E-commerce Glossary

We are going to introduce you to the main e-commerce metrics you should pay attention to when managing your online store.

A/B Testing

A/B testing, also known as split testing or bucket testing, is a method of comparing two versions of a web page or app feature to determine which one performs better. The goal of A/B testing is to identify changes that will lead to a desired outcome, such as increased conversions or improved user engagement.

A/B testing is typically done by randomly dividing visitors or users into two groups, with one group being shown version A and the other group being shown version B. The performance of each version is then measured and compared based on metrics such as click-through rate, conversion rate, or time on page. The version that performs better is then implemented for all users.

It’s important to note that A/B testing is usually used to test a single variable at a time. A/B testing can be used to test everything from headlines and images to entire landing pages and can be an effective way to optimize website or app performance.

For more details, visit the A/B testing page.

ACoS (Advertising Cost of Sales)

ACoS is one of the key metrics of Amazon. The metric is used to determine the effectiveness of your ads.

ACoS = (Amount spent on ads / Total sales) x 100

If you spent $20 on advertising and it resulted in a single sale of $100, your ACoS would be 20%. The lower this metric is, the better your Amazon advertising campaign is performing. 

Amazon ACoS depends on such variables as a company’s size, industry, campaign frequency.

To easily calculate ACoS or convert ROAS to ACoS or ACoS to ROAS, use our calculator.

For more details, visit the ACoS page.

What ACoS Is Considered Good?

What Is Good ACoS

Check out our article on ACoS vs ROAS to learn more about the differences between these two metrics and how to reduce ACoS.

Affiliate Marketing

Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts. Affiliates typically promote a business through their own personal networks, websites, or social media channels, and are given a unique link or code to track their promotions. If a sale or other desired action is completed as a result of the affiliate’s promotion, the affiliate is typically given a commission or other form of compensation. This can be a cost-effective way for businesses to acquire new customers and expand their reach, while also allowing affiliates to earn money by promoting products or services they believe in.

For more details, visit the Affiliate Marketing page.

AOV (Average Order Value)

This metric helps sellers set realistic objectives for new shoppers. It tells the average amount spent by a customer per order when purchasing from your store. 

The formula is: 

AOV = Total revenue / Total number of orders

Using the resulting number, you can calculate how many customers you should bring in to earn a certain amount for a specific period of time.

For more details, visit the AOV page.

ARPU (Average Revenue Per User)

Average revenue per user (ARPU) is a metric used to measure the revenue generated by each user of a product or service.

Use the formula below to calculate this metric:

ARPU = Total revenue generated / Number of users

For example, if a company has 100 users and generates $10,000 in revenue, the ARPU would be $100 ($10,000 / 100 users).

ARPU is commonly used in the telecommunications, media, and technology industries to measure the performance of services such as mobile phone plans and online subscriptions.

For more details, visit the ARPU page.

Attribution Model

An attribution model is a set of rules used to determine how credit for a sale or conversion is assigned to different touchpoints in the customer journey. Attribution models are used in marketing to understand which marketing efforts are most effective in driving conversions and to allocate marketing budget accordingly.

There are several types of attribution models, including:

  • Last-click attribution: credits the last touchpoint before the conversion
  • First-click attribution: credits the first touchpoint in the customer journey
  • Linear attribution: spreads credit evenly across all touchpoints
  • Time decay attribution: gives more credit to touchpoints that occurred closer in time to the conversion
  • Position-based attribution: assigns more credit to the first and last touchpoints, and less credit to touchpoints in the middle

It’s important to note that different attribution models can lead to different conclusions about which marketing efforts are most effective, so it’s important to choose an attribution model that aligns with a business’s objectives.

For more details, visit the Attribution Model page.

Average Bounce Rate (Amazon)

This key performance indicator sheds light on the rate at which potential customers exit your Amazon store without any form of interaction.

A reduced bounce rate is a strong signal of increased customer engagement and a growing interest in what you have to offer. It reflects well on the attractiveness and relevance of your store’s content and product offerings.

High engagement levels are crucial for converting visits into sales and building a loyal customer base. Improving this metric can lead to more successful marketing efforts and a better overall user experience, which are vital components in the competitive world of retail.

