Marketing reports are full of three-letter metrics. CPL, CAC and ROAS all measure efficiency, but in different ways. Using the wrong one can lead to bad decisions. This guide explains each with simple examples.
The Three Metrics
| Metric | Formula | Answers |
|---|---|---|
| CPL (cost per lead) | Marketing spend ÷ number of leads | How much does each enquiry cost? |
| CAC (customer acquisition cost) | Sales and marketing cost ÷ number of new customers | How much does each new customer cost? |
| ROAS (return on ad spend) | Revenue from ads ÷ ad spend | How much revenue per unit of ad spend? |
A Worked Example
Imagine you spend 2,000 on ads in a month. You get 100 leads, and 10 become customers who spend 500 each.
- CPL = 2,000 ÷ 100 = 20
- CAC (ad cost only) = 2,000 ÷ 10 = 200
- Revenue = 10 × 500 = 5,000, so ROAS = 5,000 ÷ 2,000 = 2.5
These numbers are examples only, to show the math, not benchmarks.
Which Metric Fits Which Business?
| Business model | Primary metric | Why |
|---|---|---|
| Local lead generation (clinics, contractors) | CPL and cost per booked job or patient | Value comes after the lead is qualified |
| Ecommerce | ROAS, plus profit after costs | Revenue is tracked online |
| SaaS and B2B | CAC and payback period | Long sales cycles and recurring revenue |
| Brand awareness | Reach and cost per result, with caution | Not directly tied to sales |
Break-Even Logic
A metric is only good or bad compared with your profit. For ecommerce, break-even ROAS is roughly 1 divided by your margin. For lead businesses, your maximum affordable CPL depends on how many leads become customers and what each customer is worth.
Common Reporting Mistakes
- Celebrating a low CPL while leads never become customers
- Using ROAS without including product and delivery costs
- Mixing ad cost and total sales cost when comparing CAC
- Ignoring lead quality. See how to stop paying for junk leads
What to Track Together
- Spend
- Leads and cost per lead
- Qualified leads and customers
- Revenue or value per customer
- Profit, where you can
Frequently Asked Questions
What is a good ROAS?
It depends on your margin. Compare against your own break-even, not other businesses.
Can I use all three?
Yes. They answer different questions and work best together.
The Bottom Line
Choose the metric that matches how your business makes money, and always connect it to profit. Ask for a free marketing audit to review your numbers.
Disclaimer: This article is for general information only and is not legal, medical or compliance advice. Prices, features, policies, laws and results can change or may not apply to your situation, and we do not guarantee accuracy, outcomes or future performance. Please verify important details, including pricing, regulations and commitments, with the official source or website, or a qualified professional, before acting on them.