The ARPU metric should not be confused with LTV and AOV, although they are all related to revenue and project value. In some cases, ARPU is replaced by ARPPU, Cumulative ARPU or Average Revenue Per Unit. Let's define the difference between ARPU and other metrics.
Average order value (AOV)
Average check differs from ARPU in that it represents the ratio of total revenue for a given period to the number of completed transactions, and not to the number of unique customers.
Customer Lifetime Value (LTV)
The difference between LTV venezuela email list and ARPU is also significant. The first indicator represents the income received from a client over the entire period of cooperation with him. When determining LTV, the costs of attracting and retaining clients are subtracted from the total income. After that, the resulting value is divided by the number of users.
This indicator allows you to predict the revenue from a client over the entire period of his interaction with the company. LTV gives an idea of the overall value of the client, while ARPU determines the revenue for a certain period.
Customer Lifetime Value
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Ultimately, ARPU, ARPPU, Cumulative ARPU and AOV are important metrics that allow companies to evaluate the revenue and performance of their business models from different perspectives.
Average Revenue Per Purchase (ARPPU)
Average revenue per customer is a metric that only takes into account purchasing users. ARPPU (Average Revenue Per Paying User) allows you to calculate the profitability of a business per customer over a certain period of time. Given that the number of buyers is always less than the number of visitors, the ARPPU value is usually higher than the ARPU value.
If a customer makes multiple purchases in a given period, the denominator of the formula will be the same. Therefore, as the number of repeat orders increases, the difference between ARPPU and AOV becomes more pronounced. ARPPU figures for a day and a month can differ significantly.
By analyzing the dynamics of the indicator, you can assess the reaction of customers to price adjustments. However, an increase in ARPPU with an increase in prices does not always mean an increase in total income, since the share of buyers may decrease.
Cumulative ARPU
This is a metric that takes into account the income from a specific group of users that appeared during a specific period of time. This parameter does not decrease over time, but constantly increases. As the time from registration increases, the Cumulative ARPU value also increases. When the metric approaches infinity or a fixed period of the customer's life, it sooner or later converges with the LTV value.
Average Revenue Per Unit
This metric represents the average revenue per unit of product sold over a certain period of time. This parameter is used to evaluate projects in the field of e-commerce. Although the abbreviation remains the same – ARPU, to avoid confusion it should be used exclusively for Average Revenue Per User.