Digital marketing’s biggest advantage is that almost everything can be measured. Its biggest trap is that businesses measure the wrong things — reach, likes, followers — and miss the numbers that decide profit.
Here are the four that matter most, with simple examples.
1. CPL — Cost Per Lead
CPL = ad spend ÷ number of leads. Spend ₹20,000 and get 80 enquiries, and your CPL is ₹250.
CPL is your early-warning signal. It tells you quickly whether a creative or audience is working. But a cheap lead that never answers the phone is worthless, so always read CPL alongside lead quality — how many leads turned into a site visit, consultation or booking.
2. CAC — Customer Acquisition Cost
CAC = total marketing and sales cost ÷ new customers. If those 80 leads become 8 customers, your CAC is ₹2,500 (before adding sales salaries or tools).
CAC answers the real question: how much does it cost to get one paying customer? If CAC keeps rising faster than your prices or margins, growth becomes unsustainable.
3. ROAS — Return on Ad Spend
ROAS = revenue from ads ÷ ad spend. Spend ₹10,000, generate ₹50,000 in revenue, and your ROAS is 5×.
A high ROAS looks great in a report, but it isn’t the whole story. A 5× ROAS on a product with a 15% margin can still lose money once you add costs. Always compare ROAS with your break-even ROAS (1 ÷ your profit margin).
4. LTV — Customer Lifetime Value
LTV = the total revenue a customer brings over the whole relationship. A salon client who visits monthly for two years is worth far more than their first appointment.
LTV is what lets you spend more to acquire a customer than their first purchase is worth — as long as LTV comfortably exceeds CAC. Many healthy businesses aim for LTV of at least three times CAC.
How they work together
- CPL tells you if your ads are attracting interest efficiently.
- Lead-to-customer rate tells you if your follow-up and sales process works.
- CAC tells you what a customer really costs.
- ROAS and LTV tell you whether that cost is worth paying — and how hard you can scale.
Start simple
You don’t need a dashboard on day one. A spreadsheet with weekly spend, leads, customers and revenue is enough to calculate all four. What matters is looking every week and letting the numbers — not opinions — decide where the next rupee goes.