Customer Lifetime Value – A Simplified Overview
What is Customer Lifetime Value? Customer lifetime value (CLV) is one of the most important factors in determining your business’s present and future success. It’s an often-overlooked metric that accurately predicts how valuable customers are. By measuring the net profit you’ll take in throughout your entire relationship with a customer, you can narrow down exactly […]
Segment Customers Using RFM
Before diving into customer lifetime value (CLV), it’s important to understand the key elements of customer value analysis: recency, frequency, and monetary value (RFM). RFM is a method used to categorize customers from least to most valuable based on the following factors: By segmenting customers based on RFM, you can evaluate different customer groups and […]
Conversion rate – A Simplified Overview
What is Conversion rate? Conversion Rate (CVR) in in-app advertising represents the percentage of users who view an app-install ad, click on it, and complete a predetermined action. This metric helps app advertisers assess the effectiveness of their ads. The specific ‘conversion’ action depends on the pricing model: for cost per install campaigns, it’s app […]
Cost Per Acquisition – A Simplified Overview
What is Cost Per Acquisition? In marketing, cost per acquisition (CPA) refers to the total expense involved in converting a lead during a campaign. While some businesses define an acquisition strictly as a sale, others take a broader view, including actions like clicks or newsletter sign-ups. Note: CPA is a crucial metric for evaluating marketing […]
Average Order Value – A Simplified Overview
What is Average Order Value? Average order value (AOV) is a metric that tracks the average amount of money customers spend each time they place an order on a website or mobile app. To calculate AOV for your company, simply divide the total revenue generated by the number of orders placed. AOV serves as a […]
The average profit margins by industry (2023)
Industry Gross Profit Margin Net Profit Margin Advertising 26.20% 3.10% Apparel 53.04% 7.06% Auto 14.25% 3.96% Alcoholic Beverages 47.99% 5.07% Broadcasting 45.22% 10.40% Business & Consumer Services 31.80% 4.97% Computer Services 27.24% 3.42% Computers/Peripherals 36.88% 18.72% Drugs (Biotechnology) 62.25% -0.62% Drugs (Pharmaceutical) 67.35% 11.03% Education 47.90% 7.17% Electrical Equipment 33.53% 7.26% Electronics (Consumer & Office) […]
Net Profit Margin – A Simplified Overview
What is Net Profit Margin? Net profit margin, also known simply as net margin, quantifies the amount of net income or profit a company earns relative to its revenue. It is calculated by dividing net profits by revenues and is typically presented as a percentage or decimal. This metric demonstrates the proportion of revenue that […]
Net Profit – A Simplified Overview
What is Net Profit? Net profit is the amount left after deducting all expenses from total revenue in a given period. It varies by industry and management practices and is often called net income, net earnings, or the bottom line. These terms may slightly differ based on their placement on financial statements. The Formula for […]
Mastering Gross Sales – A Simplified Overview
What Are Gross Sales? Gross sales are the total income a business earns from all sales before applying any deductions such as discounts, returns, or expenses. In a B2C setting, it represents the total revenue from selling goods or services. In B2B transactions, the calculation can be more complex due to factors like bulk discounts […]