02
Module 2 of 10
Performance Marketing Metrics
2.1Why metrics matter
A Performance Marketer is judged by numbers, not opinions. 'Ad achha lag raha hai' is not a report. 'CPA dropped from ₹480 to ₹310' is.
Samjho aise: Har funnel step ka ek number hota hai — impression se purchase tak.
2.2The money metrics
Revenue from ads ÷ Ad spend
₹50,000 ÷ ₹10,000 = 5x
(Profit − Total cost) ÷ Total cost × 100
Cost ₹40k, profit back ₹60k → 50%
Total revenue ÷ Total marketing spend
₹10L ÷ ₹2.5L = 4
1 ÷ Gross margin %
Margin 40% → 1 ÷ 0.4 = 2.5x
Samjho aise: ROAS 5x ka matlab ₹5 ka sale, ₹5 ka profit nahi! Product cost, shipping, RTO sab minus hoga.
2.3The cost metrics
CPA usually counts only ad spend. CAC is the bigger picture — salaries, tools, agency fees, everything spent to win a customer.
Ad spend ÷ Conversions
₹20,000 ÷ 50 orders = ₹400
Ad spend ÷ Leads
₹15,000 ÷ 100 leads = ₹150
Total sales + marketing cost ÷ New customers
₹1L ÷ 200 = ₹500
Ad spend ÷ Impressions × 1000
₹5,000 ÷ 2,00,000 × 1000 = ₹25
2.4Funnel metrics
Clicks ÷ Impressions × 100
500 ÷ 50,000 = 1%
Ad spend ÷ Clicks
₹5,000 ÷ 500 = ₹10
Conversions ÷ Clicks × 100
25 ÷ 500 = 5%
Revenue ÷ Number of orders
₹60,000 ÷ 50 = ₹1,200
2.5LTV — Lifetime Value
LTV = how much a customer is worth over the whole relationship, not just the first order.
LTV = AOV × Purchases per year × Years as customer
e.g. Skincare brand
- →AOV ₹800, buys 4 times a year, stays 2 years.
- →LTV = 800 × 4 × 2 = ₹6,400.
- →So paying ₹600 CAC on the first order is fine — even if the first order looks unprofitable.
Samjho aise: Healthy rule of thumb: LTV : CAC kam se kam 3 : 1 hona chahiye.
2.6RTO and returns — the hidden leak
RTO (Return to Origin) = the order went out but came back undelivered, mostly with COD. You paid for the ad, shipping both ways, and got zero revenue.
- Check RTO % by pincode/state — pause or exclude high-RTO locations.
- Push prepaid with a small discount.
- Confirm COD orders on WhatsApp/call before dispatch.
- Returns? Find the reason: size chart, quality, or the ad over-promised.
Try the formulas
ROAS
5x
revenue ÷ spend
CPA
₹250
spend ÷ orders
AOV
₹1,250
revenue ÷ orders
Break-even ROAS
2.5x
1 ÷ margin
Profitable on ads ✓
Gross profit after ad spend ≈ ₹10,000. Ab scaling socho.
Revision notes
- 1. ROAS is revenue, not profit. Always know your break-even ROAS.
- 2. CPA counts ad spend; CAC counts everything.
- 3. LTV tells you how much CAC you can afford.
Quick quiz
Score: 0/3
Q1.Spend ₹10,000, revenue ₹40,000. ROAS?
Q2.Gross margin is 50%. Break-even ROAS is…
Q3.Which metric includes salaries and tools?