Art – Blog – New vs recurring users a useless KPI
I never understood the purpose of a certain diagram in Google Analytics, namely the pie chart that shows the ratio of new users to returning users. It used to be in the standard dashboard that a user saw after logging in, and I always apologized for this diagram when I gave a Google Analytics demo during my time at Google.
Torten diagram: Only for static compositions
What’s so bad about this diagram? First of all, a pie chart is being used for static compilations. If I want to know the gender distribution in my course, then a pie chart makes sense. The genders will largely not change during the course.
Most websites want to increase the number of their visitors, whether through new users, repeat users or both. A development is therefore the goal, and thus a pie chart is not meaningful, as it shows static constellations. A line graph showing development over time is certainly a better choice in most cases.
The two metrics are independent of each other
I’m going now but one step further and claim that these two metrics have nothing to do with each other and therefore should never be represented in the same diagram. New users can become returning users, but they don’t have to. And returning users can also have been new users in the same period, then they are counted twice. If a user can appear in both parts of the pie chart, what does the ratio of the two parts say about each other?
New users are created through marketing. Ideally, recurring users come about because the content is so great that they can’t live without it anymore. If I don’t get new users, then I have to optimize my marketing. If my users don’t return, then I have to optimize my content. Since we’re always on the hunt for so-called “actionable insights”, why should we then display two metrics in one diagram if they require different corrective measures?
Additionally, I can spend a lot of money on marketing for two weeks, so that the proportion of new users increases massively and the proportion of returning users is greatly reduced in the ratio. Even if the absolute number of returning users remains the same, the ratio would suggest that we have fewer returning users. For this reason, these two metrics should never be displayed together as a ratio, but always separately. Suggested display: A graph showing the development of new users with acquisition channels, a graph showing returning users and the content that may be responsible for their return.
What’s actually with the non-recurring users?
This question was asked by a course participant today, and I think this question is good for several reasons. We don’t know if new users will become repeat users (apart from those new users who are both new and repeat in our period because they came twice, but they could of course decide against another visit in the future). In this sense, any user who has been there once could come back at some point in the future. Technically, no user who has deleted their cookies can reappear as a repeat user with us, except for user ID usage. But I still find the question exciting because I have dealt with it in a different context: From when do I have to consider a customer lost for a product that is regularly purchased?
The graphic is intended to illustrate my thoughts on this matter. We have a point “Today” and three users: blue, red, and green. Blue user comes by at more or less regular intervals. At the point “Today”, I would assume that they will also come back in the future, and the probability seems high. Green user was here recently. They may not have had the chance to come back yet. Red user was here a long time ago, and compared to the time intervals between blue user’s purchases, the probability of their return seems low. They can come back, but I would rather lure them with an incentive than green user, who might come back anyway (pull-forward cannibalization).
We can’t say anything definite about non-recurring users, because we don’t know the future. But we can work with probabilities. For pure users, this may not be so exciting. But for shop customers, it’s more exciting.