The Ultimate Guide To Finding Your Best Customers & Most Profitable Traffic Sources
October 24, 2019
How amazing would it be if you could see the exact lifetime customer value (LCV) of your members based upon the traffic source or marketing channel that brought them to your website and converted them into a customer?
For instance, suppose you know that people who sign up for your membership by means of an email campaign have an LCV of $100 and those who sign up via your Facebook ads have an LCV of $50.
That would be some good information to have, right?
Let’s take it a step further and assume that you’re spending $60 to acquire a customer on Facebook but only $10 to acquire a customer via email. Even though the average lifetime customer value of these two categories combined is $75 ($50 + $100 / 2 = $75), you are overspending for customer acquisition on Facebook and potentially neglecting opportunities through email.
Can you see how this sort of insight might change the way you market and promote your business? Once you know that people who come to you via email are worth twice as much as those who sign up via Facebook, it would make a lot of sense to double down on the more profitable marketing channel.
By now, you’re probably thinking, “Can’t I just get this information from Google Analytics or my advertising platform?”
If you’re just selling products with a single payment and only care about the value of the initial sale, then the answer is essentially, yes. On the other hand, if you’re selling a membership where you’ll be collecting payments on a recurring basis (monthly, quarterly, etc.) or you want to track the LCV of a customer over time (after the initial sales takes place), then the answer is, no.
With a recurring revenue business model, you collect payments on an ongoing basis. The initial sale is the beginning of a (hopefully) long-term relationship that will result in many ongoing payments. Consequently, someone who sticks with you for 12 months will have a significantly higher LCV than a member who pays you for one month and then cancels.
This is where a major blind spot exists between platforms like Google Analytics, the Facebook Ads Manager, and a payment processor like Stripe. Collectively, they can tell you how much you’ve spent, the number of people who have reached a certain goal, and the amount of money you’ve made. But when it comes to actually tracking the value of your members over time (based upon the different marketing channels you use), these tools turn up empty handed.
That’s why in this blog post, we’ll teach you a step-by-step process you can use to track the lifetime customer value of your members based upon a particular traffic source or marketing channel. Learning how to do this and implementing it in your business is so important because unless you have a reliable way to track your customer acquisition cost to lifetime customer value ratio (CAC:LCV), you run the risk of overspending on unprofitable marketing channels – thus paying more to acquire a customer then they are ultimately worth to your business.
The Blind Spot Between Google Analytics And Your Payment Processor
If you’re like most online business owners, you have Google Analytics integrated with your site and use at least one payment processor (Stripe, PayPal, etc.).
Google Analytics is an incredibly powerful tool and can give you significant insight into practically everything related to your website, visitors, and traffic sources. Even though you can track conversions and assign monetary values to their completion, once those conversions are achieved, it becomes increasingly difficult to acquire accurate information about the specific behavior of your members on a user-by-user basis. What pages did they view? Have they visited your forum yet? Were they billed for their second month? Answers to questions like these don’t come easy. This is especially true when it comes to monitoring the value of your different traffic sources over time.
A similar situation applies to your payment processor. Yes, you can get important business metrics like Gross Volume, New Customers, and Average Revenue Per Customer from the Stripe dashboard. However, using these metrics to understand the nuances of your true LCV is risky at best. If you have multiple membership levels, different pricing options, and a wide variety of products, the data available from a payment processor like Stripe can be a bit muddy. Not to mention how each of these perform across all your marketing channels and traffic sources. If you want to grow your business the smart way, you need exact numbers, not a best guess.
This is where the MemberMouse Affiliate/Traffic Source Tracking and Advanced Reporting Suite come into play.
The Solution: An Affiliate/Traffic Source Tracking System
Remember, the purpose of this post is to show you how to put a system in place for your membership business that will enable you to track the lifetime value of your members based upon the traffic source that brought them to your business and converted them into a customer.
The key to doing this is to design and use links that pass specific information about their associated referral sources to MemberMouse. When all is said and done, your links will look something like this:
Don’t worry if you don’t understand the design of this link just yet. We will explain its anatomy in detail and outline a process you can use to easily create them for yourself later in this guide. The important thing to understand right now is that by actually using this link to send people to your site, you are passing information about the referring traffic source to MemberMouse.
