The Three Metrics That Matter Most for Your Business Goals

(Plus What to Watch Out For)

In today’s dashboards, it’s easy to get distracted by ultimately meaningless numbers. While vanity metrics can feel satisfying, they rarely tell you whether your marketing is really working. To better understand metrics in relation to business goals, here are three key metrics to focus on.

1. Customer Acquisition Cost (CAC)

What it is: CAC is your customer acquisition cost. That means all your marketing spend, sales expenses, creative costs, tools—everything that goes into bringing someone in.

Why it matters: If you don’t know how much it costs to bring a customer aboard, you can’t judge whether your campaigns are profitable—or sustainable. As Entrepreneur puts it, CAC is not just a number. It’s “a philosophy, guiding businesses toward both profitability and meaningful customer engagement.” (Entrepreneur) It's important that small- and medium-size businesses keep a close eye on CAC to make smart decisions about scaling.

Note: CAC can be calculated in different ways. Some marketers include all acquisition-related costs (ads, sales commissions, creative, tools), while others strip out overhead (like salaries or software) for a cleaner view. The right approach depends on how you plan to use the number—consistency matters more than the exact formula.

How to use it:

• Compare CAC vs. Customer Lifetime Value (CLV) to ensure that each customer is worth acquiring.

• Track how CAC changes by channel (social, paid search, content) to know which channels are delivering the best acquisition efficiency.

• Use it to budget. If your CAC is rising, you may want to optimize or pause underperforming channels.

  
  

Formulas:

CAC = Total Sales & Marketing Costs ÷ Number of New Customers Acquired

CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan

CLV:CAC Ratio = CLV ÷ CAC

Healthy benchmarks for CLV:CAC:

• Aim for at least 3:1.

  • Example: CLV of $1,000 and CAC of $250 = 4:1 ratio (excellent).

  • For every dollar you spend, you make four.

• If it’s 1:1 or lower → you’re spending as much as you earn, which isn’t sustainable.

• If it’s 10:1 or higher → you might be under-investing in growth (leaving opportunity on the table).

TL;DR

CAC shows what you spend to acquire each customer, helping you judge if growth is efficient or too costly. It only tells the full story when tracked across all costs and compared with CLV. CLV measures the long-term value of a customer through repeat sales, loyalty, and advocacy—guiding how much you can invest to win and retain them.

2. Return on Investment (ROI) / Return on Ad Spend (ROAS)

What it is:

• ROI measures the net return you get from an investment, once you account for all costs.

• ROAS is more specific. It’s revenue earned from ad spend (typically, how much revenue you get back for each dollar spent on advertising). It’s useful for evaluating individual campaigns or channels.

  
  

Why it matters: It’s one thing to spend money but it’s another to make money. Senior leaders want metrics that clearly show financial outcomes, not just reach or impressions. Without ROI/ROAS data, you can’t tell which campaigns are delivering real value.

How to use it:

• Calculate ROAS for different campaigns and compare them to see which are most efficient.

• Use ROI for bigger-picture strategy—looking at net gains after all costs—not just ad spend.

• Make sure you’re counting all costs when calculating ROI (creative, management time, software, etc.). Vanity metrics often ignore those hidden costs. (Forbes)

Note: ROAS looks at revenue efficiency from ad spend, while ROI looks at profitability after all costs. Some marketers blur the two, but keeping the definitions separate makes your numbers clearer and avoids confusion.

Formulas:

ROAS = Revenue from Ads ÷ Ad Spend

ROI = Net Profit ÷ Total Investment × 100

Example: If total revenue is $50,000 and total costs are $30,000 → ROI = (50,000 – 30,000) ÷ 30,000 × 100 = 66.7%

Note: Don't confuse this with your profit margin. For every dollar you spend, you earned 67 cents (ROI). Your profit margin, using the same example, would be 40%. ROI looks at return vs. costs; profit margin looks at profit vs. revenue.

Healthy benchmarks:

There’s no universal benchmark for ROI, since it factors in all costs and varies by industry and business model. A common rule of thumb is to aim for around a 5:1 marketing ROI (meaning $5 returned for every $1 invested). Service-based and subscription businesses often achieve higher ROI than product or e-commerce companies, because recurring revenue extends customer value.

ROAS is somewhat easier to benchmark, though still dependent on margins:

• E-commerce: A healthy ROAS is typically 3:1 to 4:1 (break-even often sits near 2:1 once product, materials, and shipping costs are included).

• Lead generation: Acceptable ROAS can be 2:1 or even lower if customer lifetime value is high.

• Low-margin retail: Profitability often requires 4:1 to 10:1.Google Ads generally recommends 4:1 as healthy, though in practice many businesses target higher — in one of my past roles, we aimed for 8:1.

  
  

TL;DR

ROI helps you with big-picture decision making, by showing whether or not your overall marketing investment is profitable once you account for all costs (ads, creative, salaries, tools, etc.). This allows you to understand if your marketing is worth it compared to everything you’re putting in. Use it to evaluate long-term strategy, budgeting, and whether campaigns are actually driving growth.

ROAS helps with campaign efficiency. It focuses on just the advertising performance. How much revenue you generate for every ad dollar you spend. This helps you understand which campaigns and/or channels are working so that you can make informed decisions, pivot quickly, and forecast budget shifts.

