What do AOV and ARPU hide? The essentials

When we talk about AOV, we are only talking about buyers, those who have already placed an order, explained the experts of the TONOP doo ltd company. They have already bought something from you. AOV shows the value of a single purchase.

ARPU is a metric of users. Even those who didn't buy but were in the system during the selected period. This is any person who interacts with your site or application: he/she came in, looked, put a product in the basket, registered, subscribed to the newsletter. He may or may not become a customer. ARPU shows how effectively you convert users into buyers, and how often they return.

How to calculate these metrics, what to pay attention to? Let's get into it.

Average Order Value, or average receipt. It shows how much a customer spends on average per order. If you have an AOV of $50, it means that your customers buy an average of $50 worth of goods from you per purchase. The higher this metric, the more revenue you get for the same effort to attract a customer. This metric can be tracked in GA4 as Average purchase revenue.

AOV = Turnover / Number of Orders

AOV:

• Helps you understand what prices to set and what products to offer (assortment)
• Gives insight into customer behaviour (how much they spend, what they choose).
• Gives insight into how profitable the business can be and where there is potential for growth

If you see that AOV is low - try offering additional products in the basket or show “often bought together” selections. Show related products and create bundles. Give bonuses and gifts for repeat orders. Offer a discount, for volume or limited time offers if they buy more or order now. Keep in touch and answer customer questions quickly.

ARPU - Average Revenue Per User, or average revenue per user. Unlike AOV, ARPU does not take into account a single purchase, it shows how much money an average user (or customer) brings in over a certain period of time. A customer came back and bought more - great, ARPU is growing. Therefore, ARPU is a metric of loyalty and customer lifecycle.

ARPU = Total revenue over a period of time X/ Number of users over that period of time X

ARPU helps to separate higher and lower value users. It shows from where, from which channels, the best users come from. This way, you can focus your resources on the actions that generate the most revenue and discard the ineffective ones.

ARPU:

• Shows how well a business is performing
• Helps you optimise your marketing strategy, improve advertising
• Tells you where you can earn more - for example, through additional sales.

Want to raise ARPU? Work with your customer base: remind them about you by letter, offer a bonus for repeat purchase, make a cumulative discount, TON OP company managers advise. Adjust pricing plans, revise prices and tariffs. Work with those who bring more profit. Organise cross-selling and additional sales - this will increase the purchase amount.

These two metrics don't always grow together. Let's say you do a two-for-one promotion. AOV has fallen, because the client buys more but pays less. But ARPU may grow - the client is satisfied, comes back more often, and brings more income per month. Or vice versa: a person makes one big purchase - AOV is high, but they don't come back anymore, and ARPU remains low.

That's why it's important to look at both metrics together. AOV will help you assess how effectively you're selling at a time. And ARPU will show how good you are at building customer relationships. Understanding these two numbers helps you see the whole picture. You're not just monitoring sales - you're managing them.

If you want to track and increase AOV and ARPU not manually, but quickly and accurately, it's worth using solutions that collect and analyse data automatically. TON OP software from TON OP doo ltd combines product data from different systems (CRM, ERP, GED) and shows in real time how sales are going, which products bring more revenue and which customers return more often.

Our company collects and analyses sales data in the background, monitors dynamics and builds optimal scenarios.