Unlock the secrets of New vs. Returning Visitors with Ontrack Analytics
The New vs Returning Visitors report has always had an aura of mystery and lots of questions revolve around it. The aim of this article is to clarify the purpose of New vs Returning Visitors and leave you with a few useful tips on how to use it
The New vs. Returning visitors report is one of the most powerful tools for analyzing your website’s success. The insights gained from this report can help you optimize your business, improve performance and grow.
So what’s a good new vs returning visitor ratio, then?
This question gets asked a lot because it doesn’t really have an actual answer. It all depends on your type of business, industry and the objectives you’ve set.
This report can look entirely different depending on the type of business you’re in (ex: if you’re in a SaaS business, then you probably see way more returning visitors than most e-commerce sites, which have more new visitors and fewer returning ones). Returning visitors tend to be more engaged. They purchase more and, as a result, have much higher conversion rates.
How does Google Analytics measure new vs. returning visitors?
Before we analyze, let’s see how the data is collected. Google analytics begins tracking users from the first moment they load your site. The first time a visitor accesses your website, Analytics assigns him a client ID. The ID is a unique code made of random numbers plus the date of their first visit. When the visitor returns, Analytics recognizes the client ID and attributes the user as returning.
In order to eliminate confusion, it’s important to remember:
- If the user deletes this cookie, next time he will access your website, Analytics will mark him as a new user.
- Since analytics uses browser cookies to identify users, our visitor can be marked as a new user twice if he returns to the website using a different device.
- Also, visitors tend to have multiple sessions before finalizing a purchase. So, in a day’s reporting, a visitor can be counted both as a new visitor and as a returning visitor if he returned for a second or third session during that day.
What is the difference between new visitors and returning visitors?
As you’ll notice from the above table:
- Returning visitors represent almost 15% of total traffic.
- 15% of traffic brings in 45% of revenue and generates 44% of transactions.
- Returning visitors generate more engagement and view more pages per session.
- Returning visitors have a much higher conversion rate (more than 4x) and the AOV is more than double when compared to new visitors.
Why is their behavior so different?
The main difference between new and returning visitors is that they are usually located in different stages of the buyer’s journey funnel. New visitors are in the awareness phase while returning visitors are in the consideration phase. They clicked on your ad, checked out your site and found something of value, so they came back.
How can Ontrack Analytics help me better understand these insights?
Google Analytics provides a wealth of data, but it’s only valuable if you master the skills of reading it and turning it into an accurate story or illustration. Ontrack Analytics helps you bypass the learning phase and focus on the important part: what the data in your analytics account actually means for your business.
Ontrack Analytics reads the data in your Google Analytics account, analyzes it using state-of-the-art algorithms and informs you about the current state of your KPIs from each report, kind of like your own personal data analyst.
Go on and take a look: https://ontrack.plus
Why do we care about new vs. returning visitors?
The New Visitors metric is commonly used for evaluating the success of traffic generation actions. It’s much more useful when you combine it with a traffic source or channel, such as google organic or facebook ppc.
The number of Returning Visitors can show you how engaging your website is. Visitors who return are usually doing so because they found some value in your content or in the products you’re offering. Naturally, the more returning visitors on your website, the better.
This brings up valuable data that can be used when developing a strategy for new customer acquisition and retention of current clients. Just try to remember that not every new visitor is precisely new and not all returning visitors are customers. This represents only an indicator.
Retention vs. Acquisition
Acquisition and retention are two of the most important pillars of business success. All businesses should be able to acquire as many new customers as possible and retain as many existing customers as they can. In order to maximize efficiency, you need to have a good strategy for both acquisition and retention.
If you already have a big client base, focus on increasing your customer retention and lifetime value first and then on acquiring more clients. If you’re not there yet, improve your tactics and successfully acquire more customers until you can focus on retention.
- Why does customer retention matter so much?
“Acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one”. Source: Harvard Business Review
Furthermore, Marketing Metrics is telling us this:
The success rate of selling to an existing customer is 60-70%
The success rate of selling to a new customer is 5-20%
The relationship you have with your existing customers should not be underestimated.
If you want to acquire more customers, you can prove yourself via the success you have with existing customers. Even more so, when you take good care of them, satisfied customers usually bring in friends or acquaintances, via word of mouth, social media or referrals – and the best part: it’s completely free.
Customer lifetime value (CLV)
One of the most important metrics for your business is Customer Lifetime Value. By measuring CLV, you can better appreciate what a customer is worth to your business and how much you should invest in acquiring new customers and/or retaining your current customers. This is at the center of marketing strategy: to attract and retain profitable customers.
Historic CLV – the sum of all the gross profit from an individual customer’s past purchases. Calculating the CLV based on profit shows the amount of profit a customer brings to your business (it can be a little complicated to calculate for every individual customer).
Historical CLV = (Transaction 1 + Transaction 2 + … + Last Transaction) * Average Gross Margin
Predictive CLV – is a better way to determine CLV, based on predictive analysis. This value becomes more precise with every purchase.
Predictive CLV = [(Average Monthly Transactions * Average Order Value) * Average Gross Margin] * Average Customer Lifespan
- How do I retain my customers?
Before you delve into retention strategies, make sure you have a large enough client base. If you’re not there yet, focus your efforts on customer acquisition.
In the world of e-commerce, service is what sets you apart. A survey done by Forrester asked 4,600 US consumers from 12 industries which they thought was more important, “good customer service” or “low prices.” Customer service won an impressive victory.
Offer support. Customers need to feel that you are there to help them with anything they need. This enhances the trust they feel with respect to your business. Good customer service can make a world of difference.
Remember: The number 1 reason customers leave a company is that they believe you don’t care about them.
Simply put: customer acquisition is the process of bringing new shoppers to your business. Depending on your type of business (not just B2B; B2C, SaaS, e-commerce, but also your individual characteristics), this process can take various shapes due to the various types of audiences and channels. Just think of how many ways to advertise are out there.
More importantly, we have two important things we must focus on: the cost of acquiring a customer (CAC) and the strategy. Each one of these two has a direct influence on the other. The cost of acquiring a customer sits at the foundation of your acquisition strategy. The next step from here is to devise a plan to constantly lower that cost and maximize efficiency and ROI.
Calculating CAC is simple: Divide all costs spent on acquiring new customers by the number of acquired customers.
The strategy part we’ll leave up to you because it’s not the topic of this article. We’ll leave you with a few helpful tips though:
Research. With each business being different from the rest, we recommend to start out with getting to know your customers.
What are they like?
Where do they live?
What are their likes and dislikes?
What are the best channels to market your business towards them?
Plan. You can see how this information comes in handy when mapping out the acquisition plan. You need to know who to target, how to talk to them and where to find them.
Act & Follow up. Cast your net and permanently evaluate and optimize. A conversion usually needs more than one session, so be sure to incorporate remarketing campaigns in your strategy.
Other useful articles:
New vs. Returning Users Article