Marketing formulas
The 18 formulas we use daily, each with its own numbers. Change them and the answer moves with you.
Cost
CPC — cost per click
Ad spend ÷ Clicks
What you pay for each visitor the advertising brings in.
CPM — cost per thousand impressions
Ad spend ÷ Impressions × 1000
What it costs to be seen a thousand times. It measures visibility, not sales.
CPL — cost per lead
Ad spend ÷ Leads
What you pay for a message or an enquiry. The first figure that shows whether the advertising works.
CPO / CPA — cost per order
Ad spend ÷ Orders
What a completed order costs you, rather than just a contact.
CAC — customer acquisition cost
(Marketing cost + Sales cost) ÷ New clients
What a new client really costs, the sales team's work included.
Efficiency
CTR — click-through rate
Clicks ÷ Impressions × 100
How often the ad persuades somebody to click. Under 1 % means the wrong creative or the wrong audience.
CR — conversion rate
Conversions ÷ Visits × 100
What share of visitors do the thing you want: order, call or fill the form in.
ROI — return on investment
(Revenue − Total cost) ÷ Total cost × 100
What the whole investment returns, not just the advertising.
ROMI — return on marketing investment
(Marketing revenue − Marketing cost) ÷ Marketing cost × 100
The same question about the marketing money alone. Below 0 % you are losing on it.
ACOS — advertising cost of sale
Ad spend ÷ Revenue × 100
What share of the takings goes back into advertising. The smaller, the healthier.
Client value
AOV — average order value
Revenue ÷ Orders
What a client leaves behind on a single order.
LTV — lifetime value
Order value × Orders a year × Years
What a client brings in for as long as they stay yours. The figure that justifies a high CAC.
Profit margin
(Price − Cost) ÷ Price × 100
What is left of every leu taken, before anything is spent on advertising.
Churn rate
Clients lost ÷ Clients at the start × 100
What share of clients leave over a period.
Retention rate
(Clients at the end − New clients) ÷ Clients at the start × 100
What share of the old clients stayed. New ones are subtracted, or the figure climbs past 100 %.
LTV / CAC ratio
LTV ÷ CAC
How many times over a client repays what you spent winning them. Under 3, growth is hard work.
Handy
Break-even CPA
Order value × Margin ÷ 100
The most you can pay for an order without going under. Your ceiling for bidding.
Percentage change
(New value − Old value) ÷ Old value × 100
How far a metric rose or fell between two periods.