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Web Site Measurement Hacks by Eric T. Peterson

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Understand Frequency and Lifetime Value

Not all customers are created equal, nor are all customer acquisition strategies. Frequency and lifetime value are powerful metrics to help you differentiate customers and the content they engage in most profitably.

Repeat visit behavior metrics are a good place to start understanding customer retention. The idea is simple, and measurement is very straightforward. But many ideas that are “simple” are not “the best way,” and this is true with using the repeat visit metric to determine visitor value. When you are just starting to look at visitor behavior, it’s a fine tool—certainly better than not paying any attention to retention or visitor value at all. But once you start learning about the profitability implications of managing visitor retention, you will most certainly ask, “What’s next? How can we do this even better?” When you get to that point, you’ll need a better tool set that provides a more meaningful picture of visitor behavior.

The Limits of the “Percent Returning Visitors” Metric

So what’s wrong with using repeat visits? For one thing, the repeat visit metric is bipolar—a repeat either happened or did not, and there are certainly more types of visitors than two. For example, the repeat visit metric doesn’t take into account the difference in value between a 200-time visitor and a 2-time visitor, and you probably would agree the difference in value here could be significant. So we will need to account for these differences in value ...

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