Average Dwell Time (Amazon)

The Average Dwell Time metric offers insights into the duration visitors spend navigating through your Amazon store and exploring its various pages.

Extended periods of dwell time indicate a heightened level of interest and engagement from shoppers, suggesting that they find your content compelling and relevant. This metric is essential for understanding how effectively your store captures and maintains the attention of its audience.

A longer dwell time often correlates with a deeper exploration of your offerings, increasing the likelihood of conversions.

Enhancing this metric can significantly impact your store’s ability to foster meaningful interactions, ultimately contributing to a stronger connection with your audience and improved sales performance.

Bing Shopping

Bing Shopping is a service where users can view and compare products from multiple sellers and purchase them from a seller’s website. People use Bing as a search engine less than Google, but still, the number of its users is quite large. 

For more details, visit the Bing Shopping page.

Besides sponsored listings, merchants can also enjoy the free Product Listing option. But at the moment it’s not available in all countries.

For more information, check out our article on how to set up Microsoft shopping campaigns (Bing Shopping Ads) for e-commerce store on Shopify.

Bounce Rate

Bounce rate is a metric used to measure the percentage of visitors to a website who leave the site after only viewing a single page. A high bounce rate indicates that many visitors are leaving the site without interacting with any other pages. A low bounce rate, on the other hand, indicates that visitors are engaging with the site and viewing multiple pages.

The formula is:

Bounce rate = Number of single-page sessions / Total number of sessions

For example, if 100 visitors come to a website and 50 of them leave after viewing only one page, the bounce rate would be 50%.

Bounce rate can be a useful metric for understanding how visitors are engaging with a website. A high bounce rate can indicate that there is a problem with the website, such as poor navigation, slow load times, or irrelevant content. Improving website speed, optimizing the website’s design, and creating high-quality content can help to reduce bounce rate.

It’s important to compare your bounce rate to industry benchmarks or to your own historical data to get a sense of whether it is high or low.

For more details, visit the Bounce Rate page.

Break-Even ACoS

Before starting advertising on Amazon, it’s important to determine break-even ACoS (Advertising Cost of Sales). In order to do it, follow these steps:

  • Find out your profit margin: [(Value of sale – Item cost) / Value of sale] x 100

Note that the Item cost should include everything that goes into its producing, selling and importing.

  • Find out your ACoS by using the following formula: ACoS = (Amount spent on ads / Total sales) x 100

You can determine your perfect ACoS using an ACoS calculator.

  • Compare the numbers. 

If your profit margin is, for example, 70%, then the ACoS shouldn’t exceed this percentage in order to break even with ads on Amazon. A Higher ACoS means that you are losing money from ads. 

For more details, visit the Break-Even ACoS page.

Bundling

Bundling is a marketing strategy in which a company offers several products or services for sale as a single combined package. The goal of bundling is to increase sales and revenue by offering customers more value for their money.

There are different types of bundling:

  • Product bundling: offering several products for sale as a single package deal
  • Service bundling: offering several services for sale as a single package deal
  • Pure bundling: only selling products or services as part of a bundle
  • Mixed bundling: selling products or services both individually and as part of a bundle

Bundling can be a useful way for companies to increase sales by making it more convenient for customers to purchase multiple products or services at once. It can also be used to increase the perceived value of a product or service by including additional items or services with it.

For more details, visit the Bundling page.

CAC (Customer Acquisition Costs)

CAC helps sellers know the cost of getting a new customer. 

Use the formula below to calculate this metric:

CAC = Marketing expenditure / Number of new clients

This metric reflects the success of a seller’s sales and marketing campaign performance. 

For more details, visit the CAC page.

Cart Abandonment Rate

Cart abandonment rate is a metric used in e-commerce to measure the percentage of online shoppers who add items to their shopping carts, but do not complete the purchase.

The formula is: 

Cart Abandonment Rate = Number of abandoned carts / Number of initiated checkouts

For example, if a business had 100 initiated checkouts and 25 of them were abandoned, the abandoned cart rate would be 25%.

