This is your execution manual for diagnosing and fixing every KPI failure in the right priority order.
If ROAS is failing, you start there. If that’s stable, move to the next KPI. No fluff—just pure problem-solving.
KPI Formulas & Explanations
| KPI | Formula | What It Measures | When It Increases | When It Decreases |
| ROAS (Return on Ad Spend) | Revenue / Ad Spend | Measures how much revenue is generated per dollar spent on ads. | AOV increases, CVR improves, or Ad Spend drops without reducing revenue. | AOV drops, CPA rises, or Ad Spend increases without more revenue. |
| CPA (Cost Per Acquisition) | Ad Spend / Conversions | Measures the cost to acquire a single customer or lead. | Ad Spend increases without more conversions, or CVR drops. | CVR improves, CTR increases, or CPC decreases. |
| CPL (Cost Per Lead) | Ad Spend / Leads Generated | Measures the cost of acquiring a single lead. | CTR decreases, CPC increases, or Lead Quality drops. | CTR improves, CPC decreases, or better targeting increases lead efficiency. |
| CVR (Conversion Rate) | (Conversions / Clicks) × 100 | Measures how many users convert after clicking an ad. | Landing page UX improves, offer aligns with audience, or lead quality increases. | Landing page friction increases, traffic quality drops, or form abandonment rises. |
| CTR (Click-Through Rate) | (Clicks / Impressions) × 100 | Measures how often people click after seeing an ad. | Ad creative improves, audience targeting is precise, or ad placement quality rises. | Ad fatigue increases, audience targeting weakens, or placements worsen. |
| CPM (Cost Per 1,000 Impressions) | (Ad Spend / Impressions) × 1000 | Measures the cost of getting 1,000 ad views. | Auction pressure rises, competition increases, or ad relevance drops. | Competition decreases, ad quality improves, or better placements reduce costs. |
| AOV (Average Order Value) | Revenue / Number of Orders | Measures the average amount spent per transaction. | Upsells, bundles, or high-ticket offers increase. | Discounting increases, order volume shifts to lower-value items. |
| LTV (Lifetime Value) | (Average Revenue Per Customer × Customer Lifespan) – CAC | Measures the total revenue a customer brings over their lifetime. | Retention improves, repeat purchase rate increases, or upsells succeed. | Customer churn increases, retention strategy weakens, or poor onboarding. |
| Customer Retention Rate | ((Customers at End of Period – New Customers) / Customers at Start of Period) × 100 | Measures how many customers stay over time. | Better post-purchase engagement, loyalty incentives, or customer success efforts. | Lack of follow-up, weak product/service experience, or competitive switching. |
| Churn Rate | (Lost Customers / Total Customers at Start) × 100 | Measures how many customers leave over time. | Poor retention efforts, market competition, or weak product fit. | Retention efforts succeed, pricing models improve, or better onboarding. |
| Bounce Rate | (Single-Page Sessions / Total Sessions) × 100 | Measures the percentage of users who leave without interacting. | Landing page UX issues, slow load times, or irrelevant traffic. | Page speed optimizations, better targeting, or engaging content strategy. |
KPI Failure Diagnostics Table (Priority Order)
| KPI Failing | Immediate Cause (Primary Issue) | Secondary Issue (If Primary Is Stable) | Final Check (If Both Are Stable) |
| ROAS ↓ | Cost Per Sale ↑ (High CPA without matching revenue growth) | Average Order Value ↓ (Low-priced purchases reducing revenue per customer) | Customer Retention ↓ (No repeat purchases, limited LTV growth) |
| Revenue ↓ | Transaction Volume ↓ (Less purchases happening) | AOV ↓ (Smaller purchase values dragging down revenue) | Customer Retention ↓ (Fewer repeat buyers, limiting LTV) |
| Conversion Rate ↓ | Landing Page Friction ↑ (Slow load times, bad UX) | Offer Mismatch ↓ (Offer doesn’t align with audience intent) | Lead Quality ↓ (Attracting the wrong type of users) |
| CPA ↑ | Ad Engagement ↓ (Low CTR leading to higher cost per action) | Conversion Rate ↓ (Landing page not converting) | Audience Targeting ↓ (Wrong people clicking, increasing waste) |
| CPL ↑ | Ad Engagement ↓ (Low CTR leading to higher cost per lead) | Conversion Rate ↓ (Landing page not converting) | Audience Targeting ↓ (Wrong people clicking, increasing waste) |
| Customer Retention ↓ | Post-Purchase Experience Weak (No follow-ups, poor onboarding) | Product/Service Expectations Mismatch (Customer disappointment) | Competitor Offers Stronger (Losing customers to better deals) |
| LTV ↓ | Retention Issues (Churn too high) | Upsell/Cross-Sell Strategies Weak | Product Market Fit Weak (Not enough long-term value) |
| AOV ↓ | Price Sensitivity ↑ (Customers reluctant to spend more) | Upsell/Cross-Sell Strategy Weak | Perceived Value ↓ (Customers don’t see higher price justification) |
| CTR ↓ | Ad Fatigue ↑ (People have seen the ad too many times) | Audience Relevance ↓ (Ad isn’t resonating) | Placement Quality ↓ (Ads are running in bad spots) |
| CPM ↑ | Auction Pressure ↑ (More competition increasing costs) | Budget Constraints ↑ (Daily budget too low for full reach) | Ad Relevance ↓ (Ad isn’t winning auctions) |
| Ad Fatigue ↑ | Frequency ↑ (Same people seeing the ad too often) | Creative Engagement ↓ (Old ad losing effectiveness) | Audience Size ↓ (Too small to refresh impressions) |
| Impressions ↓ | Budget Constraints ↑ (Daily budget too low for full reach) | Auction Pressure ↑ (More competition increasing costs) | Ad Relevance ↓ (Ad isn’t winning auctions) |