When someone clicks this link and lands on your site, MemberMouse will store this information in a cookie for any length of time you specify (see Lifespan in the image below). Once someone makes a purchase on your site, this information will then be entered into the database and associated with a member. As long as the cookie is still active when someone makes a purchase, it will be associated and documented in their account.
For now, let’s turn our attention to our Affiliate Tracking Settings and see how all of this works:
Important Note: Here, in addition to the standard use of the word, “affiliate”, we also use it to refer to any traffic source or marketing channel.
The way to pass traffic source and marketing channel information to MemberMouse is to add affiliate and sub-affiliate keywords to the end of the links you use to market your membership site. As you can see in the above image, you have a few options for how to do this.
By default, you can use affid and sid at the end of your links to pass both the primary affiliate and sub-affiliate information to MemberMouse. You also have the option to create affiliate and sub-affiliate keyword aliases. This is nice because it gives you complete flexibility in the way your links look. It can also be helpful to you as you organize and categorize all of your referring links.
For example, given the configuration above, these two links would pass the same information to MemberMouse:
Both links would tell MemberMouse that the traffic source was Facebook and the specific ad was Ad1. Whether you want to use the default affid & sid keywords or create your own unique keywords is entirely up to you.
Now, anytime someone buys one of your memberships or pays for one of your products after being referred to your site by one of these links, it will be recorded in MemberMouse. Once this information is recorded, you will be able to run reports that show you which traffic sources are yielding you the best results financially.
At this point, it will be helpful to look at a real-life example.
How Traffic Source Tracking Works In Real Life
In this section, we’ll show you how to use traffic source tracking to monitor the long-term results of different traffic sources and marketing channels.
Let’s assume that you use three marketing channels to promote your membership — Facebook Ads, Google Ads, and Email Marketing — and you want to track the long-term performance of these three traffic sources. Meaning, you want the ability to look back in 3, 6, or 12 months’ time to see which of these channels resulted in acquiring customers with the highest lifetime customer value.
As you’re creating different campaigns, you would create links to pass specific information to MemberMouse about each marketing channel. When someone clicks on one of these links to go to your site and makes a purchase, MemberMouse will automatically record this information and make it available in the Advanced Reporting Suite.
In the following examples, we’re going to show you a number of different styles of links. Don’t worry if they don’t make perfect sense yet. We’ll show you everything that goes into creating these links a bit later in the post.
Exhibit A: Multiple Source Channels
For this example, let’s say that you’re running one campaign per channel with the objective of getting someone to sign up for your membership. You would then create three unique links for each channel that look something like this:
To emphasize, these are the exact links you would use when you create your campaign in the Facebook Ads Manager, Google Ads Platform, or email marketing tool like Mailchimp or ActiveCampaign. As you can see, each link corresponds to its respective channel.
After your ads and emails go live, let’s assume that an equal number of people join your membership from each channel. The situation then plays out like this:
- The people who join via your Facebook Ad stay with your membership for one month
- The people who join via your Google Ad stay with your membership for three months
- And the people who join via your Email Campaign stay with you for one year
If your membership is $25 per month, there will be a huge difference in the average lifetime customer value for each respective marketing channel:
- The customers from Facebook have an LCV of $25
- The customers from Google have an LCV of $75
- The customers from Email have an LCV of $300
With this information, you now know that people who sign up from your Email campaign stick around for the long-haul. And, your members who sign up from Facebook are quick to quit your program. Think about the implications of this knowledge. This could fundamentally change the way you market your membership.
This is where things come full circle. Remember how we talked about the importance of knowing your true customer acquisition cost to lifetime customer value ratio (CAC:LCV)? This is why it matters so much. Imagine that the amount you spend per channel is inversely proportional to the results:
- You spend $300 on Facebook Ads to acquire a customer with an LCV of $25
- You spend $75 on Google Ads to acquire a customer with an LCV of $75
- You spend $25 on an email campaign to acquire a customer with an LCV of $300
With this information, you can clearly see that Facebook is an unprofitable marketing channel for you and email is a wildly effective in converting your best members. Wouldn’t it make sense to turn off the Facebook ads and triple down on your email efforts?
We think so!
