This question cannot be answered. There is no general value for a good or bad MER that you can use as a guide. You can only judge what a good MER is for your company individually. This depends on the value at which you are profitable. What is your profitability margin? One company may be profitable with an MER of 1.5, while another with an MER of 7. So, you can't judge whether that's a good or bad MER based solely on the value. You'll learn how to calculate the individual target MER for your company in the next section.
How to calculate your target MER
By selecting the Marketing Efficiency Ratio as your KPI, you've taken an important first slovenia phone number data step, but that alone isn't enough to assess profitable sales growth. Because, of course, your company has many other costs besides marketing costs. Therefore, you need to set a specific target for your marketing efficiency at which you know your company is operating profitably. How many euros in sales do you need to generate with one euro of marketing budget for your company to be profitable?
To calculate this, you need to know your numbers exactly. Numbers refer to unit economics – that is, what is spent per product on shipping, COGS (Cost of Goods Sold), payment provider, etc.? With a list of all cost items and a profitability target, you can then determine your target KPI for the MER.
To help you with the calculation, we have created our MER calculator . The example below shows what such a calculation might look like.
Calculation of the target value for the Marketing Efficiency Ratio (MER).
Calculation of the target MER
Due to various factors, such as the degression of fixed costs, the target KPI is not linearly linked to sales. So, create a spreadsheet and calculate different scenarios. This will help you understand how the target KPI behaves at different sales levels.