A high cart abandonment rate can indicate that customers are encountering problems during the checkout process, such as issues with shipping costs, payment options, or website usability. Businesses can use this metric to identify areas for improvement and to develop strategies to reduce the abandonment rate, such as sending abandoned cart emails, offering free shipping, or simplifying the checkout process.

For more details, visit the Cart Abandonment Rate page.

Checkout Process

The checkout process refers to the steps a customer goes through when making a purchase online. It is the final stage in the e-commerce shopping experience, where customers enter their payment information and confirm their order.

The goal of the checkout process is to make it as easy and user-friendly as possible for customers to complete their purchase. A well-designed checkout process should be simple, fast, and secure to increase the likelihood of a successful transaction. It typically includes steps such as entering shipping information, selecting payment options, reviewing the order, and entering payment details. It may also include options for creating an account, applying discounts or promo codes, and choosing a shipping method.

For more details, visit the Checkout Process page.

CLV (Customer Lifetime Value)

The metric shows the total revenue that a company could expect from a client.

You need this formula to calculate CLV:

CLV = AOV x PF x Average length of the client relationship (in years)

* AOV Average Order Value

* PF Purchase Frequency

To increase this metric, sellers should do their best to make clients satisfied with the products and services offered by this particular e-commerce business.

For more details, visit the CLV page.

Conversion

Conversion refers to the process of turning a website visitor into a paying customer or a lead. In e-commerce, a conversion typically refers to a completed purchase, but it can also refer to other desired actions such as signing up for a newsletter, filling out a contact form, or downloading a product brochure.

For more details, visit the Conversion page.

Conversion Funnel

The Conversion Funnel is a visual model that illustrates the journey a customer takes from initial awareness of a product or service to the final purchase. It consists of several stages: Awareness, Interest, Desire, Action, and post-purchase evaluation. The goal of the funnel is to guide potential customers towards the final conversion step and minimize drop-off at each stage through targeted marketing and optimization efforts.

For more details, visit the Conversion Funnel page.

Conversion Rate

In digital marketing, conversion rate is the percentage of website visitors who take a desired action.

The formula is:

Conversion rate = Number of conversions / Number of website visitors

A higher conversion rate generally indicates that a website is more effective at converting visitors into customers or leads.

To increase conversion rate, businesses may use various tactics such as A/B testing, User Experience optimization, personalization, and retargeting. They may also use analytics to track and analyze the performance of their website, including metrics such as bounce rate, time on site, and pageviews per session to identify areas for improvement.

For more details, visit the Conversion Rate page.

Cookies

Cookies are small text files stored by a website on a user’s device that remember information about the user’s activity on the site. They are used to improve the user experience by remembering user preferences and tracking their behavior. For example, a cookie can remember the items in a shopping cart, so the user doesn’t have to start over if they leave the site and come back. Cookies can also be used for tracking and advertising purposes, such as displaying personalized ads based on the user’s web browsing history. Users can control cookies through their browser settings, including accepting or blocking cookies and deleting them after a certain amount of time.

For more details, visit the Cookies page.

CPA (Cost per Acquisition)

Cost per Acquisition (CPA) is a marketing metric that measures the cost of acquiring a new customer or conversion. 

The formula is:

CPA =  Total cost of a marketing campaign / Number of conversions generated by that campaign

CPA provides insight into the efficiency of a campaign by showing the cost of each acquired customer, allowing businesses to optimize their marketing efforts and make informed decisions about future campaigns. By targeting campaigns that generate conversions at a low CPA, businesses can maximize the return on their investment and achieve their desired growth.

For more details, visit the CPA page.

CR (Churn Rate)

Churn Rate is used to find out the number of clients that stopped buying from an online store.

The formula of the metric is:

CR = (1 – 2 ) / 1

1 Clients at the beginning of a time period,

2 Clients at the end of the period.

This metric always depends on a company’s industry. For example, for a single-purchase e-commerce business, the average Churn Rate is considered to be around 75%.

You can always check such metrics as Retention Rate and Churn Rate in CRM/CDP. Changes in these metrics reflect the health of a business. It makes sense to monitor the change in RR and CR on a regular basis.

