How to Improve ROAS by Focusing on What You Can Control: Conversion Rate, AOV, and LTV

When it comes to digital advertising, one number is often top of mind: ROAS (Return on Ad Spend). As businesses scramble to maximize every dollar spent on ads, there’s a lot of pressure to drive high returns—especially when competition for ad space on platforms like Google Ads and Meta is fierce.

But here’s the thing: You can’t control how many competitors are bidding on the same search terms or targeting the same audience. You’re essentially playing in an auction where everyone’s vying for attention, and costs can fluctuate rapidly.

So, what’s the best way to improve ROAS when some factors are completely out of your hands? Focus on what you can control: CRO (Conversion Rate Optimisation), AOV (Average Order Value), and LTV (Customer Lifetime Value).

Let’s dive into how optimizing these three metrics can help you drive better results without having to constantly outbid your competitors.

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1. CRO (Conversion Rate Optimization): Turning More Clicks Into Customers

A conversion rate is the percentage of people who complete a desired action (like making a purchase) after clicking on your ad. If your conversion rate is low, you’re spending money to drive traffic that’s not taking action. That means even a high ad spend might not be producing results.

How to improve conversion rates:

Optimized Landing Pages: Your landing page should match the promise of your ad. If you’re advertising a specific product or promotion, make sure visitors see that product front and center when they click. Streamline the user experience to make it easy for people to convert.
Strong CTAs: A clear, compelling call-to-action (CTA) is critical. Whether it’s “Shop Now,” “Get Started,” or “Learn More,” make sure your CTA directs users toward the next step.
Engaging Creative: Having content that sticks out and grabs attention is crucial to improving conversion rates on media placements. Especially on platforms where people are not looking to shop, but rather scrolling through for entertainment.
Trust Signals: Add customer testimonials, reviews, and trust badges. The more you can reassure potential buyers that they’re making the right choice, the higher your conversion rate will be.

Improving conversion rate is the fastest way to boost ROAS because you’re turning more of your paid traffic into actual customers. More conversions mean more revenue from the same spend.

2. AOV (Average Order Value): Get More from Each Sale

Average Order Value (AOV) is the average amount of money customers spend per transaction. Increasing AOV means each customer is worth more to you, which directly improves your ROAS.

How to increase AOV:

Upsell & Cross-sell: If a customer is buying one product, suggest complementary items that enhance the original purchase. For example, if someone buys a pair of shoes, recommend matching socks or accessories.
Bundle Deals: Offer discounts or special deals for customers who buy multiple items together. “Buy 2, get 1 free” or “Spend $50, get 10% off” incentivize customers to increase their order value.
Free Shipping: Offer free shipping on orders over a certain amount. This not only encourages higher cart values but also provides an additional incentive for customers to buy more.

Increasing AOV means you get more revenue for each transaction, which improves the overall efficiency of your advertising spend.

3. LTV (Customer Lifetime Value): Building Long-Term Profitability

While conversion rate focuses on immediate results, LTV (Customer Lifetime Value) focuses on the long-term relationship you have with a customer. LTV represents the total amount of money a customer is expected to spend with your brand over the course of their lifetime.

Improving LTV is an excellent way to reduce the pressure of having to constantly find new customers, which can be expensive, especially when bidding against competitors.

How to increase LTV:

Loyalty Programs: Reward customers for repeat purchases with discounts, points, or exclusive offers. The more a customer feels valued, the more likely they are to return.
Engage Post-Purchase: Keep customers engaged even after they’ve made a purchase. Use email marketing to offer recommendations, discounts, or updates on new products.
Customer Support & Experience: Ensure that your customer service is top-notch. A satisfied customer is much more likely to return and refer others.

The key to increasing LTV is to build a loyal customer base that returns over and over again. When you can increase the value of a customer over time, you lessen the need to constantly chase new, expensive leads.

Why Focusing on These Three Metrics is Crucial for ROAS

Let’s recap:

CRO turns more of your traffic into customers, meaning you get more value from each click.
AOV increases the value of each sale, so you’re getting more revenue without having to increase traffic.
LTV ensures that you’re building long-term relationships with customers who keep coming back and spending more.

By improving these three metrics, you’re essentially maximizing the value of every customer interaction, which directly boosts your ROAS.You don’t have to outbid your competitors for every keyword or audience. Focus on improving what you can control—and you’ll see a higher return on your ad spend. When you do this, your ads become more efficient, and your marketing dollars stretch farther.

Conclusion: Focus on What You Can Control to Improve ROAS

The reality is, ROAS isn’t just about bidding higher on ads. It’s about optimizing the customer journey at every touchpoint. If you can get more conversions, increase AOV, and improve LTV, you’ll see better returns without constantly upping your budget.

So, instead of competing for the top spot in the ad auction, invest your energy in improving the factors you can control—and watch your ROAS improve as a result.