E-commerce KPIs: how every number builds the next
ROAS is the number everyone talks about, but it’s the result of four other numbers, and it says nothing on its own about whether you make money. This guide takes the main e-commerce KPIs apart: what each one means, how they build on each other, and which ones tell you what stays in the bank.
What ROAS is made of
ROAS (return on ad spend) is revenue divided by ad spend. A ROAS of 3.0 means every euro in ads brought back three euros in revenue. But you can’t change ROAS directly: it’s the result of four numbers, each owned by a different part of the business.
The ROAS tree
How four numbers combine into one.
- CPM (cost per 1,000 impressions) is set by the auction: your audience, the season and how well the platform thinks your ad will perform.
- CTR (click-through rate) comes from the ad: the hook, the angle and the offer.
- Conversion rate comes from the page: the product page, the offer, trust and speed.
- AOV (average order value) comes from the offer: bundles, upsells and thresholds.
That’s why “our ROAS dropped” is never the diagnosis. The next question is always: which of the four moved?
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Small gains multiply
Because ROAS is a product of its parts, improvements don’t add up, they multiply. A better hook, a better page and a better offer, each 20% better, lift ROAS by 73%.
Three 20% gains, one 73% lift
What happens to ROAS when each part improves.
This is how we work: instead of squeezing one number, like pushing the ad account harder, we work on the offer, the ads and the page together. More on that in how we work.
ROAS isn’t profit
A ROAS of 3.0 sounds good. Whether it is depends on what’s left of each order before the ads are paid. Here’s where €100 of revenue goes:
What stays from €100
From order value to what’s left after ads.
Break-even ROAS
The ROAS where you break even is 1 divided by your margin before ads. In the example, €58 of every €100 is left before ads, so break-even ROAS is 1 ÷ 0.58 = 1.72. Below that, every order loses money. Above it, the difference is your profit.
| Margin before ads | Break-even ROAS | ROAS for 20% left after ads |
|---|---|---|
| 70% | 1.43 | 2.00 |
| 58% | 1.72 | 2.63 |
| 45% | 2.22 | 4.00 |
| 35% | 2.86 | 6.67 |
Two brands with the same ROAS can be in completely different places. At 3.0, a brand with 70% margin before ads is doing well; a brand with 35% is barely above zero. Our e-commerce calculator works this out for your numbers, including fixed costs.
ROAS, MER and CAC
Platform ROAS is what the ad account reports. It depends on tracking and attribution, so it often counts sales that would have happened anyway, and misses others.
MER (marketing efficiency ratio) is total store revenue divided by total ad spend, across all channels. It doesn’t care which ad got the credit, which makes it the more honest number for the business as a whole.
CAC (customer acquisition cost) is ad spend divided by new customers. CPA counts every purchase, including repeat buyers; CAC only counts first orders. When growth depends on new customers, CAC is the one to watch.
LTV and the LTV:CAC ratio
LTV (lifetime value) is the profit a customer brings over a set period, usually 12 or 24 months: AOV × orders per customer × margin. Use profit, not revenue. A customer worth €180 in revenue at 58% margin is worth €104 in LTV.
LTV:CAC compares that value with what the customer cost. A ratio around 3:1 is a common target: enough profit to pay for the business and grow. Much lower, and growth eats cash. Much higher can mean you’re spending too little and growing slower than you could.
When a customer pays back
Profit per customer over 24 months, against two different CACs.
The payback period matters as much as the ratio. A brand that earns back its CAC on the first order can grow as fast as it can find customers. A brand that needs four months has to fund those four months first. That’s why AOV, which makes the first order bigger, is often the fastest lever. See our AOV offers guide.
All the KPIs, in one table
18 e-commerce KPIs
What each one is, how it’s calculated and what moves it.
