Your core numbers: cost, demand and profit

Marketing without numbers is expensive guessing. You do not need a complicated dashboard, just six numbers you understand well and review every week.

The six numbers

• Average order value (AOV): Total sales divided by the number of orders.
• Conversion rate: The share of store visitors who buy.
• Customer acquisition cost (CAC): What you spent on marketing divided by the number of new customers.
• Order margin: The order price minus product cost, shipping, packaging and payment fees, before advertising.
• Repeat purchase rate: The share of customers who buy a second time.
• Break even ROAS: Average order value divided by order margin.

An illustrative example with made up numbers

Average order 60, product cost 20, shipping and packaging 6, payment fees 2. Order margin = 60 – 20 – 6 – 2 = 32. Break even = 60 ÷ 32 = about 1.9, meaning every 1 you spend on ads must bring back about 1.9 in sales so you do not lose on the first order. If your acquisition cost is 25, the profit from the first order is 32 – 25 = 7.

Why repeat purchase matters

A customer who buys a second time costs you no new acquisition, so your profit from them rises. That is why a whole module is about keeping customers.

Exercise

Open the marketing metrics calculator template and fill in your real numbers or your estimates. Work out the order margin and the break even point, and write both on a note beside your desk.