In today's ecommerce landscape, where competition is plentiful and customer acquisition costs (CAC)...
In the world of ecommerce, there's a metric that the largest brands keep a close eye on: Average Revenue Per Customer (ARPC). But what exactly is ARPC, and why should it matter to your online store?
Simply put, Average Revenue Per Customer is the total revenue generated divided by the number of customers over a specific period. It's a powerful indicator of how much value each customer brings to your business. Think of it as the pulse of your ecommerce operation - a healthy ARPC often signals a thriving business.
Why does this metric matter?
For starters, it's directly tied to your bottom line. Boosting your ARPC means you're gaining more value out of your existing customer base. In the current ecommerce landscape, where customer acquisition costs can be steep, this is like finding gold in your own backyard.
But there's more to it. Average Revenue Per Customer is also intimately linked with another vital metric: Customer Lifetime Value (LTV). While ARPC gives you a snapshot of current performance, LTV projects the total value a customer will bring over their entire relationship with your brand. By focusing on increasing your Average Revenue Per Customer, you're effectively laying the groundwork for a higher LTV.
In today's competitive ecommerce landscape, where standing out is tougher than ever, improving your Average Revenue Per Customer isn't just smart - it's essential. It's about making every customer interaction count, turning casual shoppers into brand advocates, and ultimately, driving sustainable growth for your online store.
The following article will cover 5 tried and tested strategies that can help you boost your brand's Average Revenue Per Customer and set your ecommerce brand on the path to long-term success.
1. Upsell and Cross-sell Strategically
Upselling and cross selling are time-tested strategies for increasing your Average Revenue Per Customer. When done right, they not only boost your revenue but also enhance the customer experience by introducing them to relevant products they might love.
Techniques for effective upselling and cross-selling:
- Suggest complementary products at checkout
- Offer upgraded versions of products in the cart
- Use post-purchase emails to recommend related items
- Create bundles of frequently bought together items
How to use data to identify upsell/cross-sell opportunities:
- Analyze purchase history to spot patterns
- Use browsing behavior to understand customer interests
- Leverage customer reviews to identify popular product combinations
Tools like LTV.ai can help here as well by using AI to ingest and learn from historical customer data, ensuring that each one of your customers gets the exact product they need, exactly when they need it based off factors like their physical location, previously purchased product, feedback etc.
The key is relevance. Your upsell and cross-sell offers should feel helpful, not pushy. When customers feel you're genuinely trying to enhance their experience, they're more likely to increase their spend, boosting your Average Revenue Per Customer and customer LTV.
2. Leverage Personalization
In today's ecommerce landscape, personalization is quickly becoming a necessity to stand out and truly connect with your customers. The goal is to offer an individualized experience that can dramatically impact your Average Revenue Per Customer.
Definition and benefits of personalization:
Personalization uses customer data to deliver more relevant communication and experiences. It goes beyond basic segmentation to tailor content based on factors like purchase history, browsing behavior, and demographic information.
Benefits include:
- Increased customer engagement and satisfaction
- Higher conversion rates
- Improved customer retention and lifetime value (LTV)
- More efficient marketing spend
How to implement personalization:
- Segment your customer base using key attributes
- Use dynamic content in emails based on customer preferences
- Personalize product recommendations on your website
- Tailor offers based on past purchase behavior
- Customize the shopping experience based on browsing history
The impact of personalization:
- Increases in email-driven revenue
- Boosts in customer engagement metrics
- Improved customer retention rates
Taking it further with hyper-personalization:
For brands looking to take personalization to the next level, tools like LTV.ai offer true 1-1 hyper-personalization capabilities, resulting in your brand talking to each customer as an individual in an email that isn't heavily branded and instantly ignored.
This AI-driven approach creates truly 1-to-1 experiences by:
- Analyzing vast amounts of customer data in real-time
- Creating individualized product recommendations
- Tailoring email content at scale to each customer's unique preferences and behaviors
- Optimizing send times for maximum engagement
Brands using LTV.ai for hyper-personalization have seen up to 25% increase in email-driven revenue, along with significant improvements in customer engagement and retention.
By leveraging personalization (and potentially hyper-personalization), you're not just improving your Average Revenue Per Customer - you're creating a more satisfying shopping experience that keeps customers coming back, driving long-term growth for your ecommerce business.
