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Reaktion AcademyMost popularReaktion.com’s Metrics Library

Reaktion.com’s Metrics Library

Explanation of all metrics and KPIs used in Reaktion dashboards and reports

Explainer for ecommerce metrics

Net Profit – Net profit is all revenue minus all expenses both variable, recurring and one-time within the selected period. In Reaktion, Net profit = Gross profit – Ad spend. In some cases, Gross profit and net profit can be the same if you do not have any other additional expenses. The numbers are excluding VAT – in Reaktion, we always use values excluding VAT to be able to report on the true Net Profit.

CLV – Customer Lifetime Value. Reaktion calculates your 1 day, 7 day, 30 day, 60 day, 90 day, 180 day, 360 day and 2 years CLV. We define avg. number of orders, aggregated revenue / total sales but we also identify the profit over time.

MER – Marketing Efficiency Ratio (MER) is total revenue (excluding VAT) divided by total ad spend from all marketing channels.
Total Revenue (Excl. VAT) / Total ad spend = MER.

Orders – Orders refer to the total number of sales generated by customers purchasing goods/services. These requests can be placed through various channels such as online platforms, physical stores, or over the phone. This can also be referred to as Sales.

Gross Profit excl. VAT – this is calculated as Revenue minus all costs ( COGS, shipping, Pick & Pack, payment fees and VAT (except marketing costs))

Revenue incl. VAT – total amount of money generated from sales or services, including the Value Added Tax (VAT). When revenue is stated as “including VAT,” it means the total revenue figure already has VAT factored into it. This is important for businesses to distinguish, as they need to know the portion of their revenue that is actual sales income and the portion that is tax.

Total Sales incl. VAT – refers to the total sales generated including VAT and refunds. Order edits are attributed to the order creation date.

COGS – Cost of Goods Sold are the direct costs incurred in producing the goods or services sold by the company. This includes expenses such as raw materials, labor, and manufacturing overhead. COGS=Opening Inventory+Purchases During the Period−Closing Inventory

Shipping Costs – Shipping cost is pulled directly from your e-commerce platform (same shipping costs as your customers pay), or estimated based on your shipping costs settings under Cost Settings.

Gross Sales – refers to the total revenue generated from all sales of goods or services before any deductions are made. It represents the initial amount of money a business brings in from its sales activities, and it does not account for any returns, allowances, or discounts.
Gross Sales=Total Quantity Sold × Selling Price per Unit

Gross Profit – Gross Profit measures the profitability of a company after deducting the cost of goods sold (COGS) from its total revenue. It represents the amount of money a company retains from sales after covering the direct costs associated with producing its goods or services.
Gross Profit=Total Revenue−Cost of Goods Sold (COGS)

Ad spend – Ad spend refers to the total amount of money a company allocates and spends on advertising activities within a specific period. This budget can be spread across various channels and platforms, depending on the company’s marketing strategy and goals.

Net Revenue – Net Revenue refers to the total revenue generated from sales after deducting any discounts, returns, and allowances. It represents the actual amount of money a company earns from its sales activities, excluding any costs directly associated with the production of goods or services (which are accounted for in the Cost of Goods Sold, or COGS).
Net Revenue=Gross Sales−Discounts−Returns−Allowances

Pick & Pack – refers to the process of selecting (picking) products from inventory and packaging (packing) them for shipment to fulfill customer orders. It is calculated based on your Pick & Pack cost settings per Order and/or item. 

Gross Profit Margin – Gross Profit Margin is a key financial metric that measures the profitability of a company’s products or services by expressing gross profit as a percentage of total revenue. It indicates how much money is retained from sales after accounting for the cost of goods sold (COGS), which includes direct production costs such as materials, labor, and manufacturing overhead.

AOV – Average Order Value is a metric used to measure the average sales incl. VAT generated per sale. Average Order Value (AOV) = Total sales incl. VAT / Number of Sales

Blended ROAS – Blended Return on Ad spend. Blended ROAS refers to the overall ROAS achieved across multiple advertising channels or campaigns. It takes into account the combined performance of all channels or campaigns to provide a holistic view of the effectiveness of the advertising efforts.
Blended ROAS = Total Revenue from all channels / Total advertising cost from all channels.

