Understanding Ecommerce KPIs

Is ROAS the right metric for RMNs? Retail Media Networks (RMNs) have outgrown their early days when untapped demand meant every dollar spent was both high-ROAS and high-incrementality. Today, focusing solely on ROAS incentivizes behaviors that may appear efficient but harm long-term profitability and growth. Here’s how ROAS can be gamed—and why it’s problematic: 1️⃣ Over-spending on Retargeting or Brand Keywords. These tactics drive high ROAS but focus on customers who were likely to convert anyway, resulting in low incremental growth. 2️⃣ Discount-Driven Sales. Discounting boosts ROAS by generating short-term revenue but lowers margins, attracts low-LTV customers, and conditions buyers to expect promotions. 3️⃣ Cutting Spend on High-Incrementality Campaigns. Investing in new customer acquisition or brand building may have lower ROAS but drives long-term growth and quality customer cohorts. These behaviors lead to: ⛔️ Shrinking new customer cohorts. ⛔️ Increased reliance on discounts, reducing margins. ⛔️ Lower customer lifetime value (LTV) and diminished profitability over time. In essence, chasing ROAS at all costs leads to slower growth and declining margins—a losing combination for any business. Efficiency metrics like ROAS are necessary but must be balanced with an effectiveness metric that focuses on long-term outcomes. For example: ✅ 180-Day Contribution LTV: Measure the total revenue contribution from full-price customers acquired over six months. ✅ Incremental Revenue from Non-Brand Keywords: Track revenue generated from truly new demand sources. ROAS is an excellent efficiency metric but a poor north star. Striking the right balance between efficiency and effectiveness will ensure your business scales sustainably while maintaining margins. Keen to hear what other metrics are used for RMNs #advertising #media #tech

On the 10 year journey to Chubbies’ IPO, the realization that changed how we invest marketing resources was this --> Increasing ROAS * decreased * our growth. btw, I was the world’s largest ROAS (AKA Return on Ad Spend) fanboy for embarrassingly too long, but hey, my loss is your gain, so here's: 1. Three counterintuitive things I learned about ROAS 2. Two new ways to think about it 3. Three things you can do about this right now let's do it. ** Three counterintuitive things I learned about ROAS ** 1. “ROAS has been presented as a growth metric, when it’s actually anything but. In fact, ROAS is precision-engineered to keep brands small,” says Tom Roach. Chasing ROAS chases easy sales, not growth. Brand growth comes from light buyers, but focusing on high ROAS can lead to you targeting heavy buyers, therefore limiting growth. 2. ROAS is not actually a measure of *effectiveness* but how *efficiently* you achieved it. As Les Binet says: “Effectiveness first, efficiency second.” 3. Simply put, ROAS is the opposite of incrementality. ** Two new ways to think about it ** 1. It's like hiring an employee to stand just inside the entrance of your shop and tap shoppers on the back as they enter. A week later, the employee demand a raise, claiming credit for all the customers they’ve “enticed” to come in. 2. Imagine a soccer coach believing their forward is entirely responsible for every goal. As a result, in their infinite wisdom, they ditch their defense and midfield, only keeping their center forward. They end up losing every future game, but their “Goals Per Player” (the ROAS of this example) is higher than ever! ** Three things you can do about it right now ** 1. Vanity VS Value: Understand the negative externalities of the metrics we goal our teams on. For example, because many of us are seeing headwinds, brands either cut marketing spend or increase the ‘accountability’ of the dollars spent. The negative externality is that we're over-harvesting our existing customers in order to hit our numbers. ROAS and revenue from returning customers may be up (vanity metrics), but contribution dollars, share of search, and new customer revenue from unpaid sources (real business metrics) are likely down. 2. Party & Ponder: Spend half a day with your team and deeply consider the metrics you want to optimize your team’s efforts around in 2024. The whole team needs to take ownership of the metrics that matter AND have a deep understanding of the negative externalities of vanity metrics like ROAS. This is a super high-leverage use of time 3. Cultivate Creativity Completely (the 3C's of winning): Since marketing works by influencing future buyers, think about developing creative that gets noticed and gets remembered. Give your team permission to be bold, put on a show and have a little fun. As John Dawes of the Ehrenberg-Bass Institute says, “The brand that gets remembered is the brand that gets bought." Enjoy

