Easy Math Behind Ecommerce Success

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Is there an easy math formula to Ecommerce success? 

 

YES! There is! In fact, I’ve created a template that breaks down all the metrics of your buyer’s journey when they shop in your Ecommerce store. This Ecommerce success template allows you to see the massive impact of each point on this journey on your store’s profitability. 


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Ecommerce Metrics that Impact Ecom Success

If you already have access to the Easy Match Success template, you will see a big table where you can see all the different metrics, the formula used to compute each metric for your store, and their meaning. 

 

 

These metrics give you significant data, especially if you’re running Google Ads and Shopping Ads. You’re able to adjust each metric and see how they affect the other metrics and the final result in terms of profitability.

 

Many Ecom store owners, particularly the beginners, wonder when they’re not making any sales or asking why their ads aren’t profitable. This Ecom Success Calculator will answer all of these questions and help you see the areas in your store that need improvement.

Impressions

This metric tells you the number of people that viewed your ad.

Clicks

Clicks represent the actual number of people that click on your ad.

Click-through Rate

CTR is the percentage of people that clicked your ad after viewing it. There can be a thousand people who will view your ad, but not all of them may click it. So let’s say there are only 100 out of 1000 who clicked your ad. To get the CTR, you only need to divide impressions by clicks. So that means your CTR is 10%.

 

For example: 1000 (impression) / 100 (clicks) = 10%

 

The higher your click-through rate means potentially more ad relevancy and a higher ranking in the ads, too, because people click ads found on top of the first page in their search results.

Average Cost Per Click

The Average CPC is the average that you’re paying for each click. This metric directly affects your cost, so it means the higher your average CPC, the higher cost you will have.

Conversions

Conversions represent the number of actual transactions or orders on your site for a specific campaign or your ad account. This metric directly affects the following two metrics, which are the conversion rate and cost per acquisition.

Conversion Rate

This metric tells you the percentage of people that clicked on your ad and purchased from you. To get the conversion rate, you only need to divide the number of conversions by the number of clicks.

Cost Per Acquisition

This metric is the average cost (in ad spend) you paid for each conversion (or acquisition or for each customer you acquire. To calculate the cost per acquisition, we divide the number of conversions by cost.

Average Order Value

This metric tells you how much a customer spends on average in your store, and this metric is a crucial element that affects your Total Number of Sales and Return on Ad Spend. I have another video where I show you how to calculate your Average Order Value and some helpful ways to improve it. Watch it here: https://www.youtube.com/watch?v=yT-_mEeTgkg

Total Sales

This metric represents the total actual number of revenue, sales, or income you get before your expenses. In the Ecom Success template I’ve provided above, this metric is automatically calculated using a formula.

Return on Ad Spend (ROAS)

ROAS is a fundamental metric of a successful account. It gives you much information about the profitability of your account. It tells you how much you’re getting back in sales for every dollar you spend in ads. Your ROAS is calculated by dividing total sales by cost.

Profit Margin

Your Profit Margin is your sales minus your cost of good sold, including your Shopify subscription, app subscriptions, maybe your rental expenses if you are renting space like a warehouse. Watch my video to learn how to calculate your profit margin and get the FREE template.

Breakeven Return on Ad Spend

The breakeven ROAS is the minimum return on ad spend you need to break even (or be profitable). To calculate your breakeven ROAS, use the formula 1 divided by your profit margin.

 

For example: 1 / 0.30 = 3.33 

 

Anything higher than 3.33 leads to profits, and anything lower means you’re losing money.

Profit Before Ad Spend

This metric is the amount of profit before taking away the cost of ad spend. You calculate this metric by multiplying sales by your profit margin.

The profit after ad spend is the amount of profit after taking away the cost of ad spend. To get this value, you only need to multiply your Sales by your Profit Margin minus the Cost.

Average Profit Per Order

This metric tells you, on average, the profit you’re making for each conversion or, in simple terms, it how much each customer actually gives you in your pocket.

Repeat Customer Rate

This is a very powerful metric that very few people take advantage of. Repeat customer rate is the percentage of customers that come back and purchase again in your store. There are so many powerful strategies to increase your repeat customer rate, including setting up email campaigns and even retargeting ads.

Customer Lifetime Value

The customer lifetime value or CLV tells you how much a customer actually gives your store in revenue over that customer’s lifetime. I have a full video where I walk you through calculating your CLV and the strategies to help you increase this metric.

Average Profit Per Customer

This is the average profit you can expect to generate from each customer over the lifetime of their buyer journey. To calculate this metric, multiply your CLV by your Profit Margin minus your Cost Per Acquisition.


These are all the important metrics that you need to keep track of to achieve Ecommerce success. All these metrics are part of your buyer’s journey, and they impact the profitability of your campaigns and your Ecom store in general. 


Using my Ecommerce Success template, you will know if you’re actually making or losing money. More than that, it also tells you which part of your store or your campaigns need sucks so you can improve to start seeing results and generating more profits!

Want to get more Ecommerce tips and tutorials just like this? Subscribe to my YouTube Channel and learn more about growing your Ecommerce store remotely.

Mr Sam Baldwin

Mr Sam Baldwin

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