Is Your Store Financially Healthy? 7 Metrics You Need to Track

Did you know? Merchants who keep track of the right metrics tend to have a net profit margin of 25% compared to the average 20%. Discover the seven essential metrics every merchant should track. From conversion funnel performance to net profit margins, these key numbers help you make smart decisions, uncover hidden costs and set realistic growth goals for your store.

Know Your Business Stage and Key Metrics

1. Startup Phase

In the early days, every dollar counts. Through these metrics, you can quickly learn what product or marketing effort works and adjust your approach so you’re not wasting money.

• Conversion Funnel (Click-through Rate; Add-to-Cart Rate; Conversion Rate): Find out where visitors drop off before buying. 

Through these metrics, you will know whether a product is worth scaling or not while testing it through your advertising efforts. Instead of looking only at overall campaign or channel metrics, focus on the performance of ads for specific products or product lines. This helps you identify which products have strong potential and deserve more ad spend, rather than relying on broad averages that may hide underperforming items.

• After surveying thousands of TrueProfit merchants, we’ve identified the key benchmarks for profitable scaling:

  • CTR: ~1.5% for TikTok, and ~2% for Facebook.

  • ATC Rate:  6% - 7%

  • CVR: Aim for 2%+

Note: These benchmarks are more applicable to low-ticket products and may vary for high-ticket ones.

• Return on Ad Spend (ROAS): This metric measures the revenue generated for every dollar spent on advertising and helps you see which ads are bringing in more money.

ROAS is useful for spotting ads with scaling potential, but it doesn’t account for all costs. To get a clearer picture of true profitability, monitor ROAS alongside Net Profit on Ads Spend. ↓

• Net Profit on Ads Spend: Check that your ad spending is truly profitable.

This metric factors in all costs and reveals the true profitability of your advertising, enabling you to make better decisions to scale your ads profitably. 

A Net Profit on Ads Spend > 0 means your ads are generating real profits, while a Return on Ad Spend > 0 indicates that your campaigns are bringing in more revenue than the ad spend itself.

2. Scaling Phase

When your business starts growing, the following metrics help you see if you have a strong foundation for further expansion. You can decide where to invest more and where to cut back.

• Net Profit: Know your actual earnings after all expenses.

This metric is arguably the ultimate measure of a business's financial health. A healthy net profit means your business is making money, not losing it. 

Common mistake: Merchants often overlook ad spend and hidden fees, leading to lower-than-expected profits.

To get a clearer picture, go beyond the overall net profit and analyze breakdown metrics such as Net Profit per Product or Net Profit per Order.

• Net Profit Margin: See how much profit you keep compared to your sales.

This metric is crucial for determining if your business is financially sustainable and profitable enough to scale up.

To scale your business effectively, target a net profit margin of at least 15%. If your margin is 5% or lower, scaling becomes unrealistic, as it leaves little room for unexpected expenses or a sufficient scaling budget.

3. Maturity Phase

At this stage, growth might slow down, but your goal is to maintain strong profits and loyal customers. Tracking these metrics helps you optimize your spending and keep your business steady over time. 

• Customer Lifetime Value (CLV): Understand how much each customer is worth over time. At the maturity phase, CLV peaks as loyal customers make repeat purchases. This is the stage to maximize profitability by focusing on retention and engagement.

CLV helps you focus on the long-term value of customers rather than just immediate profits. By understanding it, you can justify spending more on acquiring and retaining customers, knowing that the investment will pay off in the long run.

• LTV:CAC Ratio: Make sure the money you spend to get a customer is well worth it.

Your LTV:CAC ratio isn’t one-size-fits-all—it varies across different customer segments. Acquiring new customers often requires higher ad spend, and they tend to buy less, leading to a lower ratio. On the other hand, loyal customers make repeat purchases, driving a higher LTV:CAC ratio over time.

For sustainable growth, aim for a 3:1 ratio or higher—this ensures you're generating at least 3x the revenue for every dollar spent on acquisition. A strong product-market fit can also help you hit this benchmark naturally by increasing customer retention and lifetime value.

Your Next Step

Are you ready to know exactly how much you’re earning? By tracking the right numbers for your business stage, you can stop guessing and start growing your profits. And if you want a hassle-free way to monitor these metrics in real time, TrueProfit does the heavy lifting for you—so you can focus on scaling with confidence. Check out TrueProfit app for better net profit analytics for Shopify.