For years, Return on Ad Spend (ROAS) has been the North Star for ecommerce marketing. The math seems simple enough: spend $1 on advertising, get $3 back in revenue, and celebrate a 3:1 ROAS. It's clean, measurable, and provides instant gratification for marketing teams looking to justify their ad spend.
But while ROAS offers a fast snapshot of efficiency, it paints an incomplete picture. In fact, brands overly fixated on ROAS often find themselves optimizing into a corner, sacrificing long-term growth for short-term wins.
Chasing a high ROAS can actually be counterproductive. Why? Because it doesn’t account for your actual customer acquisition cost, your backend revenue or your customer’s lifetime value. If your goal is sustainable growth and not just profitable ad spend, it’s time to look beyond ROAS.
Why ROAS is incomplete
While ROAS can be a useful directional indicator, it fails to capture the full economic reality of your business:
- Short-Term Focus: ROAS creates tunnel vision, focusing exclusively on immediate conversions while ignoring the customer relationships that drive sustainable growth.
- Ignores True Costs: ROAS doesn't account for cost of goods sold (COGS), fulfillment, returns, or operational overhead.
- Misses Backend Revenue: It overlooks post-purchase customer behavior such as repeat purchases, subscription renewals, or the compound value of customer loyalty that drive profitability.
A high ROAS might look impressive on a dashboard, but without context, it can mask unprofitable campaigns, bloated acquisition costs, and poor retention.
New framework for sustainable growth
To build a modern growth marketing strategy, brands must move beyond vanity metrics and focus on KPIs that reflect both customer value and business scalability. That starts by distinguishing between metrics and key performance indicators (KPIs):
- Metrics track activity (clicks, impressions, sessions).
- KPIs track outcomes tied to business objectives (profitability, retention, customer value).
While revenue marketing uses KPIs that connect directly to immediate sales funnel performance, growth marketing focuses on how customers perceive, engage with, and commit to your business over time.
Growth KPIs measure relationship depth, customer value expansion and long-term scalability. They are forward-looking, predictive and tied to strategic goals— the real indicators of sustainable progress.
The eight growth KPIs that actually matter
1. Customer Acquisition Cost (CAC)
Customer Acquisition Cost is the total amount you spend to acquire one new customer, calculated by dividing your total sales and marketing expenses by the number of new customers acquired in that period.
Why It Matters: ROAS is meaningless without context. ROAS tells you what you made per dollar spent. CAC tells you what it costs to bring a customer in across all efforts, not just ads.
Advanced Tip: Go beyond paid CAC. Include content creation, influencer costs, agency fees, and platform tools. Use blended CAC to understand acquisition across paid, organic, referral, and partnership channels.
2. Customer Lifetime Value (LTV or CLV)
Customer Lifetime Value represents the total revenue you can expect from a customer over the entire duration of your relationship. The basic formula is straightforward:
LTV = (Average Order Value × Purchase Frequency) × Customer Lifespan
Why It Matters: Sustainable growth comes from increasing the value of each customer. If your LTV is less than or equal to your CAC, growth becomes mathematically unsustainable. You're literally paying more to acquire customers than they'll ever generate in revenue. The ideal benchmark is an LTV:CAC ratio of at least 3:1, though this varies by industry and business model.
LTV also serves as your scalability compass. Brands with high LTV can afford higher CACs, enabling them to outbid competitors for premium customer acquisition channels and accelerate growth.
3. Average Order Value (AOV)
Average Order Value measures the average revenue generated per transaction. While seemingly simple, AOV reveals insights about customer behavior and buying patterns.
Why it matters: Rising AOV often signals successful cross-selling and upselling strategies, improved product bundling, or better customer targeting. It directly impacts LTV calculations and can dramatically improve profit margins without increasing acquisition costs.
Growth Levers: Implement upsells, bundles, loyalty tiers, and free shipping thresholds to boost AOV.
4. Customer Retention Rate
Customer retention rate measures the percentage of customers who continue purchasing from your business over a specific period. The formula is:
[(Customers at End of Period - New Customers) / Customers at Beginning of Period] × 100
Why It Matters: Depending on your industry, acquiring new customers costs 5-25 times more than retaining existing ones, and existing customers spend 67% more on average than new customers.
High retention rates signal strong product-market fit, excellent customer experience and sustainable competitive advantages. Better retention also improves LTV, which improves your LTV:CAC ratio.
Retention Strategies: Personalized email flows, loyalty programs, post-purchase content, and frictionless customer support.
5. Engagement Metrics
This includes:
- Click-through rates (CTR)
- Time on site
- Email open and click rates
- Product page views
Why It Matters: Engagement is a leading indicator of brand resonance and purchase intent. A 20% lift in engagement can lead to a 15–20% increase in cross-sell and repeat purchase rates.
SEO Insight: High engagement signals relevance to algorithms and can improve organic visibility.
6. Conversion Rate
Conversion rate remains important but requires contextual analysis. To start, this is the percentage of website visitors who complete a desired action (usually a purchase).
Conversion Rate = (Total Sales / Total Visitors) × 100
Why It Matters: Conversion rate remains vital but should be evaluated alongside AOV and LTV. A high conversion rate with low-value purchases can still lead to unprofitable growth.
Optimization Areas: Site speed, UX/UI design, mobile responsiveness, checkout flow
7. Payback Period
Payback period measures time required to recoup CAC through customer revenue.
Why it matters: A shorter payback period improves cash flow and allows for faster reinvestment into marketing or operations. This is especially vital for bootstrapped or early-stage brands.
8. Campaign Scalability
This is your ability to scale your marketing campaigns without degrading performance.
Why It Matters: High ROAS at low spend is easy. But the true test of a healthy marketing strategy is whether it can scale CAC and maintain LTV margins.
Scalability Insight: Use predictive analytics and cohort-based tracking to identify channels and audiences that can scale profitably.
How to make the shift
To move beyond ROAS, you need a well thought out shift:
1. Audit your current metrics stack.
- Identify gaps — what are you tracking versus what matters for growth?
- Document all tracked metrics and their business impact
- Assess tracking accuracy and integration capabilities
2. Prioritize KPIs based on business maturity.
Efficiency Layer: CAC (blended and channel-specific),
Value Layer: LTV, AOV, LTV:CAC ratio
Predictive Layer: Retention rate, engagement metrics, payback period
Context Layer: Conversion rate, ROAS (for comparison)
Don’t view KPIs in silos. They work in concert. For example, a dip in conversion rate might be fine if AOV and LTV are climbing. The key is understanding the full picture.
The competitive advantage – why this shift matters now
Growth-ready brands are those that align marketing performance with business fundamentals: profitability, retention, and scalability.
The brands that win in the next decade won’t just buy attention—they’ll build customer equity.
Cart.com’s growth marketing team helps ecommerce and D2C brands implement KPI frameworks that drive sustainable, profitable growth.
Let’s talk about how we can unlock your next stage of growth.
Subscribe to our emails for the latest industry insights!
By entering your email, you agree to receive marketing emails from Cart.com
