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New Customer MER (Net Sales) is your total ad spend as a percentage of what first-time buyers actually paid for products, after discounts and refunds. Of the three new customer MERs, it’s the one to hold against your first-order margin.

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Formula

NC MER (Net) = ( Total Ad Spend ÷ New Customer Net Revenue ) × 100

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Formula Components

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How it works

Upstack builds the denominator from three pieces of first-order data. A first order is the earliest non-cancelled order for a Shopify customer in your store.
  1. Gross sales on first orders: line-item price × quantity.
  2. Discounts on those orders, as recorded on the Shopify order.
  3. Refunds on those orders. By default a refund lands on the day it was processed, so a June refund on a May first order lowers June’s denominator. Switch Refund Date Attribution to Original order date under Settings → Reporting and it moves back to May.
The numerator is your whole ad budget for the same dates. Upstack doesn’t split spend by campaign or audience.

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Example

An apparel brand sees heavy first-order returns from size exchanges. In September it spends $62,000 on ads. Discounts add about 4.7 points of MER here and refunds about 9.3. A further $9,000 in refunds on September orders arrives in October. Under the default refund date setting, it raises October’s NC MER (Net), not September’s. Switch to Original order date if you want each month’s figure to settle on its own orders, and expect recent months to keep rising as returns come in.

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How to interpret it

  • Compare it with first-order margin. New Customer CM1 % uses the same net revenue base. If NC MER (Net) is 55% and NC CM1 % is 60%, first orders barely cover ad spend before shipping and payment fees. That can still be a good trade if LTV 365 supports it.
  • A gap between gross and net MER is the efficiency cost of discounts plus refunds. Split it with New Customer Discounts and New Customer Refunds.
  • Watch the refund date setting in short ranges. With refunds dated by processing day, a slow sales week followed by a wave of returns can push NC MER (Net) up sharply even though spend was steady.

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FAQ

Both use total ad spend. CAC divides it by the number of new customers. NC MER (Net) divides it by the net sales those customers generated on their first order, so it also moves with order value, discounts and refunds.
With Refund Date Attribution set to Original order date, refunds processed today reduce the net revenue of the month the order was placed. Past months keep changing until returns stop coming in.
No. It starts from line-item sales, so shipping charges and tax are left out. NC MER uses order totals that include them.
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