Metrics to Achieve Long-Term Revenue Growth

This Retail Metric Is Helping Publishers Achieve Long-Term Revenue Growth

Online retailers have been using the customer lifetime value metric to gauge the success of their retention strategies for years. Now, savvy digital publishers are getting on board with the same technique as they search for new ways to achieve long-term revenue growth.

The customer lifetime value (LTV) metric is a new one for many in the digital publishing industry. The metric is designed to measure the value of a customer to a business over the course of the relationship.

Rather than looking at customer interactions and purchases in a silo, ecommerce retailers figured out years ago that they would be able to see a more complete picture, and more easily achieve long-term revenue growth, if they looked at the value of a customer over the complete course of that customer’s relationship with the company.

Tracking the LTV of customers often results in retailers paying more attention to customers who buy a few items a month over a long period of time than customers who purchase just one item and then never return to the retailer’s online store. In the long run, businesses generate the most revenue from loyal customers who incrementally spend money over a period of years.

What does the LTV metric have to do with digital publishers looking to achieve long-term revenue growth?

As more publishers adjust their business strategies to include subscriptions and memberships programs, interest in tracking the long-term value of individual readers has grown.

A publication’s most loyal readers are also its most valuable. The longer that relationship continues, the less costly it becomes to serve that reader. Over time, loyal readers can also bring in new subscribers via referrals and social media “shares,” increasing the lifetime value that much more.

The push toward using LTV as a metric comes as publishers place less and less importance on page views. Page views were once thought to be one of the most important metrics for a publisher to track. But really, all a page view tells a publisher is how many people clicked on a particular article. A page view doesn’t offer any insights into how many people actually read the article, or where they came from, or whether they decided to subscribe after viewing a particular piece of content.

How Publishers Calculate LTV

How a publisher calculates the LTV metric depends on which channels or strategies he is using to achieve long-term revenue growth. The mix of subscriptions, memberships, types of advertising, and product sales (for example, selling images, videos, branded swag, or tickets to live events) will influence which key metrics make up the LTV.

In general terms, we like to see publishers combine the eCPM of each page type with the number of pages per visit, the amount of time spent on each page, and the number of repeat visits. When combined, these metrics should paint a clear picture of the true value of each visitor, giving publishers a way to identify which topics, themes, and features are bringing readers back and causing them to subscribe.

The New York Times employs an entire data team dedicated to understanding what makes casual readers decide to subscribe, and why long-time readers decide to cancel their subscriptions. The team looks at the behaviors leading up to conversions (when readers decide to subscribe). They have found that frequency breadth and depth are good signals that can predict when a reader will subscribe, helping the media organization achieve long-term revenue growth.

Knowing that the more frequently a visitor comes to the website the more likely he is to subscribe, the publisher has boosted its tactics for bringing casual readers back for more. One of the ways The New York Times does this is through email newsletters, which the publisher has found to be a highly successful in converting casual readers into subscribers.

A decrease in website visits and engagement can also be viewed as a warning sign that a reader is about the cancel his subscription. For example, someone who used to read seven articles a week and now reads just one or two is at a high risk of cancelling.

If you’d like to learn even more about how to convert readers into subscribers to achieve long-term revenue growth for your publication, then let’s chat.