KPI METRICS SOP

OVERALL IDEAL METRICS OF A WINNING PRODUCT:

CPM = Under $1 or ₹90

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CTR = At least 1%

CPC = Under $0.1

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ROAS = At least 7-10x if using COD form / At least 4-6x if using one
click checkout
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CPP = Under $1.5 if using COD form / Under $3 if using one click
checkout
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BEROAS: Price your product accordingly that it does not have
BEROAS over 1.8
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METRIC DIFFERENCES BETWEEN COD FORM & ONE CLICK

CHECKOUT:
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A COD (cash on delivery) form is an extra “buy now” button on your store that helps customers
check out instantly with cash on delivery.

It increases conversion rates but decreases the quality of addresses received.

Whereas a one-click checkout works the opposite way and makes people verify their
authenticity by asking for an OTP while checking out.

It results in a conversion rate drop off but increases address quality.

RELATIONSHIP BETWEEN ROAS & DELIVERY RATES:

COD Form example:

You’re using a COD form on your website.

Let’s assume the following numbers:

Your ad spend = ₹5000

Your Facebook ROAS = 10x

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Your delivery rate = 35%

Which means your ACTUAL ROAS = FB ROAS X Delivery rate

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= 10 X 35%

= 3.5

So your ACTUAL REVENUE = Ad spend X Actual ROAS

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= 5000 X 3.5
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= 17,500

In this case, while your Facebook ROAS might look high, your actual ROAS will only be
dictated by your delivery rate.

And since you cannot know your delivery rate before you ship your products, it’s safer to
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assume a low delivery rate to make better advertising decisions.

Plus, you will end up paying for a lot of RTOs and that also factors in to your actual
ROAS.
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One Click Checkout example:

You’re using a One Click Checkout on your website.

Let’s assume the following numbers:

Your ad spend = ₹5000
Your Facebook ROAS = 5x
Your delivery rate = 80%

Which means your ACTUAL ROAS = FB ROAS X Delivery rate

= 5 X 80%

=4

So your ACTUAL REVENUE = Ad spend X Actual ROAS

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= 5000 X 4

= 20,000

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In this case, your Facebook ROAS will be lower, but much closer to your actual ROAS
since delivery rates are much higher.
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In such a case, it’s easier to make scaling decisions as you can fairly assume your
delivery % from the beginning.

There’s a very low % of RTO which also helps in better actual ROAS assumptions.
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