For more details, visit the Churn Rate page.

Average Churn Rate for E-commerce

This metric always depends on a company’s industry. For example, for a single-purchase business, the average Churn Rate is considered to be around 75%.

According to the Omniconvert report, companies selling gifts, consumer electronics, apparel clothing accessories, shoes, and toys have the highest churn rate. It means that customers don’t often come back to buy again from such stores.

Churn Rates by E-commerce Industry Bar Chart

Source: Omniconvert

CRO (Conversion Rate Optimization)

Conversion Rate Optimization (CRO) is a data-driven process of improving the performance of a website or landing page with the aim of increasing the percentage of visitors who take a desired action, such as making a purchase, filling out a form, or signing up for a newsletter. CRO involves using a variety of tactics such as A/B testing, user research, and website analysis to identify areas for improvement and make changes that drive higher conversion rates. The ultimate goal of CRO is to provide a better user experience and maximize the return on investment for the website or landing page.

For more details, visit the Conversion Rate Optimization page.

Cross-Selling

Cross-selling is a sales technique where a seller offers a related or complementary product or service to a customer who is already making a purchase. The goal of cross-selling is to increase the value of the transaction by offering additional products or services that the customer may find useful or desirable. For example, a seller of books may cross-sell a related book or suggest a similar book by the same author. The success of cross-selling depends on understanding the customer’s needs and offering relevant and high-quality products or services that add value to their purchase.

For more details, visit the Cross-Selling page.

CTA (Call to Action)

A call to action (CTA) is a statement or button that prompts a user to take a specific action, such as making a purchase or signing up for a service. CTAs are commonly used in marketing and advertising to increase conversions and drive sales. They can be placed in emails, social media posts, and website pages. Examples of CTAs include “Buy now”, “Sign up”, and “Learn more”. The goal of a CTA is to motivate a user to take the next step in the sales or conversion process.

For more details, visit the Call to Action page.

CTR (Click-Through Rate)

Click-through rate (CTR) is a metric used to measure the effectiveness of online advertising. 

The formula is:

CTR = Number of clicks on an ad / Number of times the ad was displayed (impressions)

CTR is used to evaluate the effectiveness of an online advertising campaign and to compare the performance of different ads. A higher CTR generally indicates that an ad is more appealing and relevant to the audience, and therefore more likely to lead to a conversion or sale. CTR can be used to gauge the overall performance of a campaign, as well as to test the performance of different ad variations.

CTR is a common metric used in pay-per-click (PPC) advertising, where advertisers pay only when their ad is clicked. In these cases, a higher CTR can result in a lower cost per click (CPC) and a better return on investment (ROI) for the advertiser. 

For more details, visit the Click-Through Rate page.

Customer Acquisition

Customer acquisition refers to the process of gaining new customers for a business. It involves attracting and converting potential customers into paying customers, and is a crucial aspect of growing a business. Customer acquisition can be achieved through various marketing and sales activities, such as advertising, email marketing, content marketing, referral marketing, and other lead generation strategies. The goal of customer acquisition is to reach and engage with potential customers, build relationships, and ultimately convince them to make a purchase. Effective customer acquisition requires a deep understanding of target audience needs and preferences.

Customer Journey

Customer Journey is the series of experiences and interactions a customer has with a company or brand from initial awareness to post-purchase evaluation. It includes every touchpoint a customer has with a company, from discovering a product or service, to researching and making a purchase, to post-purchase support and loyalty. The Customer Journey provides a comprehensive view of the customer experience, allowing companies to understand their customers’ needs, pain points, and motivations. By mapping the Customer Journey, companies can identify opportunities to improve the customer experience and drive loyalty, increase conversions, and achieve their business goals.

Customer Journey Mapping

Customer Journey Mapping is a process of visualizing and documenting the experiences and interactions a customer has with a company or brand over time. It involves creating a detailed and holistic view of the customer journey, including all touchpoints, emotions, pain points, and decision-making moments. The goal of Customer Journey Mapping is to understand the customer’s perspective and create a more seamless and enjoyable experience. By identifying opportunities for improvement and creating a roadmap for change, companies can optimize the customer journey, increase customer satisfaction and loyalty, and drive business success. 

