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.
Formulerevenue ÷ number of orders → €84,000 ÷ 1,200 = €70 AOV
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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.
Formulemarketing costs ÷ new customers → €6,000 ÷ 150 = €40 CAC
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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.
Formulecustomers lost ÷ customers at start of period → 30 ÷ 600 = 5% churn/month
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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.
Formuleorders ÷ visitors → 1,200 ÷ 60,000 = 2% conversion
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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.
FormuleAOV × margin × orders per customer → €70 × 35% × 4 = €98 LTV
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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.
Formulereturns ÷ orders → 96 ÷ 1,200 = 8% returned
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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.
Formulead revenue ÷ ad spend → €12,000 ÷ €3,000 = ROAS 4.0 · break-even = 1 ÷ margin → 1 ÷ 0.35 = 2.9
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