The mobile world moves at a breakneck pace,
and it's difficult to keep up without the technical jargons and abbreviations
most industry insiders throw around. And they do love to toss those terms
around! One has to understand and be familiar with these jargons and
abbreviations to know the industry better.
Following
are the few examples.
ARPU
: It stands for Average Revenue per User. The term is mostly used in context to
understand how much a person is paying for phone bill. The average revenue per
user has different components in it. Generally a mobile phone user spends on
voice minutes, text messages and data transfer. Carriers also consider users
extra spending such as wallpapers and ringtones in this category.
Average Revenue per User (ARPU) Erosion : ARPU erosion is the business condition where
monthly average revenue per user continues to go downward for an extended
period of time. The statistics show that the user spending has remained same
despite the voice rates going down, also an exception to the Law of Demand! One
reason for the average revenue per user remaining same is, customers are
heavily spending on text messages and data transfer instead of voice minutes.
ARPPU : An acronym for
Average Revenue per Paying User which is calculated by dividing up the revenue
amongst the users who paid anything at all. This yields a figure that is
significantly larger than ARPU.
AMPU : It stands
for Average Margin per User. It is related to one of the criteria for measuring
the success of a telecom company but less being used. It focuses on the margin
produced per sold unit and not the amount of cash (revenue) earned from each
customer. Thus, one can afford low volumes and still have a healthy company.
Churn : Churn is a term used to describe the number of subscribers who leave a
supplier during a given time period. The churn is typically measured monthly.
Churn is an
important figure in subscription based services like mobile telephony and pay TV
because it’s an indicator for customer dissatisfaction.
MOU : It is an acronym for Minutes of Use;
often used in the telecom industry. It is the total time which is measured in
minutes that a customer uses his or her mobile phone during a day, month, or
year.
SAC : It’s an acronym for Subscriber
Acquisition Cost. It is an average cost of signing up a new customer. SAC is the amount of money a company spends
for each new subscriber they gain. It is also most frequently used by
mobile telecoms companies. The customer acquisition cost of mobile companies is
complicated by the number of costs involved. Example includes mobile telecoms
companies which frequently pay incentives to retailers who bring in customers
for their networks.
LTV : It stands for Life Time Value and
it’s calculated by multiplying Average Revenue per User (ARPU) by the average
length of the company’s relationship with a customer. One can figure out the
length by dividing 1 by the churn rate for the period.
For example,
If there are 1000 customers and revenue
generated is Rs. 25000.
Then, the ARPU is Rs. 25.
Let’s take
churn rate 20 % which means the average length of the relationship
is 5 months. (5 * 20% is 100% turnover)
Thus, LTV = Rs. 25 * (1 / 0.2)
= Rs. 125
CPM : It’s Cost
per Mile (CPM), also called Cost per thousand (CPT) (in Latin mile means
thousand) and is a commonly used measurement in advertising. CPM as a
metric is used in advertising across a number of mediums (TV, Online, Radio,
etc). And as advertising moved online it continued the tradition and stuck us
with this somewhat cryptic metric.
CPM is commonly used by Internet marketers to
price advertisement banners. For example, a Web site that has a CPM rate of Rs.
25 and guarantees advertisers 600,000 impressions will charge Rs. 15,000 (Rs.
25 x 600) for those advertisers' ad banner.
Kaushal Joshi
Class of 2014
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