This glossary provides clear definitions and calculation methods for essential business metrics used across ecommerce, retail, sales, marketing, and finance. It serves as a practical reference for analysts, founders, and teams building dashboards and tracking performance.
🛒 E-commerce Metrics
Conversion Rate (CR)
Definition: Percentage of visitors who complete a desired action (e.g., purchase).
Formula: (Conversions ÷ Total Visitors) × 100
Why it matters: Measures how effectively traffic turns into revenue.
Average Order Value (AOV)
Definition: Average amount spent per order.
Formula: Total Revenue ÷ Number of Orders
Why it matters: Increasing AOV boosts revenue without increasing traffic.
Cart Abandonment Rate
Definition: Share of users who add items to cart but don’t complete checkout.
Formula: ((Carts Created − Purchases) ÷ Carts Created) × 100
Why it matters: Highlights checkout friction and pricing issues.
Customer Lifetime Value (CLV)
Definition: Total revenue expected from a customer over the relationship.
Formula (Simplified): AOV × Purchase Frequency × Customer Lifespan
Why it matters: Guides acquisition spend and retention strategy.
🏬 Retail Metrics
Sell-Through Rate
Definition: Percentage of inventory sold in a period.
Formula: (Units Sold ÷ Units Available) × 100
Why it matters: Indicates demand accuracy and inventory efficiency.
Footfall
Definition: Number of customers entering a store.
Formula: Total Store Visitors
Why it matters: Used with conversion rate to assess in-store performance.
Inventory Turnover
Definition: How often inventory is sold and replaced.
Formula: COGS ÷ Average Inventory
Why it matters: Reflects stock efficiency and cash utilization.
💼 Sales Metrics
Sales Pipeline
Definition: Total value of open opportunities across stages.
Formula: Sum of Deal Values in Open Stages
Why it matters: Supports revenue forecasting and pipeline health checks.
Win Rate
Definition: Percentage of deals closed successfully.
Formula: (Closed-Won Deals ÷ Total Deals) × 100
Why it matters: Measures sales effectiveness and lead quality.
Average Deal Size
Definition: Average revenue per closed deal.
Formula: Total Revenue ÷ Closed Deals
Why it matters: Key input for forecasting and capacity planning.
Churn Rate
Definition: Percentage of customers lost in a period.
Formula: (Customers Lost ÷ Customers at Start) × 100
Why it matters: Indicates retention health and satisfaction.
📣 Marketing Metrics
Customer Acquisition Cost (CAC)
Definition: Cost to acquire a new customer.
Formula: (Marketing + Sales Costs) ÷ New Customers
Why it matters: Evaluates marketing efficiency and profitability.
Return on Ad Spend (ROAS)
Definition: Revenue generated per unit of ad spend.
Formula: Ad Revenue ÷ Ad Cost
Why it matters: Measures campaign effectiveness.
Funnel Conversion Rate
Definition: Percentage moving from one funnel stage to the next.
Formula: (Stage B Users ÷ Stage A Users) × 100
Why it matters: Identifies drop-offs in the customer journey.
💰 Financial & P&L Metrics
Revenue
Definition: Total income generated from sales.
Formula: Price × Quantity Sold
Why it matters: Top-line indicator of business scale.
Gross Profit
Definition: Profit after direct costs.
Formula: Revenue − COGS
Why it matters: Shows core profitability of products/services.
Gross Margin
Definition: Gross profit as a percentage of revenue.
Formula: (Gross Profit ÷ Revenue) × 100
Why it matters: Measures pricing power and cost efficiency.
Operating Profit
Definition: Profit after operating expenses.
Formula: Gross Profit − Operating Expenses
Why it matters: Indicates operational efficiency.
Net Profit
Definition: Final profit after all expenses and taxes.
Formula: Revenue − All Expenses − Taxes
Why it matters: Bottom-line business performance.
Cash Flow
Definition: Net movement of cash in and out of the business.
Formula: Cash Inflows − Cash Outflows
Why it matters: Ensures liquidity and operational stability.
Forecast vs. Actual
Definition: Comparison between predicted and real performance.
Formula: Actual − Forecast
Why it matters: Evaluates forecast accuracy and planning quality.