intermediate
6 min read
The 5 Key Reality Metrics
Core metrics that drive performance marketing decisions
1. Conversion Rate (CVR)
Percentage of users who complete a conversion action. Formula: (Conversions / Impressions) × 100. Typical range: ~0.1–1% for cold traffic.
2. Cost Per Acquisition (CPA)
What you pay to acquire one converted user. Formula: Total Spend / Conversions. CPA targets are often set based on strategic objectives.
3. Return on Ad Spend (ROAS)
Revenue generated per dollar spent. Formula: Revenue / Ad Spend. Should be interpreted alongside unit economics and payback periods.
4. Lifetime Value (LTV)
Total economic value a user generates over their lifetime. Formula: Average revenue per user × Average retention period.
5. LTV:CAC Ratio
Sustainability metric comparing long-term value to acquisition cost. Formula: LTV / CAC. Below 1:1 is unsustainable, but context matters for early-stage products.