Marketing
Introduction to CLV in Google Analytics
August 14, 2018 Marko Mihin

Google Analytics is a very important platform that I frequently use for website analytics. One of the things I appreciate a lot is that they’re constantly adding new features. Coincidentally, I recently wrote a post about Customer Lifetime Value and someone informed me that Google Analytics includes a tool for calculating CLV, so I wanted to follow up with this post right away.

If you’re not sure what CLV is, I’ll give you a short summary from my previous post: CLV is the value of a given customer and it reflects their contribution to your business. CLV is a measurement of how valuable a customer is to your company throughout an unlimited time span, as opposed to just the first purchase. Simplified, CLV is an estimate of the revenue you can expect from a customer, if you keep that customer for a lifetime. 

With this information, it’s possible to compare lifetime value across channels and campaigns to inform a potential re-focusing of marketing budget and efforts according to lifetime performance. In addition, when lifetime value metrics begin to level off, advertisers may wish to re-engage with users at that stage to boost performance.

So, if you use Google Analytics and believe this is something that will benefit your company, let's move on to the next step.

When you log into your Google Analytics account, go to Audience:

You’ll find the new Lifetime Value tool here:



You’ll notice it’s marked as “beta” at this time: Since I just found out about this feature, I don’t know how well developed this beta version is, but I hope to write a follow up to this post after using it for a while. Taking this into consideration, this post is just an introduction to the tool and not necessarily a recommendation: If anybody has personal experience working with the tool and wants to contact me and share it with me, I would appreciate it.

 

So, let’s see what Google says about this new feature.

The Lifetime Value report lets you understand how valuable different users are to your business based on lifetime performance. For example, you can see lifetime value for users you acquired through email or paid search. With that information in hand, you can determine a profitable allocation of marketing resources to the acquisition of those users.

This is what they say about how CLV is calculated:
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. For example, if you acquired 100 users during the acquisition date range, then Sessions Per User is calculated as follows:

You can find more details at this link.

 

So, this is what I know now: At this point I’m not sure how useful this tool will be, but I thought it would be worth bringing attention to it by making this quick follow up post. I hope to have some more insights soon, so stay tuned! If you find the topic of CLV interesting, check out my previous post.

Marko Mihin
Marketer