Customer Journey Mapping can be done through various methods including interviews, surveys, analytics, and workshops, and can be updated regularly to reflect changes in customer behavior and technology.

Customer Retention

Customer Retention refers to the ability of a company to keep its customers engaged and satisfied over time. It measures the number of customers who continue to do business with a company after their initial purchase. High customer retention is important for a company’s growth and success, as retaining existing customers is often more cost-effective than acquiring new ones. Companies use a variety of strategies to improve customer retention, including providing excellent customer service, creating a positive customer experience, offering loyalty programs, and continuously improving their products and services based on customer feedback. The ultimate goal of customer retention is to foster long-term relationships with customers, build brand loyalty, and drive repeat business.

Dropshipping

Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third-party supplier that ships it directly to the customer. Dropshipping allows store owners to offer a wider range of products without the need for large upfront inventory investments or storage space. The supplier manages all aspects of product fulfillment, including manufacturing, storage, and shipping. Store owners are responsible for marketing and promoting the products, taking customer orders, and managing customer service. Dropshipping is a flexible and low-risk business model, as store owners only pay for products as they sell and don’t need to worry about excess inventory or stock management.

E-commerce Platform

E-commerce platform is a software solution that enables businesses to create and manage an online store to sell their products and services. It provides a complete set of tools and features to create an online presence, manage product listings, process payments, handle shipping and taxes, and manage customer orders and interactions.

E-commerce platforms range from simple, do-it-yourself options to complex, enterprise-level solutions, offering a range of customization options, integrations, and scalability. The right e-commerce platform depends on the size and complexity of a business, its target market, and its specific needs and goals. Popular e-commerce platforms include Shopify, WooCommerce, and BigCommerce. Read more about e-commerce platforms and websites in our article “16 Best Places to Sell Your Product Online in 2023 + 3 Bonuses to Scale Your Online Sales”.

Watch this short video on how Shopify works:

Email Marketing

Email marketing is a form of direct marketing that uses electronic mail as a means of communicating commercial or promotional messages to an audience. It involves sending emails to a list of subscribers with the goal of promoting a product or a service. Email marketing can be used to build relationships with customers, retain and engage existing customers, and drive sales. It is a cost-effective way to reach a large audience, as compared to traditional mail or print advertising. Best practices for email marketing include segmenting an audience, personalizing content, and regularly testing and optimizing campaigns for maximum impact.

FBA (Fulfillment by Amazon)

Fulfillment by Amazon (FBA) is a fulfillment service offered by Amazon to help online sellers store and ship their products to Amazon customers. Sellers send their inventory to Amazon’s fulfillment centers, where Amazon stores, packages, and ships the products to customers on their behalf. FBA also provides customer service and handles returns for the seller. FBA comes with fees for storage and fulfillment, so it’s important for sellers to carefully consider the costs and benefits before deciding if FBA is the right choice for their business.

Google Analytics

Google Analytics is a free web analytics service offered by Google that tracks and reports website traffic. It provides detailed insights into website traffic, including the source of traffic, geographic location, and user behavior on the site. It can be used to track the success of marketing campaigns, measure the impact of website changes, and optimize the user experience. Google Analytics can be easily integrated into a website by adding a tracking code to the site’s pages.

Google Free Listings

Google Free Listings is a great opportunity to list your products that will appear across the Google ecosystem for free. Sellers can reach more customers, however, it’s not guaranteed that the items will appear in searches.

For more information, check out our guide to Google Free Listings.

Google Shopping

It is a service that gives customers an opportunity to search for products and compare them between different retailers. The products are displayed either in the main search engine results page or under the shopping tab.

Note that Google Shopping is not a marketplace even though its services are similar.

This is a great channel for online sellers to scale their businesses as products get more visibility. Merchants can also list their items for free (Google Free Listings).

For more information, check out our article on Google Shopping Feed Optimization to Scale Your Sales.