| KPI | Formula | What it tells you | What moves it |
|---|---|---|---|
| AdsCPM | Ad spend ÷ impressions × 1,000 | What the auction charges to show your ad | Audience, season, creative quality |
| AdsCTR | Clicks ÷ impressions | Whether the ad gets the right people to act | Hook, angle, offer in the ad |
| AdsCPC | CPM ÷ (CTR × 1,000) | What a visitor costs | CPM and CTR |
| AdsHook rate | 3-second plays ÷ impressions | Whether a video ad stops the scroll | The first frame, text and line |
| SiteConversion rate | Orders ÷ sessions (or clicks) | How well the page turns visitors into buyers | Product page, offer, trust, speed |
| SiteAOV | Revenue ÷ orders | How much each order is worth | Bundles, upsells, thresholds |
| SiteRevenue per visitor | Conversion rate × AOV | The single best CRO number | Everything on the site |
| EfficiencyCPA | Ad spend ÷ purchases | What one order costs in ads | CPC and conversion rate |
| EfficiencyROAS | Attributed revenue ÷ ad spend | Platform view of ad efficiency | CTR, conversion rate, AOV, CPM |
| EfficiencyBreak-even ROAS | 1 ÷ margin before ads | The ROAS where you break even | Prices, product and shipping costs |
| EfficiencyMER | Total revenue ÷ total ad spend | The blended view, independent of tracking | All channels together |
| CustomersCAC (new customer) | Ad spend ÷ new customers | What a new customer costs | Targeting, creative, offer |
| CustomersRepeat purchase rate | Customers with 2+ orders ÷ all customers | Whether people come back | Product, email, post-purchase |
| CustomersLTV | AOV × orders per customer × margin | Profit a customer brings over time | Repeat rate, AOV, margin |
| CustomersLTV:CAC | LTV ÷ CAC | Whether growth pays off | Both sides of the ratio |
| CustomersPayback period | Months until profit covers CAC | How long your cash is tied up | First-order profit, repeat speed |
| ProfitContribution margin | Revenue − product, shipping, fees, returns, ads | What each order earns | All of the above |
| ProfitNet profit | Contribution margin − fixed costs | What the business keeps | Everything |
Which KPIs to watch, and how often
- Daily: ad spend, CPA and ROAS per campaign, to catch problems early. Don’t make big decisions on one day of data.
- Weekly: CPM, CTR, conversion rate and AOV, to see which of the four is moving, plus MER and contribution margin for the whole store.
- Monthly: CAC, repeat purchase rate, LTV:CAC and payback, and net profit after fixed costs.
Common mistakes
- Judging ads by ROAS without knowing your break-even ROAS.
- Calculating LTV from revenue instead of profit.
- Trusting platform ROAS alone, without checking MER.
- Mixing new and returning customers in CAC, so it looks cheaper than it is.
- Forgetting returns, payment fees and VAT, which quietly eat the margin.
The short version
- ROAS = CTR × conversion rate × AOV × 1,000 ÷ CPM. When ROAS moves, find which of the four moved.
- Improvements multiply: three 20% gains lift ROAS by 73%.
- Break-even ROAS = 1 ÷ margin before ads. ROAS only means something next to it.
- MER shows the whole business; platform ROAS shows what the ad account claims.
- Calculate LTV from profit, aim for about 3:1 LTV:CAC and watch the payback period.
FAQ
How is ROAS calculated?
ROAS is revenue divided by ad spend. It can also be broken down as CTR × conversion rate × AOV × 1,000 ÷ CPM, which shows the four numbers that drive it: the ad (CTR), the page (conversion rate), the offer (AOV) and the auction (CPM).
What is break-even ROAS?
The ROAS at which an order makes zero profit after ads. It’s 1 divided by your margin before ads, where margin before ads is what’s left of the order value after VAT, returns, product cost, shipping and payment fees. At 58% margin, break-even ROAS is 1.72.
What is a good ROAS for e-commerce?
It depends on your margin. A good ROAS is one comfortably above your break-even ROAS. A brand with 70% margin before ads breaks even at 1.43; a brand with 35% needs 2.86 just to break even.
What is the difference between ROAS and MER?
ROAS is the revenue the ad platform attributes to its ads, divided by that platform’s spend. MER is total store revenue divided by total ad spend across all channels. MER doesn’t depend on tracking, so it’s the more reliable number for the whole business.
What is a good LTV to CAC ratio?
Around 3:1 is a common target, with LTV calculated from profit over 12 or 24 months. Lower means growth eats cash; much higher can mean you’re under-investing in growth. The payback period, how long until a customer’s profit covers their CAC, matters as much as the ratio.
What is the difference between CPA and CAC?
CPA is ad spend divided by all purchases, including repeat buyers. CAC is ad spend divided by new customers only. CAC is higher, and it shows the true cost of growth.