CAC or ROAS? What's the difference between LTV and AOV? Everyone new to e-commerce gets lost in this sea of acronyms at some point. In this article, we've compiled the 30 most common terms you'll come across, grouped by theme and explained simply; whether you're launching your first store or want to speak the same language as your team, keep this as a handy reference.
Customer value and cost terms
CAC (Customer Acquisition Cost): Your total marketing and sales spend to win a new customer, divided by the number of customers acquired. It shows whether your ad budget is working efficiently.
LTV / CLV (Customer Lifetime Value): The total profit a customer generates over their entire relationship with you. LTV should be higher than CAC; otherwise every new customer is costing you money. You can find a step-by-step way to calculate and grow this ratio in our LTV guide.
To check whether your LTV/CAC ratio is healthy, you can follow a simple sequence:
- Divide total marketing spend for a given period by the number of new customers to calculate CAC,
- Add up the average lifetime profit generated by that same customer cohort to find LTV,
- Divide LTV by CAC to get the ratio; below 3 is generally a warning sign,
- If the ratio is low, first review the channels that could lower CAC, then the repeat-purchase steps that could raise LTV.
AOV (Average Order Value): Total revenue divided by the number of orders. Increasing AOV (cross-selling, bundle offers) is one of the easiest ways to extract more profit from every order.
ROAS (Return on Ad Spend): Shows how much revenue each unit of ad spend generates. A ROAS of 4 means every dollar spent brought in 4 dollars of revenue; you need to set a target ROAS based on your cost structure to ensure profitability.
ROI (Return on Investment): The ratio of profit generated by an investment (campaign, software, equipment) to the amount spent on it. Unlike ROAS, it's based on net profit rather than just revenue.
Conversion and traffic terms
Conversion Rate: The percentage of site visitors who complete a goal you've defined (usually a purchase). It varies by industry in e-commerce, but typically sits in the low single digits.
Cart Abandonment Rate: The share of visitors who add items to their cart but leave without completing the purchase. A high abandonment rate usually points to friction in the checkout process.
Bounce Rate: The percentage of visitors who land on a page and leave without visiting any other page. A high rate can signal that the page doesn't meet expectations or that it's loading too slowly.
Organic Traffic: Visitors who reach your site through unpaid (non-advertising) search engine results. Over the long term, it's the most sustainable traffic source.
Funnel: The sequence of stages a visitor goes through from first contact to purchase (view → add to cart → checkout → complete). It's used to spot where you're losing customers; we cover how to read this data with the right tool in our GA4 guide.
Marketing and advertising terms
CPC (Cost Per Click): The average amount you pay each time your ad is clicked. CPC rises for highly competitive keywords.
CPM (Cost Per Mille): The amount paid for a thousand impressions of your ad; usually tracked in brand-awareness campaigns.
CTR (Click-Through Rate): The percentage of people who saw your ad or link and clicked on it. A low CTR suggests the message or creative isn't grabbing attention.
Remarketing / Retargeting: Showing ads again, on other platforms, to users who previously visited your site but left without buying. It usually converts far better than cold traffic.
UGC (User-Generated Content): Reviews, photos, or videos that customers share about your product. It's seen as more trustworthy than brand content and helps drive conversions.
Influencer Collaboration: Promoting a product with content creators who reach a specific audience; micro-influencers (smaller but highly engaged audiences) often deliver higher engagement rates.
"Knowing the terms is the starting point; understanding which term changes which decision for your business is what actually makes the difference."
Inventory and operations terms
SKU (Stock Keeping Unit): A unique code assigned to each product variant (size, color, model). It's the foundation of inventory tracking and marketplace matching.
Fulfillment: The entire operational process from receiving an order to packing and shipping it.
Dropshipping: A sales model where the seller doesn't hold stock and has orders shipped directly from the supplier to the customer. It offers a low upfront cost but usually thin profit margins.
Buffer Stock: A safety margin published below actual inventory when selling across multiple channels, to prevent double-selling.
Marketplace: An online shopping venue like Trendyol, Hepsiburada, or Amazon where multiple sellers list products on the same platform.
Payment and finance terms
Virtual POS: Banking infrastructure that enables credit/debit card payments to be accepted online. We've gathered the criteria to weigh when choosing the right provider in our virtual POS guide.
Payment Gateway: Middleware software that securely relays customer card details to the bank or payment institution.
Chargeback: When a cardholder disputes a charge with their bank and has the payment reversed. Frequent chargebacks raise a seller's risk score with the payment provider.
Profit Margin: The remaining amount after costs are subtracted from the sale price, expressed as a share of the sale price. If revenue is growing while margin is shrinking, that growth may not be sustainable.
Customer relationship terms
Churn (Churn Rate): The share of customers who don't buy from you again within a given period. It's a critical metric for subscription and repeat-purchase businesses.
NPS (Net Promoter Score): A simple survey score that measures how likely customers are to recommend you to others; a quick indicator of overall customer satisfaction.
Omnichannel: Customers experiencing a consistent, integrated journey across channels like your website, physical store, marketplaces, and social media.
Personalization: The practice of offering product recommendations, email content, or campaigns based on a customer's past behavior; it drives far higher engagement than generic, one-size-fits-all messaging.
Acronyms at a glance
We've gathered the most commonly confused acronyms among the 30 terms above into a single table, along with their full forms; use it as a quick reference when talking with your team or reading a report.
| Acronym | Full Form | Short Definition |
|---|---|---|
| CAC | Customer Acquisition Cost | Average cost of acquiring one customer |
| LTV | Lifetime Value | Total lifetime profit generated by a customer |
| ROAS | Return on Ad Spend | Revenue ratio generated by ad spend |
| AOV | Average Order Value | Average amount per order |
| CTR | Click-Through Rate | Percentage of viewers who click |
| CVR | Conversion Rate | Percentage of visitors who convert to buyers |
| CPC | Cost Per Click | Amount paid per click |
| CPM | Cost Per Mille | Amount paid per thousand impressions |
| SKU | Stock Keeping Unit | Unique inventory code assigned to a product variant |
| NPS | Net Promoter Score | Score measuring likelihood a customer would recommend you |
Quick reminder: which term to check, when
- Assessing ad budget efficiency: CAC, ROAS, CPC, CTR
- Evaluating customer value: LTV, AOV, Churn, NPS
- Reviewing site performance: Conversion Rate, Cart Abandonment Rate, Funnel
- Setting up operations: SKU, Fulfillment, Buffer Stock
- Discussing payment infrastructure: Virtual POS, Payment Gateway, Chargeback
Most of these terms are really pieces of a single, connected story: acquiring the right customer at a reasonable CAC, convincing them to make a first purchase with a high AOV, and retaining them in a way that grows their LTV. The Şimşek Software panel brings most of these terms together in a single reporting screen instead of scattered spreadsheets, so you learn by looking at your own store's numbers rather than memorizing concepts.