Marketing KPIs
Weftwise's March orders rose from 960 to 1,000, and Rohan's team is pleased. Then Ishaan points out that conversion fell from 2.4% to 2%: the campaign brought more visitors, but a smaller share of them bought. Marketing KPIs exist to show where along the way customers are lost, and what each one costs to win.
The rule
Walk the funnel step by step, then price each customer.
A funnel is the sequence of steps a shopper takes, with a count at each step. Each step rate is the count at one step divided by the count at the step before:
| Step | February | Rate | March | Rate |
|---|---|---|---|---|
| Sessions | 40,000 | — | 50,000 | — |
| Viewed a product | 16,000 | 40% | 20,000 | 40% |
| Added to cart | 3,840 | 24% | 4,000 | 20% |
| Started checkout | 1,536 | 40% | 1,600 | 40% |
| Ordered | 960 | 62.5% | 1,000 | 62.5% |
Overall conversion is orders ÷ sessions: 960 ÷ 40,000 = 2.4% in February, and 1,000 ÷ 50,000 = 2% in March. It is also the product of the step rates, which is why one weak step drags the whole funnel down.
Then, price each customer:
- Customer acquisition cost (CAC) = marketing spend ÷ new customers won. March: ₹1,20,000 ÷ 240 = ₹500.
- Return on ad spend (ROAS) = revenue credited to an ad channel ÷ spend on it. Instagram: ₹1,60,000 ÷ ₹40,000 = 4, so each rupee of ads brought ₹4 of sales.
- Customer lifetime value (LTV), in its simplest form, is the gross profit a customer brings over all their orders. At ₹1,250 an order, a 40% margin and three orders on average, that is ₹500 × 3 = ₹1,500. Compared with CAC, LTV:CAC = 1,500 ÷ 500 = 3: each rupee spent on winning a customer comes back about three times.
The shortcut
Find the leak. Put this month's step rates beside last month's. The step whose rate changed is where to look; the steps that held steady are not the problem, however big their drop-off.
See the symptom
Overall conversion: 2.4% in February, 2% in March.
The trap is staring at the biggest drop-off. Most shoppers always leave between the first two steps, so 30,000 lost there looks alarming, but that rate did not change. A leak is a step that got worse.
Drills
Answer fast — trust the rule.
Which step is March's leak?
A customer brings ₹1,500 of gross profit over their lifetime and costs ₹500 to win. What does an LTV:CAC of 3 tell Rohan?
Remember
- Walk the funnel step by step, then price each customer.
- Find the leak: compare step rates with last month; the step that moved is the one to fix.
- Trap: mistaking the biggest drop-off, which is often normal, for the leak.