Of course, this is an oversimplified example for the purpose of illustrating a point. In the real world, there are so many variables at play that could create this sort of disparity: your copy, offer, audience targeting, etc. The key thing to understand here is that unless you have a way to know where your most profitable customers are coming from, you can wind up wasting a lot of time, energy, and money on ineffective or unprofitable customer acquisition channels.
Merely knowing how much you spend on marketing and advertising per month and dividing that by your average lifetime customer value is not enough. To intelligently grow your business, you must be able to track the long-term results of all your marketing channels.
And not to sound like a broken record, but this system can be used anywhere you use links. While we looked at an example with three specific marketing channels (Facebook, Google, Email), you can realistically create these types of links to track any and all of your traffic sources. The implications of this are just as significant when applied to a single marketing channel as well.
Exhibit B: 3 Facebook Ads Compared
Let’s take a look at how this can be applied to a single marketing channel: Facebook Ads. Here, we’ll show you the power of sub-affiliate tracking. Instead of looking at the results of Facebook Ads in general, you can track the outcomes of specific ads. Yes, this means you can see the lifetime customer value connected to one specific ad.
Say that you’re running three different ads, all with the objective of converting someone into a paying member. You would create three distinct links that look like this:
As you can see in the above links, the primary marketing channel (src) is defined as Facebook. And, the sub-affiliate (ad) values correspond with your three different ads (Ad1, Ad2, & Ad3).
Going back to our example, imagine that these ads give you the following results:
- Ad1 customers have an LCV of $25
- Ad2 customers have an LCV of $75
- Ad3 customers have an LCV of $300
Assuming that you spent the same amount of money on each ad set, once you can connect an exact lifetime customer value to a specific ad, it would only make sense to turn off the ads that are underperforming.
By now, you might be thinking, “Wait, can’t I just get this information from the Facebook ads manager?”
Well, not exactly.
Facebook does report on the results of your ads. It will only tell you if someone has achieved a certain conversion objective. Once someone crosses the finish line you’ve defined, Facebook’s work is done. Remember, with membership sites or subscription business you’re collecting payments on a recurring basis. So, the conversion results you’re getting from the Facebook Ads manager or Google Analytics only apply to the first payment.
Without a system in place to track what happens after this, you’re left in the dark about the lifetime customer value of your members who bought as a result of this ad. We can’t overemphasize how important it is to have another system in place to begin tracking what happens after someone first joins your membership.
However, with the traffic source tracking system we’re sharing with you in this post, you will be able to not only identify which of your ads are most profitable in the short term – meaning, resulted in the most sales – you’ll be able to track the lifetime customer value of your members based on the specific ad that brought them to your site in the first place. And the best part is that it doesn’t matter which page someone lands on. MemberMouse will store this data in a cookie for any period of time you specify.
How To Set This Up On Your Site (Step-By-Step)
Up to this point, we’ve covered the concepts and theory behind traffic source tracking for your membership site. You now know what it is and why it’s important. From here, we’ll get into the brass tacks and show you how to set this up on your site. After you read this section, you’ll be able to start collecting this vital information immediately.
To get started, the first thing you need to do is to configure your affiliate tracking settings. To do this, go to the Affiliate Settings section of your MemberMouse Dashboard and click on the Tracking Settings button.
As you’ll see, the default affiliate keyword is affid and the default sub-affiliate keyword is sid. You can use these default keywords to create your links. Or, you can create affiliate keyword aliases to get more specific about your different traffic sources.
In the image below, you’ll see that I’m using src as my affiliate keyword alias. And, I’m using ad, email, and post as my sub-affiliate keyword aliases.
Now, let’s take a look at the anatomy of an affiliate tracking link and how to create them:
Let’s stick with our example and say that the URL to your site is:
Next, let’s suppose that you’re running Facebook ads and want to track the lifetime customer value of the people who join your membership site based upon the ad that brought them to your site.
To do this, you would define Facebook as the primary affiliate and your specific ads as the sub-affiliate. It’s important to note that as you’re creating these links, you can choose any words or abbreviations you want to define the affiliate keyword or alias (affid, src, etc.) and the sub-affiliate keyword or alias (sid, ad, etc.). But, keep in mind that you will want to be consistent with your naming rules. For example, you wouldn’t want to use the full word Facebook in one URL and the abbreviation FB in another. Stick with one naming convention to keep your reports nice, clean, and organized.
