If we open up google analytics of Facebook ads manager - we will be immersed in a sea of data points and sometimes when we take a dip, we get lost and coming back to look at the bigger sky becomes difficult.
In my personal experience being deep into too many metrics made me myopic to the overall business health.
To avoid getting lost in the sea we need to hold on to a few key metrics that keep the big picture clear.
1. Customer Acquisition Cost or CAC as we call on a daily basis, this is no doubt the most important metric and the majority of the effort goes into improving and decreasing it day by day. (Total Amount Spent/ Total New Customers Acquired)
2. AOV - Average Order Value, if it is less than the CAC there is a big problem. Always make sure that AOV is way below CAC unless it is a high repeat category with a high lifetime value per customer.
In my personal experience being deep into too many metrics made me myopic to the overall business health.
To avoid getting lost in the sea we need to hold on to a few key metrics that keep the big picture clear.
1. Customer Acquisition Cost or CAC as we call on a daily basis, this is no doubt the most important metric and the majority of the effort goes into improving and decreasing it day by day. (Total Amount Spent/ Total New Customers Acquired)
2. AOV - Average Order Value, if it is less than the CAC there is a big problem. Always make sure that AOV is way below CAC unless it is a high repeat category with a high lifetime value per customer.
3. LTV - Lifetime value is the sum of the revenue that a customer will generate for your business in its entire existence. If you do not have a great LTV then you need to make sure that the CAC is way below the AOV and each transaction is profitable.
4. Retention Rate - A high LTV is useless if there is no or minimal retention. Retention rate is the metric that determines how valuable your business is and how strong is your brand. A company with very poor retention in a high repeat category will always keep on paying money to Google and Facebook or any other ad platform there is. also the most ignored metric
5. Customer Re-Acquisition Cost (CRAC) - Another critical metric that marketers ignore and end up spending the same amount to re-acquire the customer. If the CRAC is almost the same as CAC then there is no retention happening and the LTV is being eroded.
4. Retention Rate - A high LTV is useless if there is no or minimal retention. Retention rate is the metric that determines how valuable your business is and how strong is your brand. A company with very poor retention in a high repeat category will always keep on paying money to Google and Facebook or any other ad platform there is. also the most ignored metric
5. Customer Re-Acquisition Cost (CRAC) - Another critical metric that marketers ignore and end up spending the same amount to re-acquire the customer. If the CRAC is almost the same as CAC then there is no retention happening and the LTV is being eroded.
Beyond these there lies a sea of other important metrics, like conversion rate, CPC, add to cart rate, funnel dropouts, CPM CTR, etc.