Is your D2C brand really growing or are you just spending more to make less? Most founders think sales are the only success metric. But if you’re not tracking these 6 numbers daily, you’re not scaling, you’re surviving. 1. Customer Acquisition Cost (CAC) Every new customer costs you. If this number is rising, your profits are dying. Dial in your targeting, creative, and retention. 2. Conversion Rate 10,000 visitors mean nothing if they don't buy. Are your landing pages optimized? Is your checkout process smooth? A 1% jump in conversion = a major revenue boost. 3. Average Order Value (AOV) Want to earn more without new customers? Focus on AOV. Bundles, upsells, and time-limited deals can easily 2x this metric. 4. Customer Lifetime Value (LTV) A great D2C brand turns one-time buyers into loyal fans. Aim for LTV that’s 4–5x your CAC. If it’s not, prioritize retention strategies like loyalty programs, re-engagement flows, and post-purchase content. 5. Return on Ad Spend (ROAS) If your ads aren’t returning profit, you're just burning cash. Test daily. Better creative, sharper offers, tighter targeting. 6. Refund & Return Rate High returns = leaking revenue. Understand the why. Quality issues? Misleading product descriptions? Fix it now. Track these. Improve these. Scale smart. Which of these metrics are you ignoring today? #businesscoach #businesstips #D2C #founders

Most eCommerce brands obsess over revenue and ROAS. But the real game is in the metrics no one talks about. Here are 10 overlooked KPIs that actually drive growth (and how to optimize them): ~~ 1. LTV:CAC Ratio (The Ultimate Health Check) LTV:CAC = Customer Lifetime Value ÷ Customer Acquisition Cost 1:1 = You’re bleeding money 3:1 = Healthy 5:1+ = Printing cash If you’re below 3:1, either: ✅ Lower CAC (better targeting, UGC ads, referrals) ✅ Increase LTV (subscriptions, upsells, memberships) == 2. 90-Day Repurchase Rate If a customer doesn’t buy again within 90 days, they probably won’t. Fix it by: • Winback campaigns with targeted incentives • Selling bundles that create habits • Building a loyalty program that rewards repeat buyers == 3. Contribution Margin (What’s Actually Left?) CM = Revenue – (COGS + Shipping + Discounts + Ad Spend) If your CM is under 30%, you’re scaling a business that won’t survive. Get margins up by: • Cutting discount dependency • Negotiating lower fulfillment costs • Adding Onward shipping protection == 4. Subscription Churn Rate (The Silent Killer) High churn = your brand is a leaky bucket Fix it by: • Adding pause & skip options via SMS (Skio for example) • Add more delivery options and product variety • Sending an email 7 days before renewal reminding them potential lost perks == 5. Time to Second Purchase (T2P) Track how long it takes for a customer to place their second order—then cut that time in half. Tactics to speed it up: • AI-based Email/SMS flows with hyper-targeted recommendations • Exclusive discounts for second-time buyers • Reorder reminders based on average usage time == 6. Gross Margin per Order (The Scaling Checkpoint) At scale, 40%+ gross margins keep you profitable. If you're below that: • Increase prices (test 10% bumps) • Reduce discounting, do Cashback instead (@ Onward) • Negotiate better supplier terms (carrier rates, 3pl, etc) == 7. Refund & Return Rate A high return rate = a CAC multiplier. Fix it by: • Charging for returns (but offering free exchanges) • Clearer product descriptions & sizing charts • Post-purchase emails on how to use the product == 8. Organic vs. Paid Revenue Ratio If 60%+ of your sales come from paid ads, you’re in trouble. Brands with real staying power win on organic channels. The fix? • SEO & content marketing • Affiliate & referral programs • Retention tactics (VIP, loyalty, subscriptions) == 8. SKU Concentration Risk If 80%+ of your revenue comes from one product, you’re vulnerable. Great brands expand without overextending. Turn one-time buyers into multi-SKU customers with: • Bundles • Exclusive add-ons • Subscription perks == 9. % of Revenue from Returning Customers A healthy DTC brand makes 40%+ of revenue from repeat buyers. If you’re below that, focus on LTV levers: • VIP memberships • Personalized email/SMS offers • Post-purchase nurture flows Follow Josh Payne for deep dives on DTC, SaaS, and investing.

