Everyone wants a single north star metric. Here's mine — and why I've used it across every brand I've worked with for the last decade.
Everyone wants a single north star metric. Boards love them. Investors love them. They give you something to rally around.
After 14 years and dozens of brands, mine is contribution margin per order, cohorted by acquisition channel.
That's a mouthful. Let me break it down.
Contribution margin per order tells you how much money you actually made after accounting for COGS, shipping, and variable marketing costs. Not revenue. Not ROAS. Actual contribution to the business.
Cohorted by acquisition channel tells you which channels are bringing in customers who are profitable — not just customers who convert.
Why this matters:
I've seen brands with incredible ROAS numbers that were losing money on every order when you factored in shipping and returns. I've seen brands with "bad" ROAS numbers that were printing cash because their AOV was high and their return rate was low.
The metric that matters is: did this customer, acquired through this channel, contribute positively to the business over time?
Everything else is a proxy. Some proxies are useful. None of them are the truth.
Build your reporting around contribution margin. It's harder to game. It's harder to misread. And it will tell you things about your business that ROAS never will.