ROAS – Return on Ad Spend. ROAS is used to measure the revenue generated for every unit of currency spent on advertising. ROAS helps businesses evaluate the effectiveness of their advertising campaigns and optimize their advertising budget allocation.
ROAS = revenue generated from sales / ad spend

POAS – Profit on Ad Spend. POAS is calculated as Gross profit from ad campaigns / Ad spend. All the costs (including shipping, payment fees, etc) are taken into account, and the custom expenses too, when calculating POAS. We do not take into account orders that didn’t come from your ad campaigns.
POAS = Gross profit / attributed ad spend that generated the gross profit.

Conversion rate – refers to the percentage of website visitors or users who take a desired action, such as making a purchase, filling out a form, or subscribing to a newsletter. It is a key metric used to measure the effectiveness of marketing campaigns and the overall performance of a website or landing page.
Conversion rate = number of sales / total number of unique clicks

Paid Clicks – refer to the number of unique clicks users click on a paid advertisement, such as a pay-per-click (PPC) ad, sponsored post, or promoted listing. These clicks are typically generated through online advertising platforms like Google Ads or Meta Ads where advertisers pay for each click on their ads.

New Customers – New Customers are the Count of Unique Customers who placed their first Order in the selected Date Range. These are customers who have never purchased from your store before.

Repurchase Rate – also known as repeat purchase rate, refers to the percentage of customers who make a repeat purchase from a company within a specific period. This gives you an indication whether or not a certain product is well-liked or disliked by your customers.

Refunds excl. VAT – refers to the refunds of fully or partially refunded orders. Refunded orders are attributed to the order creation date.

Refund Rate – refers to the percentage of purchases that are refunded by customers within a specific period. It is a metric used to measure customer satisfaction, product quality, and overall business performance.

Total fixed costs – refers to the sum of all expenses that do not vary with the level of production or sales. These costs remain constant regardless of the volume of goods or services produced or sold by a company within a certain period. For example, rent, salaries, utility costs, insurance, etc.

Repeat Customers – refers to customers who make more than one purchase from a business over a certain period of time. These customers are valuable to businesses because they have already shown a level of trust and satisfaction with the products or services offered.

Net Sales – refers to the total amount of revenue generated from the sale of goods or services after deducting returns, discounts, and allowances. Net sales are an important metric for businesses as they represent the actual revenue earned from core business activities.
Net Sales = Gross Sales – Returns – Discounts – Allowances

Discounts – We identify the discount by ex. coupon codes.

Return Rate – refers to the percentage of products or services that are returned by customers relative to the total number of products or services sold. It is a key metric used to evaluate customer satisfaction, product quality, and overall business performance.
Return rate = (Refunds / Gross sales excl. VAT) x 100

CTR – Click-Through Rate. It is a metric used to measure the effectiveness of an online advertising campaign.
CTR = (Number of clicks / Number of Impressions) x 100

CPC – Cost Per Click. It is a pricing model used in online advertising, where advertisers pay a certain amount each time their ad is clicked. CPC is commonly used in search engine advertising, social media advertising, and display advertising.
CPC = Total cost of clicks / Number of clicks

CAC – Customer Acquisition Cost. It represents the average cost a business incurs to acquire a new customer. Calculating CAC is important for businesses to understand the effectiveness of their marketing and sales efforts and to ensure that the cost of acquiring customers does not exceed the lifetime value of those customers.

CPM – Cost Per Mille, which translates to the cost per one thousand impressions. CPM is a common pricing model used in advertising, especially in online and digital advertising, to determine the cost of reaching one thousand potential customers or viewers.

CPV – Cost Per View. It is a pricing model used in advertising, particularly in video advertising, where advertisers pay a certain amount each time their video ad is viewed by a user. CPV is often used in online video advertising campaigns, such as pre-roll ads on YouTube.

Inventory Stock Level – refers to the inventory stock level per product variant.

Thumb stop ratio – this metric is calculated as 3 second video plays divided by Impressions. The Thumb stop rate of your Meta Ads can be an incredibly valuable metric that demonstrates how effectively your videos are engaging audiences as they scroll their feeds.

Bounce rate – refers to the percentage of visitors to a website who navigate away from the site after viewing only one page. A high bounce rate can indicate that the landing page or website content is not engaging or relevant to visitors, leading them to leave without exploring further.

Attr. Revenue – Attributed revenue is the amount of revenue that can be attributed to a traffic source or campaign.

For further inspiration, please see Shopify’s 20 key metrics:
https://www.shopify.com/blog/basic-ecommerce-metrics