Lifetime Value Report In GA4 - Which Users Are Worth The Hassle?
What is Lifetime Value report in GA4?
The User Lifetime Value report in Google Analytics 4 lets you understand how valuable different users are to your business based on their lifetime performance. Lifetime Value Report in Google Analytics will show you the total value you have earned from a group of users over a certain period of time.
This value can be monetary but you can also analyze how engaged each group is over particular period of time.
Where can you find User Lifetime Value report in GA4?
In GA4 left hand menu Explorations section, scroll horizontally all the way to the right:
Before we dive deeper into practical advice on how to create and make use of User Lifetime Value reports - let’s talk about User Lifetime Value and Customer LTV.
How does User Lifetime Value report differ from the Customer LTV metric?
GA4 offers User Lifetime report in the exploration section. While the concept is similar to the common business metric called Customer Lifetime Value there are substantial differences that should not be overlooked.
Customer Lifetime Value (CLV or LTV) is a business metric that helps us understand how much a business earns from an average customer over the course of the customer/business relationship.
Customer loyalty and its evil-twin metric Churn, are two of the most important things to keep an eye on if you want to increase LTV.
As you can imagine - the lifetime of a customer plays a significant role here as it influences this metric heavily - the longer a customer continues to purchase from a company, the greater their lifetime value becomes.
There are two major differences between customer LTV and User LTV in GA4
- User lifetime value expands this insight to ALL the users of your website or app (not customers only!). For that very reason, this metric is significantly lower than Customer LTV because its calculation doesn’t include customers only but also those who don’t spend a penny on your offering. This means that User lifetime value by its nature gives you a wider perspective as the volume of non-spenders strongly affects the bottom-line performance of any group of users.
- While customer LTV is tied to the average customer lifespan, the User LTV in GA4 is directly tied to the selected date range - it shows how a particular group of users performed during certain periods.
How do you create User lifetime exploration?
Once you click on “User lifetime” exploration template as described in “Where can you find User lifetime report” above, GA4 will automatically create your first User Lifetime exploration. It will be pre-populated with one-size-fits-all dimension and metrics:
- Rows (i.e. dimension) represent First user medium - how a particular group of users first came to your site
- Metrics are:
- Total users
- LTV Average
- Average lifetime engagement duration
- AverageLifetime transactions
Let’s focus just on the table here - we’re looking how each cluster of users spend when you group them by the medium i.e. type of traffic that brought them to your website for the 1st time!
Looks cool? There’s more! (hint: a LOT more to it)
NB: each First medium group has average transactions < 1 which proves the point about non-buying users being included in the report!
Now let’s give the right hand side menu proper attention
Apart from the date range selector, the left column represents the available choices for segments, dimensions and metrics.
The right column shows what is actually incorporated in the current report. It also offers filtering option, if you scroll all the way to the bottom of it.
User Lifetime report: use-cases
User Lifetime report in GA4 helps you determine the commercial performance of a particular group of users.
Let’s start with the simplest - the default setup will tell you how each medium performs when it comes to billing:
(the data in this screenshot is actually the Google merchandise store publicly available account)
By looking at this report we can tell that their affiliate scheme(s) and cpm campaigns are not working.
We can also say that referrals are outperforming the organic search, and that visitor from email are, by far, most valuable ones. As if we didn’t know it already, eh?!?
Now let's give a bit more context to the data by adding 1st user source as second column (simply double click on it in the left-hand setup column, under dimensions, and it will appear in the report:
This report tells us that geeks coming from analytics.google.com never spend on the Google merch while those from art-analytics website pretty much make it up.
Youtube visitors are also having ‘a snake in the pocket’ but perksatwork.com people improve the bottomline.
It also provides insights about non-monetary metrics like Average engagement time, Average number of engaged sessions etc.
The most important thing is to understand that these numbers reflect how groups of users perform over time!
Examples:
- People who first came to your site the day before Christmas
- People who first came via a particular source/medium combination
- People who belong to a GA4 audience
These are just a few examples and each business should define cohorts in the way that fits their experiential data.
How does GA4 calculate Lifetime Value?
Calculation of User Lifetime Value relies on 2 factors:
Rt - total revenue generated from a group of users
Ut - total number of users that belong to a group
LTV = Rt / Ut
NB: “Lifetime” as a part of the GA4 report name is a bit misleading here. Why?
For a particular group of users - the value CHANGES, as you change the date range.
Recap: User Lifetime Value reports in Google Analytics 4
User Lifetime Value exploration can be extremely useful and valuable for your business if you want to understand how particular channels, campaigns or audiences perform long-term.
Clever use of these reports will help you constantly increase you ROAS. But have in mind that analyzing the periods that include high-converting time of year (like Black Friday for example) may strongly affect your numbers. While the overall revenue may spike during these periods, it’s the actual volume and, subsequently, the conversion rate that will make or break your bottomline.
As we already stated the non-spenders influence the end result, longer timespans mean more users, and if they turn out to be tire kickers - the average value will drop. On the other hand if you actually succeed in converting high-volume traffic into high-spenders - the LTV will skyrocket, and your marketing mix would perform as never before!