I am working with a client that is pitching a big box retailer that the ROAS target for acquiring new users should be lower than the standard ROAS target because those new users increase the total aggregate lifetime potential revenue for the retailer. 1) Does this logic ring true? 2) Do you know of any retailers who actually do this, and how much of a discount are they willing to accept? ie) normally the goal would be 5X ROAS for an electronics category, but for new users they would take a 3X ROAS?
ROAS or ROAS per customer makes a big difference, I normally look at the latter and compare to the total profit made. You can further analysis using ROAS per sq meter (floor area) and study the patterns of the customers and floor areas.
Therefore using only a one-sided KPI not only not useful, but it can also be very dangerous.
For your question 2 - google for the answer focus on statistical information.
Answered 3 years ago