Terms and Formulas to  

Measure Your  
Marketing Goals 
 
 
 
 
 
 
 

 
 
Advertising KPIs:​ ​ROAS, ROI, CPR, CAC 

Formula  What does this formula 

What is the formula?  Formula Example Problem  Formula in Action 
Name  calculate? 

ROAS  ROAS, or Return on Ad Spend,  Revenue ÷ Ad Cost =  If you spent $1 on advertising and  $10 ÷ $1 = 10 
(Return on  calculates how much revenue  ROAS  made $10 off of that advertising,   
Ad Spend)  you made on your advertising,  your ROAS is 10. It can also be   
versus what you spent on your  expressed as 10:1, or 10x. That means  Your ROAS is 10. 
campaign.  that this advertising made ten times 
what was spent on it.   

ROI   Your ROI calculates your  (Revenue -  Let’s say you’re a company that  Total Revnue = $10,000 
(Return on  bigger-picture spending of  Investments)    made a revenue of $10,000 from a   
Investment = $2,800 
Investment)  revenues, investments, and  ÷ Investments = ROI  product. You invested $2800 into   
advertising, versus the profits  that product. This means your ROI  ROI= 
 
you make.  was 2.57, and that you made 2.57  ($10,000-$2,800) ÷ 
times what you invested in the  $2,800 = 2.57 
product.    
 
Your ROI is 2.57. 

CPR (Cost  Your cost per result looks at how  Total spent ÷ # of Results  Let’s say you spend $200 on a  $200 ÷  
Per Result)  much you paid for a specific  = CPR  reach campaign, and get 1000  1000 impressions = .20 
result. This could be a link click, a  impressions. Your cost per results   
lead, an app install, a customer  would be 20 cents/ impression.  Your cost per result is 
buying a product, engagement  $0.20 per impression. 
with a post, an impression, or any 
number of other actions you 
wanted to happen.  

CAC  Your customer acquisition cost is  Total cost of sales ÷  Let’s say you spend a sum total of  $19,000 ÷ 1,000 = $19 
(Customer  the total marketing cost you  Number of customers  $19,000 targeting new customers,   
Acquisition  spend to get one new customer.  acquired = CAC*  and make 1000 sales to 1000 new  Your CAC is $19. 
Cost)  It’s actually a type of ROI, that    customers. This means your CAC is 
measures conversions among  *This only applies in  $19.  
new customers.   conversion campaigns 
that target new 
customers. 
Customer Value KPIs:​ ​ACV, ACL, LTV 

Formula  Formula Example  Formula in 

Formula Description  Formula 
Name  Problem  Action 

ACV (Average  The ACV, or ​Average  Average Customer’s Value = ​(Average Purchase Value)  Let’s say we have a  ACV= 
Customer’s  Customer’s Value​, is  x (Average Purchase Frequency Rate)  company that makes   
Value)    $1000 in revenue, and  ($1000/ 
how much a customer  To determine the ​Average Purchase Value​, we solve 
spends in a set amount  has 50 customers. The  100 purchases) x  
for: 
customers have bought  (100 purchases   
of time. This is done by  Total Revenue ÷ ​ ​Total Purchases = APV 
 
100 items, combined in  in one month /   
multiplying the ​Average 
And to determine the ​Average Purchase Frequency  one month.   50 customers) 
Purchase Value​, or the     
Rate​, we solve for: 
average amount a    How do we calculate our  Our ​Average 
customer spends per  Number of Purchases ÷ ​ umber of Customers = APFR 
​ N ACV?   Customer’s 
purchase, by the    Valu​e is 
Average Purchase  Thus, the ​Average Customer’s Value ​formula can also  $20/month. 
be written as: 
Frequency Rate, ​which  ACV= (Total Revenue/Total Purchases) x (# of 
is how many purchases  Purchases/#of Customers) 
you would typically get 
from one customer. 

ACL (Average  The ​Average Customer  There’s no formula for this. You’ll have to rely on  For our exercise, we’ll  N/A 
Customer  Lifespan​ is how long a  company data or a forecasting tool.   say the Average 
Lifespan)  customer relationship  Customer Lifespan is 5 
typically lasts with your 
years, or 60 months.  
company. You may know 
this data from experience, 
or by looking at your churn 
rate, or, if you're a younger 
company, by forecasting.  

LTV  Your LTV both  LTV=   Now we know our Average  LTV= 
(Customer  estimates and measures    Customer Value is   
Lifetime  how much your  (Average Customer’s    $40/month, and a  ($20/month) x (60   
customer’s lifespan, or  months) 
Value)  customer will spend  Value) x (Average  
relationship with our   
with your business over  Customer Lifespan)  company typically lasts 60  Our Customer  
the span of their  months. This means our  Lifetime Value is  
relationship with you.   Customer Lifetime Value is  $1,200. 
$2400.