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The Most Important Ecommerce Marketing Metric You're Not Tracking How's business? Good? How can you tell? Intuitively, humans use ratios determine value. Unit Economics People use the term "ROI" or "Return On Investment" very loosely. Unit economics might sound fancy, but it's a really simple concept. I kept putting "units" in quotation marks because what you look at as your unit of economic value can significantly change how you approach growing your business. Transactional Unit Economics I remember someone once described selling through marketplaces, like Amazon.com, as the most addictive experience in the world. Transactional unit economics are expressed using a simple ratio: Cost Of Transaction Acquisition (COTA) : Average Order Value (AOV) This can be read as: "For every dollar I put in to acquiring a transaction, I get $X back." For the sake of whole numbers, there's nothing wrong with flipping that ratio around and using AOV:COTA which, from our example, would give you a nice round ratio of 2:1 (which you can reduce to a nice, clean "2").
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