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Why would you possibly need another one? What good would come of adding yet another hour to the end of you’re already long work day in order to dig it up? The truth, in this case, is that you can’t afford not to. Lifetime value isn’t just another vanity metric. It’s the metric. The one that stands head and shoulders above all others. If there was one and only one metric you were tracking, this should be it. And now you can do it simply and easily inside Google Analytics. Here’s how.
What is lifetime value (and why does it matter?)Metrics often lead you astray. Take cost per click. They range wildly from industry to industry. $2 bucks in one industry, but $50 bucks in another. Crazy, right? Surely that $50 is just “too expensive.”Not necessarily, obviously. The first easy answer is your break-even point. If your cost per acquisition is less than your initial average order value, you’re golden. But sometimes, in some cases, you actually want to willingly lose money initially. So what’s a reasonable cost per click in that scenario? Now, it depends. This can even change from company to company within a vertical (and their appetite for risk).Let’s talk insurance.
So you’ve got a new company. You’re entering a new market and trying to expand. Would you willingly, purposefully sacrifice #1 in order to scale #2? Of course you would. Why? Because of the lifetime value of a customer. The full potential value of each new client you add will eclipse the initial commission. So, as long as you can stomach the negative cash flow for a bit, you’d probably be willing to drive that cost per click as high as humanly possible. You go all in when the stakes are right and drive everyone else out. All of this sounds perfect except for one teeny, tiny detail. Does your company track lifetime value? ‘Cause most don’t. I’ve personally worked with dozens (hundreds?) of clients over the past few years and I can count on one hand the number who were actually tracking conversions properly. Let alone seeing anything past the first purchase. One of the reasons is because tracking this info, with current systems, isn’t always easy. It might be easy if you’re using a Shopify and do all sales in a single channel or two. That way, everything happens inside one platform.
But usually, your business is spread out. Each department has its own independent systems. So it’s tough to bring everything together. Thankfully, Google Analytics has been hard at work recently. Their new Lifetime Value report helps business owners acquire data to understand how valuable certain users and customers are to their businesses based on their lifetime performance. And best of all, it pulls together lifetime values for people acquired through different channels and mediums, like social, email, and paid search. You’ll also be able to view data by engagement (page views, goals, events) and trends (like 90 days after customer acquisition).Using this will help you determine which sources are driving the most valuable traffic and which corresponding marketing investments are truly delivering good ROI.
Here’s how to run a lifetime value report inside Google Analytics. Start by setting your acquisition date range (the option on the far right). Any customer acquired during this date range (May 2017, in this example) will be included in the LTV report. Let’s say you ran a promotional campaign or online sale during the month of May. You can easily analyze the data for these customers and segment by date based on your campaigns.
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