Email marketing has become an indispensable tool for businesses of all sizes to reach out to and engage with their audiences. One important metric that businesses should track is Average Revenue Per Email Subscriber (ARPU). In this article, we will provide a step-by-step guide on how to calculate ARPU, and explain its significance in email marketing.
ARPU is a metric that provides insights into the average amount of revenue generated per email subscriber for a business. Essentially, it measures the value of each email subscriber and gives an indication of how effective a business’s email marketing campaigns are in terms of generating revenue.
Calculating ARPU involves dividing the total revenue generated from email marketing campaigns by the number of email subscribers. This metric can be used to identify high-value subscribers who are more likely to make purchases or engage with the business. By understanding ARPU, businesses can optimize their email marketing strategies to increase revenue and improve customer engagement.
By tracking ARPU, businesses can quantify the impact of their email marketing campaigns on their bottom line. This metric can also help identify areas of improvement in email marketing strategies, such as segmentation, personalization, timing, and messaging. It can also help in comparing the effectiveness of email marketing campaigns over time.
Moreover, ARPU can provide insights into the behavior of different customer segments. By analyzing the ARPU of different segments, businesses can identify which segments are the most valuable and tailor their email marketing campaigns accordingly. For example, if a business finds that customers who purchase high-end products have a higher ARPU than those who purchase low-end products, they can focus their email marketing efforts on promoting high-end products to that segment. This can lead to increased revenue and a higher return on investment for email marketing campaigns.
Before we dive into the steps involved in calculating ARPU, we need to gather some data. The data we need includes:
In addition to the above mentioned data, we also need to gather information on any discounts or refunds given during the period. This is important as it can affect the accuracy of the ARPU calculation. It is also important to ensure that the data is accurate and up-to-date, as any errors can lead to incorrect calculations and decisions based on those calculations.
The first step is to calculate the total revenue generated from email marketing campaigns. This includes revenue from all sales and leads generated as a result of email marketing campaigns, including direct sales as well as any sales generated from follow-up marketing efforts.
It is important to track and analyze the revenue generated from email marketing campaigns in order to determine the effectiveness of the campaigns and make necessary adjustments. This can be done by using analytics tools to track the source of sales and leads, as well as the revenue generated from each campaign. By regularly analyzing this data, businesses can optimize their email marketing strategies and increase their return on investment.
The second step is to determine the total number of email subscribers for the period in question. This includes all subscribers who have opted in to receive emails from the business.
To accurately determine the number of email subscribers, it is important to exclude any duplicates or inactive subscribers. This can be done by regularly cleaning up the email list and removing any invalid or bounced email addresses. Additionally, it is important to track the growth of the email list over time to identify any trends or changes in subscriber behavior.
The final step is to divide the total revenue generated from email marketing campaigns (Step 1) by the number of email subscribers (Step 2). The result is the Average Revenue Per Email Subscriber.
ARPU is an important metric for businesses to track as it helps them understand the value of each email subscriber. By knowing the ARPU, businesses can make informed decisions about how much to invest in email marketing campaigns and how to allocate resources to maximize revenue. It is also a useful metric for comparing the effectiveness of different email campaigns and identifying areas for improvement.
Once you have calculated your ARPU, it’s important to interpret the results. A higher ARPU usually indicates a more engaged and loyal subscriber base, which means your email marketing campaigns are contributing to your business’s success. On the other hand, a low ARPU may suggest that your email marketing campaigns are not as effective as they could be, and improvements are necessary.
By tracking ARPU over time, businesses can identify changes in revenue trends and adjust their email marketing strategies accordingly. This includes improving segmentation, optimizing email content, timing campaigns better, and testing different calls to action. It’s important to not only track ARPU but also other metrics such as open rates, click-through rates, and conversion rates to get a holistic understanding of email campaign performance.
One common challenge in calculating ARPU is dealing with subscribers who have not made a purchase or generated revenue for the business. One way to overcome this is to segment subscribers based on their engagement levels and only include subscribers who have interacted with your email campaigns in the calculation.
There are several tools and software available that automate the process of calculating ARPU. These include email marketing platforms that provide detailed reports on campaign performance, as well as business analytics software that can help track and visualize ARPU over time.
Tracking ARPU is an essential practice for businesses that use email marketing to engage with customers. It provides insights into the effectiveness of email campaigns and helps identify areas of improvement. By following the steps outlined in this article and tracking ARPU over time, businesses can optimize their email marketing strategies and drive revenue growth.