GTIN (Global Trade Item Number)

GTIN (Global Trade Item Number) is a unique identifier assigned to products in the global supply chain. It is used to identify and distinguish products from each other and to streamline supply chain processes, such as inventory management and order tracking. GTINs may be 8, 12, 13, or 14 digits long.

Keyword

A keyword is a word or phrase that is used as a search query in a search engine, such as Google. It represents the main topic or theme of a piece of content, such as a webpage or blog post. In the context of search engine optimization (SEO), keywords are used to help search engines understand the content and relevance of a website or web page, which can help it rank higher in search results for relevant search queries. Keywords can be single words or multi-word phrases and can be used in various parts of a website, including in page titles, headlines, meta descriptions, and page content.

Keyword Research

Keyword research is the process of discovering and analyzing keywords that are relevant to a particular topic or business, in order to optimize a website or online content for search engines. The goal of keyword research is to identify keywords or phrases that people are searching for in order to drive targeted traffic to a website. The process typically involves researching and analyzing keyword data, such as search volume, competition level, and relevancy to the website’s content, in order to determine which keywords to target. Keyword research is an important component of search engine optimization (SEO) and is often the first step in developing an effective SEO strategy.

Margin

In e-commerce, margin refers to the difference between the cost of goods sold and the selling price of those goods. It represents the profit a business makes from selling a product or service after accounting for all the expenses involved in acquiring or producing the item. It is important for e-commerce businesses to monitor their margins regularly and make changes to their pricing and cost structures as needed to ensure a balance between profitability and customer satisfaction.

Microsoft Shopping

Microsoft Shopping campaigns allow advertisers to visually show their ads to users on Microsoft (Bing). One of the main advantages of this campaign type is the opportunity to target unique demographics. 

Bing is usually used in conjunction with Google Ads campaigns as a complement. Moreover, an average CPC (cost-per-click) for Bing Ads is quite affordable compared to Google Ads. 

For more information, check out our article “How to Set Up Microsoft Shopping Campaigns (Bing Shopping Ads) for E-Commerce Store on Shopify”.

New-to-Store Visitors (Amazon)

The New-to-Store Visitors metric serves as a vital indicator of your Amazon store’s ability to draw in fresh traffic. It provides a clear measure of your marketing campaigns’ success in appealing to new individuals who could become future customers.

By tracking this metric, you can assess the reach and impact of your promotional strategies, identifying what resonates with a broader audience. A steady influx of new visitors is essential for expanding your customer base and sustaining business growth. Moreover, understanding the behavior and preferences of these newcomers can help tailor your marketing efforts more effectively, ensuring that you not only attract but also retain these potential customers by offering relevant products and engaging experiences.

Online Marketplace

An online marketplace is a digital platform where individuals or businesses can buy and sell goods and services to each other. Examples include Amazon, eBay, and Etsy. Read more about best marketplaces in our article “18 Best Places to Sell Your Product Online in 2023 + 3 Bonuses to Scale Your Online Sales”.

Online marketplaces act as an intermediary, providing the necessary infrastructure and tools for transactions to occur, and often also handle payment processing and shipping logistics.

Watch this video to learn more about how to start selling on Amazon:

Organic Traffic

Organic traffic refers to the visitors that come to a website naturally, without paid advertising. It is the result of visitors finding a website through search engines like Google, Bing, or Yahoo, either by typing in keywords directly or following a link from another website. Organic traffic is considered a valuable source of website traffic, as it is high-quality and targeted. In contrast, paid advertising, such as Google Ads, drives traffic to a website by paying for visibility in search results or on other websites. 

PCI (Payment Card Industry) Compliance

The Payment Card Industry (PCI) compliance refers to a set of security standards established by the major credit card companies (Visa, Mastercard, American Express, etc.) to ensure that all merchants who accept, process, store, or transmit credit card information maintain a secure environment. PCI compliance is mandatory for all merchants who accept credit card payments, and failure to comply with these standards can result in hefty fines and increased risk of security breaches.

PCI compliance helps to reduce the risk of credit card fraud and protect the sensitive information of both consumers and merchants. By adhering to these security standards, merchants can establish trust with their customers and maintain a secure environment for the processing of credit card transactions.