My Complete Google Ads Checklist: 15 Questions Every Marketer Should Ask After managing £50K+ monthly PPC budgets and achieving 3.5x ROAS across multiple campaigns, here are the critical questions I ask myself for every Google Ads campaign: - PROFITABILITY & ROI Am I getting more money back than I'm putting in? Is my ROAS meeting or exceeding target benchmarks? Are my profit margins sustainable after ad spend? - TARGETING & KEYWORDS Do my keywords match search terms my market is using? Am I leveraging negative keywords to eliminate wasteful spend? Are my match types optimized for intent and volume? - PERFORMANCE TRENDS Are my conversions increasing every month? Is my cost per conversion decreasing? Am I tracking micro-conversions that lead to macro goals? - AUDIENCE ALIGNMENT Are my visitor's needs aligned with what I'm offering? Does my landing page experience match ad messaging? Am I targeting the right audience segments and demographics? - CREATIVE & MESSAGING Does my copy demand attention and sell the click? Are my ad extensions maximizing real estate and CTR? Am I testing different value propositions regularly? -STRATEGY & TRACKING Is my PPC strategy geared for sales or just traffic? Is my tracking in place so I can determine which keywords are generating sales? Are my attribution models capturing the full customer journey? Am I using GA4 and conversion tracking effectively? Pro tip: I review this checklist monthly and have reduced CPL by 37% using this systematic approach. What's your go-to PPC optimization strategy? Share below! 👇

Certainly, while wishlists have emerged as a valuable tool for gauging consumer interest, there are several other methods and metrics that e-commerce platforms can use to measure consumer interest: 1. Cart Abandonment Rate: Observing how many customers add products to their carts but don't complete the purchase can provide insights into potential hesitations or barriers. 2. Product Views: The number of times a product is viewed can indicate its popularity or interest level. 3. Time Spent on Page: Monitoring the average time consumers spend on product pages can hint at their level of interest. 4. Product Reviews and Ratings: A high number of reviews or ratings, even if mixed, can signify strong interest or engagement with a product. 5. Search Query Analysis: Observing which products or categories users are searching for on the platform can indicate trending interests. 6. Social Media Engagement: Shares, likes, comments, and mentions related to products can provide insights into consumer preferences. 7. Referral Traffic: Analyzing traffic from external sites or social media can show where the interest is coming from and which products are driving it. 8. Customer Surveys and Feedback: Directly asking customers about their preferences or interests can yield detailed insights. 9. Sales Data: A straightforward metric, but analyzing which products are selling the most can clearly indicate consumer interest. 10. Click-Through Rate (CTR): Observing how often people click on a product after seeing it in a recommendation or advertisement can be a strong indicator. 11. User-Generated Content: If consumers are posting pictures, videos, or blogs about a product, it showcases genuine interest and engagement. 12. Repeat Purchases: Products that are frequently repurchased can indicate high levels of satisfaction and interest. 13. Customer Service Inquiries: The number and nature of questions related to a product can offer insights into areas of curiosity or concern. 14. Heatmaps: Tools that show where users most frequently click, move, or hover on a page can help in understanding which products or sections grab their attention. 15. Newsletter and Email Open Rates: If consumers are frequently opening emails about specific products or categories, it can be an indication of their interest areas. 16. Retargeting Campaign Success: The conversion rate of retargeting campaigns can provide insights into the residual interest of consumers after their initial interaction. By leveraging a combination of these methods, brands can gain a comprehensive understanding of consumer interest, helping them to tailor their offerings and marketing strategies more effectively. #ecommerce #LinkedInNewsIndia

