Growing your Average Revenue per Customer (ARPC) over time should definitely be the goal of any Software-as-a-Service (SaaS) or Subscription business (any business, probably).
That said, generating more revenue and higher margins aren’t the only reasons to drive up Average Revenue Per Customer; there are two main benefits — side effects, if you will — from generating more revenue from existing customers.
- ARPC growth among existing customers generally leads to lower churn (per McKinsey & Company research), not simply because those who pay more will stay longer, but because those who pay more over time are usually more invested beyond the dollars they pay.
- AggregateAverage Revenue Per Customer growth across all customers generally comes from building a more diversified customer base – often by moving up-market – rather than simply raising prices on existing customers.
I go into a lot more detail on different strategies and tactics around SaaS Marketing, Pricing, Growth Hacking, etc. on my Sixteen Ventures site.
This post was originally published on LinkedIn.