PF (Purchase Frequency)

Purchase Frequency shows the number of times that a customer makes a purchase in a given period.

To calculate it, use the following formula:

PF = Number of orders / Number of customers

Numbers of orders and customers should be within the period you need to analyse (e.g 12 months).

You can also check PF in the CRM/CDP.

AOV and PF are especially important for advertising management. They allow merchants to understand the maximum CPO (Cost Per Order) and ROAS (Revenue on Ad Spend).

Average Purchase Frequency for E-commerce

Purchase Frequency is affected by various factors.

Omniconvert’s report showed how this metric differs by industry.

Purchase Frequency by E-commerce Industry Bar Chart

Source: Omniconvert

Let’s assume you sell goods in the beauty and fitness industry. If you found out that your average PF is 1.6, you should think of the ways to encourage your customers for new purchases

PPC (Pay-Per-Click)

Pay-per-click (PPC) is an online advertising model in which advertisers pay each time a user clicks on one of their ads. The ads usually appear as sponsored listings or banners on search engines (like Google or Bing), websites, or social media platforms. PPC allows advertisers to reach specific target audiences and bid on keywords related to their products or services, resulting in targeted and measurable advertising.

Remarketing

Remarketing is a digital marketing tactic that aims to show ads to users who have visited your site before or interacted with the content on your social media. Most visitors don’t convert when they browse your site for the first time. This strategy has all chances to result in higher conversion since it targets people who are more likely to be interested in your products.

The most popular kinds of remarketing are:

  1. Remarketed display ads
  2. Video remarketing
  3. Email remarketing

Remargeting campaigns are very powerful. Using them, you stay connected with your audience and encourage them to return to your site.

ROAS (Return on Ad Spend)

It’s one of the most important marketing metrics. ROAS shows the amount of revenue you earn for each dollar spent on the advertising campaign for your e-commerce business.

The formula of this metric is simple:

ROAS = Revenue from an ad campaign / Cost of the campaign

Let’s assume you spent $500 on an advertising campaign that resulted in a revenue of $3000. The ROAS is $6. So, for every dollar spent on the ad campaign, your company gets $6.

To easily calculate ROAS or convert ACoS to ROAS or ROAS to ACoS, use our calculator.

What ROAS Is Considered Good?

What is good ROAS

ROI (Return on Investment)

This financial ratio is used to measure the profitability of all investments made in a business. 

There are many ways to calculate Return on Investment. We suggest using this formula:

ROI = Net income / Cost of investment x 100

The higher the percentage is, the better your investments perform.

ROI greatly depends on the industry and investment type, so there is no average value. You may want to compare your results with those of the companies operating in your industry.

RPR (Repeat Purchase Rate)

Repeat Purchase Rate, also known as the repeat customer rate or repeat business rate, is a metric used to measure the percentage of customers who make a repeat purchase from a business.

RPR = Number of repeat customers / Total number of customers

For example, if a business has 100 customers and 25 of them make a repeat purchase, the repeat purchase rate would be 25%.

This metric is used to measure customer loyalty and the effectiveness of retention strategies. A higher repeat purchase rate is generally seen as a positive sign for a business, as it indicates that customers are satisfied with their purchases and are more likely to continue doing business with the company.

RR (Retention Rate)

The metric shows the percentage of customers who keep purchasing your products. 

This formula is used to calculate RR:

RR = [(1 – 2) / 3] x 100

1 – Clients at the end of a time period,

2 – New clients during the time period,

3 – Clients at the beginning of the time period.

It’s a valuable measure that indicates a seller’s ability to sustain customer relationships.

Sales Funnel

A sales funnel is a visual representation of the customer journey through the stages of a sales process, from initial awareness of a product or service to the final purchase. The stages of a typical sales funnel include: Awareness, Interest, Desire, Action. The purpose of a sales funnel is to guide prospects towards becoming customers by providing the information and support they need at each stage of the buying process.

