CSMs usually don't have too much to do with the Finance department. What a wasted opportunity!
Yeah, Finance isn’t the most sexy topic to talk about if you’re in Customer Success. We all care more about the human side of the business, right?
But today I want to talk to you about two financial metrics that actually come in really handy if you’re a Customer Success Manager. I’m talking about ARPA (Average Revenue per Account) and ARPU (Average Revenue per User). Here’s how you can use them to your advantage.
Average Revenue Per Account (ARPA)
Calculating the ARPA is pretty simple – you just divide your revenue by the number of accounts. But how can that be helpful?
First, you can get a trendline of the revenue that each new account brings in. It’s a pretty good indicator for the profitability of your accounts, and also shows which products and services generate revenue.
For Customer Success, the opportunity lies in dedicated playbooks1
Of course, every customer is relevant. But when a customer with a certain (high) ARPA comes in, you might consider a different playbook. Maybe add a couple extra steps in the onboarding that add more value. Sure, this costs time and money – but with a high ARPA, this can create even more revenue!
On the lower end, you might consider doubling down on automation.
In short, the ARPA helps you to segment your customers and make sure you focus on the ones that really drive value for your organization.
Average Revenue Per User (ARPU)
The ARPA is really useful for Customer Success. But the ARPU? Well, the ARPU can help you communicate more efficiently with the other departments.
In a healthy SaaS business, your ARPU should steadily go up. This shows that your Sales and Marketing get more effective at attracting good-fit customers.
But Sales and Marketing rarely optimize for ARPU. That’s why it’s good to have the finger on the pulse of the ARPU and talk about it with your Sales and Marketing colleagues. It’s a super lagging indicator, but it can help you steer the company in the right direction.