Next, to add this tracking information onto the URL itself, you would add this onto the end of your URL:
This then defines Facebook as the traffic channel. You could leave it at that and have MemberMouse track the performance of Facebook in general as a referral channel. However, you’d be missing out on a huge opportunity: the opportunity to track things down to the sub-affiliate (in this case, the ad) level.
From there, you would add the sub-affiliate information to the end of the URL:
Now we have a complete affiliate/traffic source link. This is the exact type of link you would use in a Facebook ad. Once someone clicks on your ad and makes a purchase, the information from the link will be passed and stored in MemberMouse. Then, it will be available in your Channel Sales, Quick Average, and Lifetime Customer Value reports.
What this means is that you will be able to track the results of this ad as the days, months, and years go by. This is such powerful information because without it, you would essentially be guessing. However, with this system, you can know precisely where your best customers are coming from.
Now that you know the What, Why, and How of traffic source tracking, it’s time to look at running reports that will organize this information in a way that’s meaningful to you and your business. For that, we turn our attention to the final piece of the puzzle: Advanced Reporting.
Advanced Reporting: Putting The Pieces Together
In this section, we’ll take a closer look at the different types of information you can get and reports you can run from our Advanced Reporting Suite now that you know how to create links that will pass specific information to MemberMouse.
With the affiliate and sub-affiliate information you now know how to pass to MemberMouse, there are three primary reports that track this data:
- Quick Average
- Channel Sales
- Customer Value
We’ll tackle these one by one and show you the type of insight you can gain from each report.
The simplest and easiest way to find your most profitable marketing channels is to run a Quick Average report. With this report, you can quickly see how much money you’ve made from all your different marketing channels. The Quick Average report divides the total amount of money you’ve made from a particular traffic source by the number of customers generated by that channel. This report is great because you can quickly find your most effective and profitable marketing channels.
The results can be organized by affiliate or sub-affiliate (based upon the parameters you define in your links), # of customers, total sales, and the simple average. Even though this may seem like a simple report, the insight you can get into your business is powerful.
With the Channel Sales report, you can get a high-level view of the total amount of money you’ve made per marketing channel. What’s great is that you can run this report for any date range you’d like to see. Whether you want to see how much revenue you’ve earned this month from Email Campaigns or a comparison of all your marketing channels for the year, this can be done in the Channel Sales report.
The way this information is displayed will depend on how you’ve named and mapped out your different affiliates/traffic sources. You’ll see a list of all the different traffic sources you’ve mapped out. Like this:
From there, you’ll get a 180-day report on the total amount of money made from each channel. Having this 6-month snapshot is really helpful in showing you where your best members are coming from.
This is the most robust and detailed report out of the three we’ve outlined in this post. And, it gives you the most specific information about the performance of your different marketing channels. It is in this report that you can track the lifetime value of your customers, subscribers, and members down to the sub-affiliate level. Yes, this means that you can see the LCV of your members based upon the ad, newsletter, or guest blog post that brought them to your site in the first place.
The Customer Value report displays the average customer value by affiliate (traffic source, marketing channel, etc.) or by membership level, for the given date range. You can choose any period of time to analyze – from a day, month, or the entire lifespan of your business.
This report is organized in a similar way to the two previous reports. All results will be sorted by the affiliates/traffic sources you define in your link construction (Facebook, Google, Email, etc.). You’ll also see the total number of customers each channel has brought to your business and a breakdown of the LCV from Day 0 to All-Time LCV.
If you have defined a sub-affiliate parameters (like a specific ad or newsletter name, etc.) you can drill down into the results by clicking on the affiliate ID. This will show you a list of all the sub-affiliate IDs associated with this particular referral channel (if any exist).
This report will give you the most detailed information about your different traffic sources. Once you have this information, you’ll know which of your acquisition channels are the most valuable. From there, you can accurately calculate your CAC:LCV ratio – down to the sub-affiliate level.
Now, we realize we’re membership geeks over here… but this type of information definitely deserves a mic drop.
Whew! We covered a lot of ground in this post. Thank you for sticking with us.
We hope that you’re now walking away with a system you can put in place in your business today. When you use what we’ve taught you, you will have a reliable way to know the exact value of all the different marketing channels you use.
If you have any questions or comments about the material we covered in this post, please leave us a comment below.
We’d love to hear from you.