Understanding The New Lifetime Value Report from Google Analytics

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Craig Smith  |  Founder & CEO

Last year, Google launched a metric to track calculate customer lifetime value. The Lifetime Value Report is located under the Audience section of the Google Analytics interface. This tool tracks performance over the past 90 days to better understand the behavior of customers and what they bring to your business. The best part is that you can monitor this report by channel, goals, transactions, and a variety of other factors to isolate variables and learn what works for your business.  

Check out a few examples of the Lifetime Value Report in action and learn how you can use this took to better plan your digital marketing efforts.

How Do You Read Google’s Lifetime Value Report?

Marketers who use the new Lifetime Value Report will be able to determine which campaigns are successful and which marketing tactics bring customers back to your website. You start with a 90-day window and track behavior in the three months following the acquisition process. The graph calculates the number of users on your website versus the number of sessions, goals, revenue, or other factors that you want to keep an eye on.

There are multiple metrics you can choose from to determine the long-term value of your campaigns. A few of these include:

  • Sessions Per User (LTV): The average number of website sessions users have per 90-day window (the number of times customers visit your website on average).
  • Session Duration Per User (LTV): The average amount of time users spend on your website, engaging with your brand.
  • Pageviews Per User (LTV): The average number of pages customers look at on your website.
  • Revenue Per User (LTV): The amount your customers spend on average over a period of 90-days.
  • Transactions Per User (LTV): The number of times your customers buy from your brand in an average quarterly period.
  • Goal Completions Per User (LTV): The average number of goals completed per user.
  • Tenure: the number of customers who reached a specific age, starting with their first website visit.  

Each of these metrics can provide value to your brand. For example, knowing the pageviews per user on average can help you see if your website is sticky and valuable to returning customers, while the transactions per user can give you an idea for how often customers return to buy from your brand.

How Are Lifetime Value Report Metrics Calculated?

At first, the lifetime value report can be hard to understand, especially if analytics and data aren’t your native languages. However, once you understand where Google is coming from in presenting this report, you can start customizing it to get the information you want.

So how does Google calculate this report and display the information? According to their support page:

“Lifetime value is calculated using the cumulative sum of the metric value divided by the total number of users acquired during the acquisition date range.”

In layman’s terms, Google tracks whatever you are hoping to monitor (be it revenue or time on site) and divides it by your total number of users to get the overall average. The 90-window mark follows customer behavior over three months, to see how your users change depending on your marketing efforts.   

Who Can Benefit From This Report?

There are multiple companies and industries that can benefit from tracking the lifetime value of customers. Surprisingly, these industries vary in the size and price of the products and services they offer. For example, here are three examples of companies that can track metrics in the lifetime value report to better understand their customers:

  • An eCommerce retailer can understand how often customers buy from them in the Transactions Per User view. This gives marketers an idea for when customers re-enter the sales funnel and look to buy from their brand again, helping them plan their remarketing strategies.
  • A therapist can track Revenue Per User (especially if they import data to Google Analytics from their accounting tools) to learn how much users spend on average of three months. This makes it easy to set target CPA goals and ROI goals per user.
  • A travel company can track Session Duration Per User and Pageviews Per User to learn how many tours on average customers look at before they buy. They can also review Sessions Per User to see how many times potential customers return to the website before they make a purchase.

In the examples above, customers spend anywhere from $20 to $2,000 with the companies and take anywhere from a few minutes to a few months to make a purchase. Every business is unique and can put the lifetime value report to use.

What Can You Do With This Report?

Analytics are only as valuable as the actions you take to improve them. Many companies fall into the trap of monitoring analytics and reporting performance without actually take steps based on the content. With that said, there are a few ways you can use this lifetime value report to guide your overall digital marketing efforts to make improvements to the metrics if you’re not happy with them.

Track Specific Campaigns

The new lifetime value report breaks down information by channel, and users can dig even deeper to review it by ad campaign in Google Adwords. Use this report to see how customers behave when you launch a specific social campaign or send out a marketing promotion to engage customers.

The team at Conversion Works shared a case study from one of their clients using the lifetime value report. The Revenue Per User shot up when customers received remarketing messages a month after they made a purchase, increasing the average customer spend as a whole for that period.    

Evaluate Customer Behavior During Peak Seasons

Many businesses experience seasonal ebbs and flows, in which their performance during a few specific months can affect their revenue for the whole year. During this time, customer acquisition and conversion is crucial.

By reviewing customer lifetime value in a 90-day window, brands can make note of when their seasonal peaks start and take action if customers aren’t as responsive as they were in past years.

Set Target ROI Goals

Once you know the average lifetime value of your users, you can set goals for your marketing campaigns based on this information. For example, if the average customer at a dentist office spends $100 per year on cleanings, and stays with the dentist for an average of five years, then their total lifetime value is $500. It’s worth it for the dentist to spend $50-$100 to acquire a new customer because their value pays off in the long run.

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