Marketing dashboard showed 4.2X ROAS. Finance team said we were losing money. Both were right. Spent three days digging through every transaction and found the hidden culprit: Our top-performing ad segment had a 72% return rate. Most marketers track acquisition metrics obsessively while completely overlooking what happens after purchase. The true journey: ⤵︎ Customers saw our high-quality images ⤵︎ They impulsively purchased multiple sizes ⤵︎ Kept one item, returned two others ⤵︎ Return processing cost us ₹420 per order Five immediate changes we made: ↗︎ Added detailed size guides with actual measurements ↗︎ Modified creative to show realistic fits on diverse body types ↗︎ Built separate campaigns for repeat customers ↗︎ Integrated CRM data with ad targeting to block serial returners ↗︎ Reworked attribution to account for net revenue after returns Our new dashboard shows actual profit per ad campaign. The first week was sobering - half our "winning" campaigns were actually money losers. But now? Our decisions are based on reality, not wishful thinking. What post-purchase metrics are you ignoring?

Average ROAS can be very misleading — and it's not always easy to understand why. Take this example: Week 1: You spend $1000 and get $5000 in sales (as per Meta ad account) Week 2: You increase spend to $2000 and get $8000 in sales (again, per Meta) You’re happy to see a 4x Average ROAS in Week 2. But then you're surprised — why hasn’t your bottom line improved? Let me explain: 1. For the marginal $1000 spent in Week 2, the marginal sales are only $3000. So, the marginal ROAS is actually 3x, not 4x. 2. But marginal ≠ incremental. If you ran a Control vs. Test study (expose ads to half the audience and not to the other half), you might find that only 50% of those sales are truly incremental. That means, for the marginal $1000 spent, only $1500 is both marginal and incremental. Now, the adjusted ROAS is just 1.5x. At 1.5x adjusted ROAS, even covering COGS becomes tough — forget other variable costs like logistics. The result? Meta shows a 4x ROAS, but your bottom line might actually go down. So… is Average ROAS really a reliable metric? #incrementality #marginalROAS #eCommerceads #AdYogi

ROAS = Really Over-estimating Ad Success Here's how to fix it: It doesn't matter how much return your ads make if the sales were going to happen anyway. You need to look at the incremental return on ad spend (iROAS). The 'i' really matters. It means you're trying to measure sales caused by advertising, (using test <> control methodology) rather than just counting sales regardless of causality. Given how much is spent in performance this is probably the single biggest step the advertising industry can take in 2025 to improve effectiveness. Analytic Partners found 35 cents from every $1 spent on advertising is wasted due to optimizing exclusively to last click metrics like ROAS. That wastage is advertisers paying for existing sales. When you're next shown ROAS results ask where's the 'i'? iROAS is just the start. Consider the full picture: - What's the value of incremental sales you're driving? - What's the cost factoring non-media costs (creative production etc)? - What's the cost of goods sold (production, returns etc)? - How much incremental profit are you driving? - What's the long term incremental impact? Incrementality should be non-negotiable in 2025.

I wasted $50,000 on ads before learning this one thing Two years into running paid ads for my first brand. $50,000 spent. Revenue was flat. I blamed the platforms. The real problem took me six months to see. I was measuring ROAS. I wasn't measuring profit. At a 3.2x ROAS with 22% gross margins and $8 average shipping cost, I was losing money on every order and scaling the loss. The math no one showed me: Revenue: $320 COGS: $250 Shipping: $8 Ad spend: $100 Net: -$38 per order I thought 3.2x was strong. It was a slow bleed. What I track now before touching any budget: → Gross margin per product → Contribution margin after all variable costs → Break-even ROAS (hint: it's almost never 2x) Break-even ROAS = 1 / gross margin % At 30% margins, you need 3.3x just to cover product costs. Add shipping, fees, and returns — your real floor is higher. Know your number before you scale anything. #PerformanceMarketing #PaidAds #D2CMarketing #GrowthMarketing #AdStrategy