A client's revenue per customer is rising but total revenue is falling. What's the most likely explanation?

How to answer

Rising revenue per customer with falling total revenue means customer count is declining faster than per-customer spend is growing. Mathematically: if ARPU grows 10% but customers decline 20%, revenue drops ~12% (1.1 x 0.8 = 0.88). Most likely causes: (1) the company lost price-sensitive customers and retained high-value ones, creating survivorship bias in ARPU, (2) aggressive upselling compensates per-customer but acquisition has stalled, (3) a competitor entered and captured the volume segment. The key insight is that rising ARPU can be a vanity metric masking a shrinking customer base. Always look at both sides of the revenue equation simultaneously.

Key idea: Revenue = Customers x ARPU; one can mask the other