When calculating ROAS, you should limit yourself to advertising costs and ignore other costs, such as the fee for the specialist who sets up the ads.
This indicator does not take into account the total profitability and therefore does not allow for accurate conclusions regarding the effectiveness of advertising campaigns.
ARPU
ARPU (average revenge per user) is the advertising data package average revenue per customer over a given period. Calculating ARPU can help you study how revenue from each customer has changed over time and how customers react to price fluctuations.
ARPU (for a given time period) = total sales revenue for a given time period / number of people who used the product during that time period.
It is advisable to take into account revenue from all audience acquisition sources for individual time periods. In this case, it becomes easier for the company to identify problem areas and understand which advertising is not effective, as well as what causes periodic sales declines.
AOV
AOV (Average Order Value) is the average order value or average check. It is equal to the average income from one transaction in a specific period. This information allows you to more accurately predict the total income. Additional sales can be made to increase AOV.
AOV = total sales revenue / number of sales.
First of all, you need to strive to increase the average bill, not the number of customers. If the customer is initially set to order, he will not have to re-learn information about the company, look at reviews from other consumers and learn the advantages of the products of a particular manufacturer.
LTV
LTV ("lifetime value") characterizes the lifetime value of a client, i.e. how much money the consumer brings to the company over the entire period of cooperation. The importance of this indicator is due to the fact that the total income directly depends on it.
Revenue = LTV * number of active users.
Regularly checking LTV allows you to:
monitor customer acquisition costs;
identify traffic sources that attract experienced users of the product;
to most accurately divide buyers into categories depending on what benefits cooperation with them can bring;
make long-term forecasts of the amount of total income.
LTV = average check * number of product purchases.
It is profitable for a company when LTV is greater than CAC (customer acquisition cost). When running a successful business, the cost of all customer purchases should exceed the amount spent on attracting them. LTV increases if customers are more satisfied with the service. In this case, they have a desire to contact this company again.
How to achieve multiple growth in traffic and sales from your website?
Alexey Boyarkin
Dmitry Svistunov
Head of SEO and Development
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I have always been concerned about the issue of moving to a fundamentally new level. So that the indicators would grow not by 2 or 3 times, but by several orders of magnitude. From a thousand visits to ten thousand or from ten thousand to a hundred thousand, if we are talking about a website, for example.
And I know that such leaps are always the result of painstaking work in five areas:
Technical condition of the site.
SEO.
Collection of site semantics.
Creating useful content.
Working on conversion.
And at the same time, every manager needs an increase in sales and the number of applications from the site at the moment.
To get this growth, download our step-by-step template for increasing sales from the site:
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