WHAT IS THE GOLDEN RATIO OF NEW VS RETURNING USERS IN ECOMMERCE?

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THE DYNAMIC BETWEEN NEW VS RETURNING USERS SHAPES THE WAY ECOMMERCE BUSINESSES GROW AND SUSTAIN THEMSELVES. NEW USERS BRING FRESH POTENTIAL, INTRODUCING YOUR BRAND TO UNTAPPED AUDIENCES. RETURNING USERS, HOWEVER, REPRESENT LOYALTY AND HIGHER LIFETIME VALUE, MAKING THEM A CRITICAL PIECE OF THE GROWTH PUZZLE.

Retention insights are often accessed through the retention overview report in analytics platforms like Google Analytics 4 (GA4). This is your go-to for understanding how well your business retains users over time. This report is found in GA4’s reports library, where it provides a clear breakdown of returning user behaviour alongside acquisition data. Using this information, businesses can identify patterns and areas for improvement.

These insights allow you to measure how effectively your strategies convert first-time visitors into loyal customers. With the right approach, you can balance attracting new audiences while maintaining engagement with returning users. In an article shared by Hotjar, they discuss how understanding user behaviour can guide businesses towards more effective retention strategies and improved customer journeys.

To locate the retention report, open the library. If it’s not available, choose “create new report.”

WHY SEPARATING NEW VS RETURNING USERS METRICS MATTERS

Distinguishing between new and returning users can help you understand their unique roles in your business.

New users provide valuable insights for evaluating your marketing efforts, website usability, and funnel efficiency. High first-visit conversions signal that your strategies are attracting the right audience effectively.

Returning users, on the other hand, typically have higher conversion rates and reflect the value of your offerings. Analysing their behaviour helps determine customer retention rates and visit-to-purchase ratios, offering actionable insights for improvement.

Focusing on returning users also reveals opportunities to enhance engagement. Observing where they spend time on your site allows you to refine key channels and optimise their journey toward conversion.

An example of a report that compares new and returning users:

FINDING THE RIGHT BALANCE: NEW VS RETURNING USER RATIOS

The balance of new and returning users depends on your business model and audience. According to Shopify, new customers typically convert at an average rate of 2.5%, while returning customers have higher conversion rates of around 3.5% to 4.5%, reflecting greater loyalty and familiarity with your brand.

For new websites, 80-90% of traffic often comes from new users as they establish their audience base. For example, with 100 users (85 new and 15 returning) applying these updated conversion rates:

While it might seem logical to prioritise returning customers, attracting new users is critical for scaling your business. Without fresh traffic, growth plateaus, and opportunities to expand diminish.

A balanced approach, such as maintaining a 75% new to 25% returning user ratio, can optimise growth. This mix ensures reduced dependency on external traffic sources while improving overall conversion rates and building a stable customer base.

A comparison between new and returning users:

USING BEHAVIOURAL SEGMENTATION FOR TARGETED STRATEGIES

Knowing how your users behave gives you a clear way to improve marketing and engagement. Behavioural segmentation groups your audience based on actions like time spent on your site, pages visited, or how often they buy. This makes it easier to spot trends and create messages that hit the mark.

For new users, it could mean offering welcome discounts or helpful content to guide their first visit. For returning users, using past purchases or browsing habits can help you craft personalised offers that keep them coming back. Each group gets content tailored to them, boosting engagement and driving conversions.

Adding behavioural segmentation to your strategy helps you focus resources where they matter most and track results with more precision. It turns broad analytics into practical steps, letting you tackle both overall trends and individual needs effectively.

TRENDS AND TOOLS TO CONSIDER

Google Analytics 4 (GA4) continues to help businesses track customer journeys across devices, providing detailed insights into the behaviour of new and returning users. This allows eCommerce companies to refine their strategies in real-time, improving engagement and boosting conversion rates.

Personalisation remains a cornerstone of user experience. AI-driven tools like recommendation engines, dynamic content, and targeted email campaigns enable businesses to craft tailored experiences for visitors. These strategies help guide new users toward making their first purchase while encouraging loyalty among returning customers.

Using heatmaps and behavioural tracking tools alongside GA4 enhances your ability to understand user interactions. These tools highlight key engagement points and identify issues within the sales funnel. This data equips businesses to optimise user journeys, addressing pain points and improving overall conversions.

WHAT SHOULD WE LEARN FROM THIS?

What is immediately apparent, is that new business is what feeds your growth. Although the conversion rate is much lower, bringing that new business back is where it blossoms. So working on customer retention, through email marketing, targeted ads such as PPC and Social Media Ads, and SEO and ASO turns those new users into returning users, greatly increasing the chance of a conversion.

As personalisation technology continues to advance, businesses can now use machine learning algorithms to refine customer journeys. These tools dynamically analyse user behaviour, enabling real-time adjustments to marketing campaigns for better engagement and conversions.

Your own new vs returning users ratio might differ slightly, but the principles remain consistent. Analysing this ratio helps you tailor strategies to attract new visitors while fostering loyalty among existing users, ensuring a balanced and effective approach.

Returning users often engage more deeply with your platform, offering an opportunity to build stronger connections. Focus on creating content that resonates with their needs, encourages exploration of other pages, and drives meaningful conversions. By aligning creative efforts with user behaviour, you can maximise both engagement and sales outcomes.

ADDITIONAL BENEFITS

Focusing on new and returning users provides additional advantages, such as improving search rankings and building trust in your brand and products. Heatmaps and analytics tools offer insights into user behaviour, helping you identify where interactions happen and where sales funnels might leak. These insights empower you to make targeted improvements that attract more users and boost conversions.

Separate strategies for nurturing new and returning users allow you to address their distinct needs effectively. New users require compelling first impressions, while returning users benefit from personalised content and tailored offers. Both approaches work together to strengthen overall engagement and loyalty.

To achieve long-term success, track the entire customer journey – from acquisition to conversion and beyond. This holistic view reveals how efficiently your strategies drive growth across the spectrum, helping you refine efforts to maximise both customer satisfaction and business performance.

Curious about how to get the most out of your Google Analytics 4 setup? Whether it’s refining your reports or unlocking deeper insights into your users, we’re here to help. Reach out to us and let’s start a conversation today!