Google Analytics allows for the measurement of new and returning user segments. While this data is handy, it’s important to make sure that you and your team are using it correctly.
We have found that a surprising number of businesses attempt to use these new and returning user segments as a proxy for measuring new and existing customer behavior – often in the absence of a proper marketing database. This is a very bad idea. If you’re currently one of the many businesses using these segments this way, and actively making marketing decisions based on these user segments, you may be hurting the health of your company. Let me demonstrate how with a quick example.
Here’s the new and returning user data in Google Analytics for one retailer. In this example, Google Analytics reports $227,875 in new user revenue. If you’re incorrectly using these segments, you might be reading that as “new customer” revenue, and therefore interpret that 27% of sales came from new customers.
When looking at the customer file for this particular retailer, we see that reality is quite a bit different. In reality, $613,945, or 74% of sales during this period came from new customers. Almost a polar opposite of the picture which the user segment data painted for us.
If you worked for this company and were using new and returning user segments in place of actual customer data, what decisions might you have made with this information? Would this have impacted your budgeting? Would this impact your tolerated cost for acquiring a customer?