New vs Returning Users
What is New vs Returning Users?
New vs Returning Users refers to the metric that measures the number of new users compared to returning users on a website or ecommerce platform. It helps businesses understand the composition of their website audience and the effectiveness of their customer retention strategies.
The formula for New vs Returning Users?
New Users / Total Users
How is New vs Returning Users used by e-commerce businesses?
New vs Returning Users is widely used by e-commerce businesses to gain insights into their customer acquisition and retention efforts. By analyzing the ratio of new users to returning users, businesses can assess the effectiveness of their marketing campaigns, website experience, and customer loyalty programs.
For example, if the percentage of new users is high, it may indicate successful marketing campaigns attracting new customers. On the other hand, a high ratio of returning users suggests customer loyalty and satisfaction, indicating that the business is doing a good job in retaining its customers.
What is a good result for New vs Returning Users?
A good result for New vs Returning Users depends on the specific goals and strategies of a business. In general, a healthy balance between new and returning users is desirable.
For instance, if a business aims to expand its customer base, a higher percentage of new users could indicate successful acquisition efforts. On the other hand, if the goal is to focus on customer retention and repeat purchases, a higher percentage of returning users would be considered positive.
As an example, let’s consider an e-commerce business that sells subscription boxes. If the business successfully retains a high percentage of returning users, it indicates customer satisfaction and loyalty, which in turn leads to predictable recurring revenue.
What is a common mistake when analyzing New vs Returning Users?
A common mistake when analyzing New vs Returning Users is solely focusing on the percentage of new users without considering the overall customer journey and experience. While attracting new users is essential for business growth, it is equally important to focus on retaining and nurturing existing customers.
Relying solely on the percentage of new users might lead to overlooking potential opportunities for customer retention strategies or improvements in the overall customer experience. It is crucial to analyze the metric in conjunction with other performance indicators, such as customer lifetime value, repeat purchase rate, and customer satisfaction scores, to gain a comprehensive understanding of the customer journey and make informed business decisions.