Average Revenue per User

What is the average revenue per user?

The Average Revenue per User is a business ratio that has a high significance with regard to the actual impact of a website or an app. The average revenue per customer is a figure that is always quoted in connection with a certain period of time. Usually, monthly or annual turnover per customer is considered.

Average Revenue per User – Interesting key figure in the context of optimization

The key figure was taken from the world of stationary retail stores but is much more meaningful in the area of online trading. Because most people in supermarkets & Co. still pay with cash and do not leave any personal data behind, there are only very weak key figures without great significance: the average receipt of all customers or a single receipt without any correlation with the name.

In the online world, practically all customers are assigned customer numbers and data records are created. Only a very small proportion of customers shop as “guests” and insist on immediate data deletion.

This means that the average revenue per user can be linked to the customer data as an initial key figure. In order to increase the impact of the offer and to make the company even fitter for the competition, the performance analysis can then begin. For the average revenue per user, the following correlations can be determined with the help of a specialist:

Average revenue per user versus advertising costs per new customer

The average revenue per customer is a slightly isolated figure per time unit and cannot yet be interpreted. For example, in connection with a certain fixed cost block per customer and time unit (for media offers), the meaningfulness increases.

This key figure can also be used in the context of the advertising costs per new customer for sales promotion control or success control. In the case of affiliate links, links from Google Ads or editorial offers, a promotion code can be transferred which can enable statistical evaluation.

Amortization time of a customer

Even with a stagnating average revenue per user of an individual user, this user can continue to support the economic success of the company. In every month in which his turnover is so high that the costs are covered, he makes a contribution to achieving the company’s goals. With the help of forecast calculations and the inclusion of the “unsubscription rate” or even customer churn, it can be determined whether certain customer groups are really attractive.

Once an ordered whose sales are zero from the second month onwards would then no longer be able to refinance certain advertising measures. These would then have to be fine-tuned to such an extent that one-off customers would no longer be so strongly attracted,

Regional characteristics or distribution of average revenue per user

With average sales per user, the regional distribution can also be highly interesting. Especially since the introduction of the five-digit postal codes, a time-saving, effective evaluation by city district is possible. The segmentation does not cover individual households. Nevertheless, certain connections between city and country or within different “purchasing power areas” of a city can be established and used.

This can be particularly helpful if the online and offline worlds are to be linked and you want to get closer to your target group.

Average Revenue per User – Growth but not at any Price

In many industries, there is a real cut-throat competition, because in many cases the market seems to have reached a saturation point. And the turnover of market participant A can only be increased “at the expense” of company B.

In order not to fall into the discount trap as a company or not to make an increasingly negative contribution margin with a user, the revenue per user should be linked with other key figures or data.

For example, it is a good idea to compare the average revenue per user with a profit and loss statement at the item level: The increase of the average revenue only makes sense if the additionally sold articles can achieve a positive contribution margin or if it is a pure sale to reduce losses (e.g. extremely perishable goods such as fashion at the end of the season).

In summary, it can be said that the Average Revenue per user is an interesting starting figure. It can be used to calculate both direct relationships with costs per shipment or customer contact (e.g. shipping costs, provision costs for a media offering) and complex relationships.

A high average revenue per user is therefore also the basic prerequisite for successful company management since a company cannot grow without constant revenue streams.

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