3. Build out a comprehensive Customer Win-back Strategy
Sometimes customers drift away, but that doesn't mean they're gone forever. A well-crafted win-back strategy can re-engage lapsed customers, boosting your Average Revenue Per Customer and extending customer lifetime value (LTV).
Identifying and re-engaging lapsed customers:
- Define what "lapsed" means for your business (eg. haven't purchase in 6+ months)
- Use your CRM data to identify these customers
- Segment lapsed customers based on their previous buying patterns or lifetime value
Techniques for effective win-back campaigns:
- Send personalized "We miss you" emails
- Offer a special "comeback" discount
- Showcase new products or improvements since their last purchase
- Use retargeting ads to stay top-of-mind
- Reach out on multiple channels (email, SMS, social media)
The most effective win-back campaign:
One of the most efficient win-back campaign's in the industry is LTV.ai's lapsed customer win-back flow.
It's a sequence of 5 emails coming from a "brand ambassador" who is nurturing your customers back into the fold, through 1-1 AI driven, hyper-personalized emails, that reference each customers individual location, give them reasons to make their next purchase, gather genuine feedback (as opposed to cold surveys) and ultimately re-engage your lapsed customers.
One of LTV.ai's most recent win-back campaigns on customers that haven't purchased in 6-18 months with a leading menswear brand, Ministry of Supply, resulted in a Average Revenue Per Lapsed Customer of $0.91. Full case study here.
4. Optimize Your Product Bundles
Product bundles are a smart way to increase your Average Revenue Per Customer while providing value to your shoppers. When done right, bundles can boost sales and introduce customers to new products they might love.
Creating attractive bundle offers:
- Combine bestsellers with truly complementary items
- Offer a slight discount compared to buying items separately
- Create themed bundles (eg. "Summer Essentials" or "Home Office Setup")
- Allow for some customization within bundles
Using data to inform bundle creation:
- Analyze frequently bought together items
- Look at browsing patterns to identify potential combinations
- Use customer feedback to understand pain points and create solution-oriented bundles
- Test different bundle configurations and price points
Remember, the goal is to create bundles that feel like a great deal for the customer while increasing your Average Revenue Per Customer. When customers feel they're getting more value, they're more likely to choose a bundle over individual items.
5. Start a Loyalty Program
Loyalty programs are an efficient tool for increasing your Average Revenue Per Customer. They're not just about rewarding customers but about creating a cycle of repeat purchases that can significantly impact your bottom line.
Benefits of loyalty programs:
- Encourages customers to choose your brand over competitors
- Increases purchase frequency, average order value and customer lifetime value (LTV)
- Provides valuable data on customer preferences and behaviors
- Fosters emotional connection with your brand, enhancing lifetime value (LTV)
Examples of successful ecommerce loyalty programs:
- Sephora's Beauty Insider: Offers points for purchases, redeemable for products or experiences
- Amazon Prime: Combines free shipping with additional perks like streaming services
- Venus Unlocked: Uses gamification elements to encourage frequent purchases
The key is to create a program that aligns with your brand and offers genuine value to your customers. Remember, a well-executed loyalty program can turn occasional shoppers into brand advocates, driving up your Average Revenue Per Customer in the process.
Conclusion (TLDR)
Improving your Average Revenue Per Customer isn't just about making more money in the short term - it's about building a sustainable, profitable ecommerce business for the long haul. Let's recap the five strategies we've explored
- Implement a Loyalty Program: Turn one-time buyers into repeat customers and brand advocates.
- Upsell and Cross-sell Strategically: Increase order values by offering relevant additional products.
- Leverage Personalization: Use AI-powered tools like LTV.ai to create truly individualized shopping experiences.
- Optimize Your Product Bundles: Combine products in ways that provide value and encourage larger purchases.
- Implement a Customer Win-back Strategy: Don't let lapsed customers slip away - re-engage them with targeted campaigns.
Each of these strategies contributes to boosting your Average Revenue Per Customer, but their impact goes even further. By focusing on these areas, you're not just increasing immediate revenue - you're laying the groundwork for higher customer lifetime value (LTV).
Remember, in the world of ecommerce, it's not just about acquiring new customers - it's about maximizing the value of each customer relationship. By implementing these strategies, you're creating a better shopping experience, fostering loyalty, and ultimately building a stronger, more profitable brand.
