Running ads without knowing your key numbers is like driving blindfolded. These four metrics will tell you what’s working, what’s not, and where to scale. Let’s break them down with real-world context.
1. What’s Your Real CAC Limit Based on Margins?
Why it matters: If your margins can’t support your CAC, scaling ads will just burn cash.
Example:
You sell a product for £100. Your cost of goods is £40.
That leaves £60. Out of that, you pay:
- £10 for fulfilment
- £5 for returns
- £15 for overheads
Now you’ve got £30 left. That’s your max CAC if you want to break even on the first purchase. Spend more than that, and you’re relying on repeat sales to stay afloat.
Takeaway: Work backwards from your margins, not forwards from what others are paying.
2. How Does LTV Change Across Products?
Why it matters: Not all customers are worth the same over time.
Example:
- Customer A buys a £30 gift set once.
- Customer B buys a £20 moisturiser every month.
You might lose money acquiring both, but Customer B brings in £240 over a year. That’s your growth engine.
Takeaway: Track repeat purchases by product. Invest in the ones that lead to long-term value.
3. What’s Your Contribution Margin – And Why It Matters for Channels?
Why it matters: It’s what’s left after product costs and CAC – your actual profit per sale.
Example:
£100 sale
- £40 product cost
- £30 CAC
= £30 contribution margin
If you spend £50 on CAC instead, you’re down to £10. Not much room left to operate.
Takeaway: Use contribution margin to decide where to scale. It’s the most honest view of return.
4. Are You Driving Incremental Revenue – Or Just Winning the Last Click?
Why it matters: Some channels make the sale. Others set up the sale. Don’t kill top-of-funnel efforts just because they don’t close.
Example:
You run a Meta campaign that warms people up. They Google your brand and convert. Google Ads gets the credit, but Meta did the heavy lifting.
Takeaway: Test holdouts, check blended ROAS, and look at full-funnel behaviour. Invest in what grows the pie, not what just grabs the last slice.
Rounding Up
Before you scale your spend, know these four numbers inside and out:
- Your true CAC ceiling
- LTV by product or customer type
- Contribution margin per channel
- Which touchpoints drive net-new growth
