Guide
Marketing metrics cheat sheet
The funnel, acquisition and retention metrics you will meet in marketing classes and interviews, with formulas and worked numbers.
All examples use a fictional D2C skincare brand. The numbers are illustrative.
Funnel metrics
| Metric | Formula | Example |
|---|---|---|
| Click-through rate (CTR) | clicks ÷ impressions | 2,000 ÷ 1,00,000 = 2% |
| Conversion rate | orders ÷ visitors | 60 ÷ 2,000 = 3% |
| Cost per click (CPC) | ad spend ÷ clicks | ₹40,000 ÷ 2,000 = ₹20 |
| Cost per acquisition (CPA) | ad spend ÷ orders (or sign-ups) | ₹40,000 ÷ 60 ≈ ₹667 |
A funnel is only as strong as its weakest step. Before spending more on ads, check whether the problem is reaching people (CTR) or convincing them once they arrive (conversion rate).
Return on spend
| Metric | Formula | Example |
|---|---|---|
| ROAS | revenue from ads ÷ ad spend | ₹1,20,000 ÷ ₹40,000 = 3× |
| Marketing ROI | (gross profit from campaign − spend) ÷ spend | (₹72,000 − ₹40,000) ÷ ₹40,000 = 80% |
A ROAS above 1× does not mean a campaign is profitable. If gross margin is 60%, the ₹1,20,000 of revenue above produces ₹72,000 of gross profit — profitable, but by much less than ROAS suggests.
Customer economics
| Metric | Formula | Example |
|---|---|---|
| Customer acquisition cost (CAC) | total sales and marketing spend ÷ new customers | ₹5,00,000 ÷ 1,000 = ₹500 |
| Average order value (AOV) | revenue ÷ orders | ₹6,00,000 ÷ 2,400 = ₹250 |
| Purchase frequency | orders ÷ unique customers (per year) | 2,400 ÷ 1,000 = 2.4 |
| Lifetime value (LTV), simple | AOV × gross margin × orders per year × years retained | ₹250 × 60% × 2.4 × 2 = ₹720 |
| LTV : CAC | LTV ÷ CAC | ₹720 ÷ ₹500 = 1.44 |
There is no universal "right" LTV-to-CAC ratio, but a ratio close to 1 means each customer barely pays back what it cost to acquire them — before counting any other costs.
Retention
| Metric | Formula |
|---|---|
| Retention rate | customers at end of period who were also customers at the start ÷ customers at start |
| Churn rate | 1 − retention rate |
| Repeat purchase rate | customers with 2+ orders ÷ all customers |
Which metric answers which question
- Are people noticing us? Impressions, reach, CTR.
- Are they convinced? Conversion rate, CPA.
- Is the spend paying back? ROAS, then marketing ROI.
- Is growth profitable? CAC, LTV and LTV : CAC.
- Do customers stay? Retention, churn, repeat purchase rate.