SEO (Search Engine Optimization)

SEO is the practice of optimizing a website and its content to increase the quantity and quality of traffic from search engines like Google, Bing, and Yahoo. SEO involves optimizing various elements of a website such as its content, structure, and technical features to improve its visibility and ranking in search engine results pages (SERPs). The goal of SEO is to increase organic (non-paid) traffic to a website by improving its relevance and authority for specific keywords and phrases. Effective SEO requires a combination of technical skills, analytical skills, and a deep understanding of the search engines and their algorithms.

SERP (Search Engine Results Page)

A SERP (Search Engine Results Page) is the page displayed by a search engine in response to a user’s query. It shows a list of relevant web pages and other content, such as images and videos, that the search engine considers most relevant to the user’s query. The top results on a SERP are typically paid advertisements, followed by organic results based on the search engine’s ranking algorithms. The ranking of the results is influenced by various factors such as the relevance of the content, the authority of the website, and the popularity of the page.

SKU (Stock Keeping Unit)

A Stock Keeping Unit (SKU) is a unique identifier assigned to a product by a company to track its inventory. It is used to keep track of individual items in stock and to manage the flow of goods in and out of a warehouse or retail store. SKUs are typically composed of letters and numbers, and they may include information such as the product name, size, color, and other characteristics. By using SKUs, companies can efficiently manage their inventory, track sales, and make informed decisions about when to reorder products or discontinue underperforming items.

Social Proof

It is a psychological concept that suggests that individuals are more likely to trust and follow the actions of a group or crowd, rather than relying solely on their own judgment. Social proof can be observed in a variety of contexts, from purchasing decisions to political opinions.

In marketing and advertising, social proof can be leveraged to influence consumer behavior by showcasing the popularity or endorsement of a product or service by others. This can take the form of customer reviews, testimonials, celebrity endorsements, and the number of likes or followers a brand has on social media. Social proof can be a powerful tool for businesses looking to build trust and credibility with potential customers.

tACoS (Target ACoS)

While break-even ACoS shows the upper limit above which the ads campaign is not profitable, target ACoS tells how profitable it is.  

To determine this metric, use this formula: 

TACoS = Break-Even ACoS – Desired Profit Margin

For instance, your break-even ACoS is 40% and desired profit margin is 20%. So, the target AcoS would be 20%. This is the percentage you should strive for.

tROAS (Target ROAS)

tROAS is a Google Ads Smart Bidding strategy. When users search for products that are similar to yours on Google, the strategy predicts the value of a potential conversion and adjusts bids in order to maximize the return. So, if the search doesn’t seem to result in a high-value conversion, it will bid low, and vice versa.

Before using this strategy, make sure you meet certain requirements, namely, in the past 30 days a campaign must have at least 15 conversions. For Discovery campaigns, the requirement is different 75 or more conversions for the same period.

Upselling

Upselling is a sales technique where a seller encourages a customer to purchase a higher-end or premium version of a product or service they are already considering. The goal of upselling is to increase the value of the transaction by offering an upgraded or more feature-rich option. For example, a seller of electronics may offer a customer an upgrade from a basic laptop to a higher-end model with more storage and better performance. The success of upselling depends on understanding the customer’s needs and budget, and offering an upgrade that provides real value and satisfies their requirements.

UX (User Experience)

User Experience (UX) refers to the overall experience of a person using a product or service, such as a website or mobile app. It encompasses all aspects of a user’s interaction with a product, including how easy it is to use, how well it meets their needs and expectations, and how enjoyable the experience is. UX design is the process of designing and optimizing these interactions to improve the overall experience for the user. By focusing on UX, businesses can improve customer satisfaction and increase engagement with their products.

Wish List

A wish list, in e-commerce, is a feature that allows customers to save items they are interested in purchasing for later. The wish list serves as a personal shopping list, allowing customers to keep track of products they want to buy, or to share their wish list with others, such as friends or family members, who may want to purchase items as gifts.

Wish lists can also be used by e-commerce businesses as a marketing tool to keep customers engaged and to encourage repeat purchases. For example, businesses can send customers reminders about items on their wish list that are now on sale or back in stock. Wish lists can also provide valuable data and insights into consumer preferences and buying habits, allowing businesses to make informed decisions about product offerings and marketing strategies