The Side Effects of Growing Average Revenue per Customer

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.

  1. 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.
  2. 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.

I help grow SaaS companies at Gainsight by focusing on Customer Success. Follow me on Twitter @lincolnmurphy.

This post was originally published on LinkedIn.

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About Lincoln Murphy

I am a Customer Success Consultant focused on Customer Success-driven Growth. I wrote the Customer Success book which you can buy at Amazon. If you need help applying Customer Success-driven Growth principles in your company or would like me to speak at your event, please contact me. Also, connect with me on LinkedIn or follow me on Twitter or Facebook.