Track what matters! Here’s a focused guide on the key metrics that help D2C founders make smarter decisions, optimise spend, and drive sustainable growth.
1. Revenue Metrics (GST-Aware)
- Gross Revenue (Incl. GST): Total sales including GST. Useful for top-line tracking and reporting.
- Net Revenue (Excl. GST): Revenue after removing GST, discounts, and returns. Use this to measure real performance and profitability.
- Average Order Value (AOV): Formula: Revenue ÷ Total Orders. Higher AOV = better unit economics.
- Average Revenue per User (ARPU): Formula: Net Revenue ÷ Total unique suers. A high-leverage metric to align users with revenue.
- Monthly Recurring Revenue (MRR) (for subscription D2C): Total predictable revenue from active subscribers, net of GST.
2. Profitability & Contribution Margins
Profit = What’s left after each layer of cost. Break it down like this:
- CM1 (Contribution Margin 1): Net Revenue – Cost of Goods Sold (COGS). Tells you Product-level profitability.
- CM2 (Contribution Margin 2): CM1 – Fulfilment, Logistics Costs (shipping, packaging, etc.) and Direct Marketing Cost (Ad Spend). Tells you Operational profitability.
- CM3 (Contribution Margin 3): CM2 – Indirect Marketing. Tells you True contribution after growth investments.
- Customer Acquisition Cost (CAC): Total marketing + sales cost ÷ new customers acquired.
- Customer Lifetime Value (LTV): Predicted net revenue generated by a customer over their lifetime.
- LTV:CAC Ratio: Ideal benchmark is 3:1 — spend Rs.100 to earn Rs.300.
- Gross Margin (%): CM1 ÷ Net Revenue.
- Contribution Margin % (CM1, CM2, CM3): Track over time to understand scaling efficiency.
- Return on Ad Spend (ROAS): Net Revenue ÷ Paid media spend.
3. Retention, Churn & Loyalty (D2C-Focused)
Retention is where profit lives. Especially in crowded D2C markets.
- Repeat Purchase Rate (RPR): % of customers who place more than one order. (Good benchmark: 25–35%+ depending on category.)
- Customer Retention Rate: % of customers returning within a defined time window (30/60/90 days).
- Customer Churn Rate: 1 – Retention Rate. More relevant for subscription-based D2C models.
- Customer Reorder Interval: Average time between first and second purchases.
- Time to Second Purchase: Helps map the “window of intent” and tailor marketing nudges.
- Net Promoter Score (NPS): A measure of customer loyalty and satisfaction.
- Active Customer Rate: % of customers who purchased in the last 30/60/90 days.
- Customer Lifetime Value (LTV): Retention drives LTV. Consider both historical and predicted LTV.
- Cohort-Based Retention: Track customer behaviour by acquisition source, campaign, or time period.
- Subscription Retention (if applicable): Track average tenure, pause vs cancel behaviour, and reasons for churn.
4. Funnel & Conversion Metrics
Track how efficiently you’re converting traffic into paying customers:
- Site Traffic: Unique visitors per period.
- Conversion Rate: % of site visitors who make a purchase.
- Cart Abandonment Rate: % of users who add to cart but don’t complete checkout.
- Checkout Abandonment Rate: Users who start checkout but drop off.
- Bounce Rate: % of users who leave after one page.
5. Engagement & Marketing Effectiveness
- Email Open Rate: Gauge of email subject and timing performance.
- Click-Through Rate (CTR): Percentage of email/ad viewers who click.
- Subscriber Growth Rate: Growth of your email/SMS base over time.
- Influencer / Affiliate ROI: Revenue driven ÷ total partnership cost.
- Organic vs Paid Traffic Split: Aim for balance to reduce CAC dependence.
6. Fulfillment, Returns & Inventory
- Order Fulfilment Time: Also called, Time to Fulfil, this is the average time between customer placing the order and receiving the Order. It tracks the operational efficiency of your brand. Track this separately for each channel to get a clear picture.
- Order Fulfilment Rate: Formula:
(Orders Fulfilled / Total Orders Placed) × 100. Also called Fill Rate, Order Fulfilment Rate is a metric that measures how effectively a business can fulfil customer orders. - Order Accuracy Rate:
(Accurate Orders Shipped / Total Orders Shipped) × 100. This Indicates picking/packing efficiency and process reliability. - Shipping Cost per Order: Total shipping costs / total number of shipped orders. Includes all courier, packaging, and handling costs. Helps optimize courier mix and weight-based pricing.
- Backorder Rate:
(Orders Not Immediately Fulfilled / Total Orders) × 100. This could be because of non-availability of stock. High backorders hurt customer trust and is a key signal of your inventory planning. - Return Rate: % of orders returned. High returns = friction in size, quality, or expectation.
- Stockout Rate: % of time key SKUs are out of stock.
- Inventory Turnover: COGS ÷ Avg Inventory. Shows how fast stock is selling.
7. Financial Health & Cash Flow
- Burn Rate: Monthly net cash outflow.
- Runway: Months left at current burn rate.
- Operating Margin: Operating Profit ÷ Net Revenue.
- Revenue Concentration: % of total revenue from top 5 SKUs or top 10% of customers. High concentration = risk.
- GST Payable vs Input Credits: Track GST collected vs input tax credits from purchases. Key for cash flow and compliance.
Pro Tips for D2C Operators
- Always analyze revenue net of GST for real profitability insights.
- Use CM1/CM2/CM3 to spot where your profit leaks are — is it cost of goods, shipping, or performance marketing?
- Segment your retention data by channel, product, and first purchase value — your best customers usually have early signals.
- Never assume ROAS = profit. Factor in fulfillment, CAC, and returns to see the full picture.