Above all else, this metric can help you sell better, optimize more, and create a better overall user experience. But why would you need this data? All you have to do is know how to use the data given to you. So I want to show you how to use Google Analytics to find this data on your website. How to create a lifetime value report in Google Analytics Now that you know why the lifetime value of your customer is so vital, I want to show you where and how you can pull up this data in your own Analytics dashboard. To start gathering your data, there will be a few different areas you’ll need to choose your LTV Metric and Acquisition Date Range. Analytics will then base its lifetime value projections off of those customers. Then once you’ve established your cohort, you’ll need to select a lifetime value metric for Google Analytics to calculate. But how do you use this data to help inform your marketing decisions and sell to your existing customer? Simply by running a Revenue Per User report, you can see which channels and campaigns are the most profitable to your brand as proven by this brand’s data: In this instance, its organic search traffic by far outstripped other channels in terms of traffic, but the average revenue per user is one dollar.
If you had to pick only one metric to help you grow your business, what would you choose?
You might think that conversion rate optimization metrics would be the most important since they typically affect your bottom line the most, right?
But if I had to pick just one metric, I would choose lifetime value.
Above all else, this metric can help you sell better, optimize more, and create a better overall user experience.
But up until recently, finding out your customer’s lifetime value involved complex equations that needed to be done on a regular basis in order to get useful data.
Simply put, the process was mind-numbing.
Your only other alternative was to pay for a service that could track and calculate everything for you, but that wasn’t always budget-friendly for small businesses and startups.
But since 2017, Google Analytics has been allowing users to experiment with a free lifetime value report.
That means that anyone can now use this useful metric.
So I want to help you understand and use your lifetime value report in a way that enables you to find better ways to sell to your existing customers.
But first, it’s important to know how exactly lifetime value fits into the bigger picture of brand growth.
Why lifetime value is so vital
Lifetime value is a metric that takes a vast amount of high-level data and turns it into something more actionable.
But somewhat, unfortunately, that also means that lifetime value is inherently more nuanced than most metrics you may be used to seeing.
This metric attempts to project the amount of revenue a single customer can potentially spend over the course of their interaction with a brand.
Another way to look at it is to think of it as the value of a customer over the course of every phase of their interaction with a business as it relates to various revenue building opportunities.
Your lifetime value will be different for customers that make it into each phase, which creates a layered effect to your data.
The purpose of your brand is to find data points that help you improve your product and marketing.
In turn, this can reduce churn in each of these phases and boost your revenue in the long-term.
But why would you need this data?
Aren’t traditional metrics enough to help you make these decisions?
Yes and no.
Basic metrics aren’t always the most reliable method of proving actual ROI, and can sometimes distract you from the data that will help you better optimize your customer experience.
For example, A/B tests can lie to you if you aren’t careful.
You may end up only testing your biases, and you may not gather enough data to achieve statistical significance.
That, in turn, leads to the problem of a premature testing dilemma like this one:
In many cases, brands will take the early results of its A/B tests or data gathering and see what it believes is an improvement.
Thinking they’ve discovered a new hack that will always help their brand, they end their testing and don’t wait to see if the change lasts.
In the image above, it only took a few months for the control test on the bottom to surpass the newer test that saw short-term success.
A short-term solution may look good, but it’s easy to let early success cloud your vision when interpreting your data.
And then you have to remember that merely having a high conversion rate doesn’t mean you have high-quality and qualified leads.
You could have astronomically high conversions on a landing page or blog post, but if all of those leads are dropping out before purchasing something, then your data is useless.
Instead, you need to find a way to correlate your metrics to their ultimate outcome and make changes from that data set.
But then it gets even more complicated.
On top of premature testing dilemmas and unprofitable conversion rates, you have to remember that different industries need to interpret its data in different lights.
For example, if you use paid ads to drive traffic, remarket, and ultimately win customers, then your cost-per-click will vary greatly and skew the viability of some marketing options.
You may see a reasonable conversion rate for your industry, but if you can’t link this type of cost to proven revenue, then you can ultimately use your data to run your business into the ground.
All of this data prompts you to make a decision, but if you’re not careful, it could point you in the wrong direction.
You have to ask one question:
If your data doesn’t point to a proven lead, sale, or profitable end goal, then how much is that data telling you?
Once again, that’s where lifetime value can provide clarity.
Lifetime value is an interaction of data that will show you just how much effort you need to put into getting and keeping a customer.
By interpreting your smaller data points through the lifetime value lens, you provide yourself with data that will help you make money more efficiently.
In the words of PMGBrands founder and CEO George Popstefanov, lifetime value can:
…complement the right first-party data that a brand has with a partner’s signals to give a very customized message and experience to customers with high accuracy.
That means you’re taking high-level data and finding a practical application for it.
More specifically, you’re taking data from your already existing customers and finding out how you can sell even better to them.
And now that Google Analytics provides a free Lifetime Value Report, it’s easier than ever to gather data that enables businesses to understand the value of a customer truly.
Winning new customers is excellent, but lifetime value focuses on providing real data that lets you sell to all potential customers, including those that already exist.
And plenty of studies have shown that your current customers are by far your most profitable audience.
So not only will you sell better by understanding and using your lifetime value, you can build the future of your business on this single metric.
Or in other words, increasing lifetime value equals more revenue and better customers in the long run.
And now that Google Analytics allows you to access a free version of your lifetime value, most of the number crunching is done for you.
All you have to do is know how to use the data given to you.
So I want to show you how to use Google Analytics to find this data on your website.
Then, I want to give you some ideas for how you can use this data to improve your marketing and boost the value of your existing customers.
How to create a lifetime value report in Google Analytics
Now that you know why the lifetime value of your customer is so vital, I want to show you where and how you can pull up this data in your own Analytics dashboard.
To start, pull up your Google Analytics dashboard and find the Audience tab.
From there, select the option that says Lifetime Value.
From this…
COMMENTS