Glossary
Terms, without 'it depends'.
One definition, one formula and one worked example per term. It grows every month — missing one? Email the editors.
- AOVAverage Order Value
- What a customer spends per order on average. The lever to pull when advertising gets more expensive: a 10% higher AOV means you can bid 10% more per click without losing margin.FormuleNaar de module
revenue ÷ number of orders → €84,000 ÷ 1,200 = €70 AOV
- CACCustomer Acquisition Cost
- What it costs to bring in one new customer — counting all marketing costs, not just ad spend. A healthy CAC is one you earn back within 1–2 orders.FormuleNaar de module
marketing costs ÷ new customers → €6,000 ÷ 150 = €40 CAC - Churncustomer attrition
- The percentage of customers (or subscribers) you lose in a period. For webshops without subscriptions: the share of last year's customers who bought nothing this year.FormuleNaar de module
customers lost ÷ customers at start of period → 30 ÷ 600 = 5% churn/month - Conversion rateconversion rate
- The percentage of visitors who actually buy. Dutch webshops sit roughly between 1% and 3%; above 3% you're doing something right — or your traffic is very warm.FormuleNaar de module
orders ÷ visitors → 1,200 ÷ 60,000 = 2% conversion
- LTVLifetime Value
- The total profit one customer brings you across the whole relationship. Together with CAC the most important ratio in ecommerce: LTV ÷ CAC above 3 is healthy, below 1.5 you're slowly bleeding out.FormuleNaar de module
AOV × margin × orders per customer → €70 × 35% × 4 = €98 LTV
- Return ratereturn rate
- The share of orders that comes back. Fashion sits at 20–40%, most other categories under 10%. Subtract returns from your revenue before you calculate ROAS or LTV — otherwise you're kidding yourself.FormuleNaar de module
returns ÷ orders → 96 ÷ 1,200 = 8% returned - ROASReturn On Ad Spend
- Revenue per euro advertised. Careful: ROAS says nothing about profit — a ROAS of 4 on a 20% margin is a loss. So always work through to POAS (profit on ad spend) or use your break-even ROAS as the floor.FormuleNaar de module
ad revenue ÷ ad spend → €12,000 ÷ €3,000 = ROAS 4.0 · break-even = 1 ÷ margin → 1 ÷ 0.35 = 2.9
Missing a term?
Email it to the editors — we'll add the definition, with a worked example.