3. Conversion Rate (and Quality of Conversions)

What it is: Conversion rate is the percentage of users who take a desired action, but it’s important to define what that action is and how you’re measuring it. Are you tracking unique visitors or total sessions? Are you including micro-conversions (like downloads or signups) or only final purchases? Clarity here prevents misinterpretation.

Why it matters: A high conversion rate means your messaging, UX, and targeting are effective. But if your conversions are low-value or non-actionable, then high conversion alone won’t move the needle. Conversion rates are a metric that matters, especially for growth-focused businesses.

Note: Benchmarks vary, but e-commerce conversions average 2–4%, B2B forms 1–3%, and landing page opt-ins 5–10%. The goal isn’t to hit a universal number, but to establish your baseline and keep improving.

How to use it:

• Segment conversions by quality. Are they from organic search, paid, referrals? Are they final purchasers or just signups?

• Optimize conversion paths (landing pages, checkout flows, forms) to reduce friction.

• A/B test different calls to action, page layouts, etc. to see what boosts conversion.

Formulas:

Conversion Rate (CR): Conversion Rate = (Number of Conversions ÷ Total Visitors) × 100

Example: If 200 people visit your landing page and 20 complete the form → CR = (20 ÷ 200) × 100 = 10% (10% of visitors took the qualifying action for completing the form)

Sales-Qualified Conversion Rate (SQL Conversion): SQL Conversion Rate = (Number of Sales-Qualified Leads ÷ Total Leads) × 100

Example: If you generated 100 leads and 25 are sales-qualified → SQL Conversion Rate = (25 ÷ 100) × 100 = 25% (of the leads you you snagged, 25% turned into sales)

Channel Conversion Rate: Channel Conversion Rate = (Conversions from Channel ÷ Total Visitors from Channel) × 100

Example: If 500 visitors come from paid ads and 30 convert → Channel Conversion Rate = (30 ÷ 500) × 100 = 6%

TL;DR

Conversion formulas don’t just show how many people take action—they reveal how effective your marketing and/or sales really are. A strong overall rate means your message and design are working, but breaking it down by quality (e.g., sales-qualified vs. casual signups) and channel (e.g., organic, paid, referrals) shows where growth is truly coming from. This helps you spot friction points, double down on high-value sources, and optimize the paths that lead to converting customers.

What to Watch Out For: Metrics in Context

• Impressions & Reach

  • Why they matter: Key for brand awareness and filling retargeting pools. But to move beyond vanity, they must be connected to downstream metrics — clicks, conversions, and ultimately revenue.

  • How to use them: Pair with cost-per-1,000 impressions, unique reach, or aided recall. If reach is high but traffic is low, test CTR and creative.

  Follower Count

  • Why it matters: Builds social proof and lowers future costs.

  • How to use it: Track growth rate, engaged followers, and follower-to-visit conversion. Watch for inflated numbers from contests or low-quality/non-converting followers.

  Page Views / Sessions

  • Why it matters: Indicates visibility and is useful for diagnosing funnel leaks.

  • How to use it: Look at scroll depth, time on page, landing-page conversion rates, and site speed. If traffic is strong but conversions lag, A/B test headlines, CTAs, and form fields.

  Engagement (Likes, Basic Reach)

  • Why it matters: Good for quick creative testing and community health checks.

  • How to use it: Prioritize saves, shares, link clicks, and conversions. Likes alone don’t prove value unless tied to deeper behavior.

  Email Opens

  • Why it matters: Rough deliverability signal, but limited since Apple Mail Privacy Protection.

  • How to use it: Pair with click-through rate, click-to-open rate, conversions, and revenue per send. If opens are high but clicks low, test subject lines, preview text, hero images, CTAs, and list hygiene.

    
    

  Rule of Thumb: Every top-of-funnel metric should connect to the next step down the funnel (reach → clicks → conversions → revenue/retention). That’s what turns “vanity” into diagnostic insight.

Putting It into Practice

1. Find CAC, ROI/ROAS, and Conversion Rates

2. Make sure everyone agrees on what “conversion” means, what costs count toward CAC, etc.

3. Set goals like: by end of next quarter, reduce CAC by 15% or Improve ROAS by channel by 20%.

4. Focus on trends, not day-to-day fluctuations.

5. Shift budget, test creatives, refine offers, and improve user experience based on insights.

6. Align marketing insights with sales, customer success, and finance so improvements show up in revenue, retention, and profitability — not just dashboards.

TL;DR

Instead of chasing dozens of metrics that may sound impressive, focus on the ones that really show whether your marketing is working: how much it costs to get a customer (CAC), what returns you’re getting on your spend (ROI/ROAS), and how good your conversion process is. When you hone in on those, everything else becomes secondary—and your decisions become a lot clearer.

A few notes: Benchmarks vary widely by industry and margin structure. Don’t overlook brand health and qualitative signals alongside hard numbers. Keep in mind that CAC and ROI are harder to pin down in today’s multi-touch, privacy-first landscape—but still possible with the right tools. Platforms like CallRail can help, though you’ll need to install their JavaScript tracking code in the backend of your site.