Sales
Average Revenue Per Account (ARPA)
ARPA measures the average revenue generated per account (or customer) over a specific time period, usually monthly or annually. This metric helps businesses understand revenue contributions on a per-customer basis, which is crucial for pricing strategy and financial forecasting.
HOW TO MEASURE
Calculate ARPA by dividing the total revenue in a given period by the number of accounts during the same period.
HOW TO IMPROVE
Upsell and Cross-sell: Offer additional products or services to existing customers to increase revenue per account.
Improve Customer Retention: Focus on retaining customers longer to increase their lifetime value and revenue contribution.
Optimize Pricing Strategy: Adjust pricing based on customer value and competitive analysis to maximize revenue.
Enhance Customer Experience: Deliver exceptional service and product quality to encourage more spending.
FORMULA
ARPA = Total Revenue / Number of Accounts
EXAMPLE
A SaaS company generates $100,000 in revenue from 250 accounts in a month. The ARPA would be: ARPA=100,000/250=$400. This indicates that, on average, each account contributes $400 to the revenue each month.
DEPARTMENT USAGE
Finance: For financial analysis and performance measurement.
Sales: To target efforts on high-value accounts or improve sales strategies across accounts.
Marketing: To tailor marketing efforts based on revenue generation per account.
Leadership: For strategic decision-making based on revenue contributions from different account segments.
View the collection of Metrics Workshops.