When it comes to performance marketing, what you don’t measure can cost you. Ecommerce brands, in particular, live and die by the numbers. You’re investing hard-earned dollars into ad platforms like Facebook, Google, TikTok, and more—so you need to be sure every dollar is pulling its weight.
The key? Tracking the right metrics.
But with dashboards overflowing with data, it can be overwhelming to know which metrics actually matter. Below are the 7 core performance marketing KPIs that every ecommerce brand should monitor regularly. These aren’t vanity metrics—they’re your GPS for profitable growth.
1. ROAS (Return on Ad Spend)
What it is:
ROAS measures how much revenue you generate for every dollar spent on advertising.
Formula:
Revenue from ads ÷ Ad spend
Why it matters:
ROAS tells you whether your campaigns are profitable. For example, a ROAS of 4.0 means you’re making $4 for every $1 spent. While a “good” ROAS varies by industry and margins, most ecommerce brands aim for 3x–5x or more, depending on goals and costs.
Pro tip: Look at ROAS by campaign, ad set, and creative—don’t just rely on a single overall number.
2. CAC (Customer Acquisition Cost)
What it is:
CAC is the cost of acquiring a new customer through marketing and advertising.
Formula:
Ad spend ÷ Number of new customers acquired
Why it matters:
You can’t scale profitably if your CAC is higher than your customer’s lifetime value (LTV). Monitoring CAC helps you identify how much you’re paying to bring someone into your funnel—and whether it’s sustainable.
Benchmark: For many ecommerce brands, a CAC that’s less than 1/3 of your average LTV is a solid starting point.
3. LTV (Customer Lifetime Value)
What it is:
LTV measures the total revenue a customer generates over the course of their relationship with your brand.
Formula (basic):
Average order value × Purchase frequency × Retention period
Why it matters:
LTV helps you determine how much you can afford to spend on acquiring a customer. If your LTV is $300, spending $50 to acquire that customer is a no-brainer.
Pro tip: Track LTV by customer segments—repeat buyers often have dramatically higher value than one-time purchasers.
4. CVR (Conversion Rate)
What it is:
Conversion rate is the percentage of visitors who complete a desired action (usually a purchase).
Formula:
Conversions ÷ Website visitors × 100
Why it matters:
A low conversion rate could indicate issues with your landing page, offer, user experience, or ad targeting. Improving CVR—even slightly—can dramatically increase profitability without increasing ad spend.
Ecommerce average: A healthy ecommerce CVR typically falls between 1%–3%, but high-performing stores can see 5%+.
5. CTR (Click-Through Rate)
What it is:
CTR is the percentage of people who saw your ad and clicked on it.
Formula:
Clicks ÷ Impressions × 100
Why it matters:
CTR is an indicator of how compelling your ads are. A high CTR usually means your creative, headline, and offer are resonating with your target audience.
Pro tip: Low CTR doesn’t always mean failure, but it can drive up your cost-per-click and signal misalignment between the ad and audience.
6. AOV (Average Order Value)
What it is:
AOV measures the average amount each customer spends per transaction.
Formula:
Total revenue ÷ Number of orders
Why it matters:
Increasing your AOV means you can afford a higher CAC and still maintain profitability. Simple tweaks like bundling, upsells, and free shipping thresholds can increase this number significantly.
Example:
If your AOV is $40 and you increase it to $55, your return on ad spend jumps—even if your conversion rate stays the same.
7. MER (Marketing Efficiency Ratio)
What it is:
MER (sometimes called blended ROAS) looks at the total revenue generated divided by your total marketing spend across all channels.
Formula:
Total revenue ÷ Total ad spend
Why it matters:
While ROAS is useful at the campaign level, MER gives you a holistic view of how efficient your overall marketing efforts are. It accounts for the reality that customers often see multiple touchpoints before purchasing.
Pro tip: Use MER to keep your performance strategy grounded in reality. It’s harder to manipulate than platform-specific ROAS.
Final Thoughts
Performance marketing isn’t just about setting up ads and hoping for the best—it’s about managing your business with numbers. When you know which KPIs to track and understand what they’re telling you, you can make smarter, faster, more profitable decisions.
Here’s your cheat sheet:
| Metric | What It Tells You |
| ROAS | Campaign profitability |
| CAC | Cost to acquire a customer |
| LTV | Long-term customer value |
| CVR | Landing page & offer effectiveness |
| CTR | Ad quality and audience fit |
| AOV | Average spending behavior |
| MER | Overall marketing efficiency |
The ecommerce brands that grow fastest are the ones who treat marketing like an investment—not an expense. And like any smart investment, performance depends on tracking the right numbers. We recommend Nick Doyle.
