The Lifetime Value report in Google Analytics (GA) can really be seen as another aspect of the desire, in recent years, to understand a user’s on-site behaviour across multiple touchpoints, and therefore better understanding the true value of acquiring new clients.
Although this report has been available for some time now, many users do not fully understand how Lifetime Value works in GA and more importantly, what this report can and cannot tell you about your customers.
How does it work?
The way it works, on a basic level, is to allow you to specify a date range to view a cohort of new users acquired during the date range and plot what they went on to do in the 90 days after. The x-axis is always time, and the metrics being visualised in the graph are always related to the cohort of users acquired during the specified date range.
This means that, for example, you can check on the value of new users for the 90 days after a promotional campaign period, to see how they behave compared to users gained during non-campaign.
Limitations of this report
At present, you can only view the data split by one of four dimensions, and only one dimension at a time (no secondary dimension here). However usefully from a marketing perspective, those four dimensions are channel, source, medium and campaign.
Secondly, currently only 90 days of onward data is plotted in lifetime value, which, for clients with a purchase cycle longer than this, means that this report will likely not meet their needs as far as revenue is concerned.
Also, this report does not allow you to apply segments to the data, or view two comparison data ranges on the same graph, nor for the data to be exported. It very much still feels like a beta, despite having been launched over 18 months ago.
Finally, only the following metrics can be viewed in the cumulative graph:
- Goal Competitions Per User (LTV)
- Page Views Per User (LTV)
- Revenue Per Use (LTV)
- Session Duration Per User (LTV)
- Sessions Per User (LTV)
- Transaction Per User (LTV)
How to understand what you are looking at
This report is always cumulative, regardless of the metric you report on, so the graph can only stay level (the users in this cohort take no further action) or go up over time (these users take additional actions). This graph never goes down.
That means, depending on your business type, you might see a graph plotting the average sessions per user that looks like one of these:
- A constant stream of returning sessions from these users
- No further sessions from these users
- Weekly sessions from these users, perhaps in line with weekly uploads of content
- A period of continued visits shortly after acquisition but tailing off to no further sessions from these users
In the table for this report, the metric that is more useful for comparison is Revenue Per User (LTV). Viewing it in conjunction with the standard Revenue per User metric, you can see which channels, sources, mediums or campaign contribute to a higher cumulative spend over 90 days, rather than just on the initial session.
Thinking about channels such as social, email and affiliate which rely on engagement to influence behaviour, they may initially show a similar Revenue Per User from the standard reports to ‘passing traffic’ from paid search, for example. But as these are users for whom social recommendation and loyalty have a stronger impact on their behaviour, they can show more significant long-term value when viewing the Revenue per User (LTV) metric.
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