CES Ecommerce Analytics & Performance Metrics 1 — Questions and Answers
Question 1: What does conversion rate measure in ecommerce?
- The percentage of website visitors who complete a desired action such as making a purchase (Correct answer)
- The rate at which email subscribers convert to social media followers
- The percentage of cart abandonment relative to completed orders
- The ratio of paid to organic traffic on the website
Correct answer: The percentage of website visitors who complete a desired action such as making a purchase
Conversion rate is calculated by dividing the number of completed purchases (or other target actions) by the total number of website visitors, expressed as a percentage.
Question 2: What is Customer Lifetime Value (CLV or LTV) in ecommerce?
- The total revenue a business expects to earn from a customer over the entire relationship (Correct answer)
- The average order value of a customer's first purchase
- The total number of orders a customer places in a single year
- The discount value offered to loyal customers over time
Correct answer: The total revenue a business expects to earn from a customer over the entire relationship
CLV is the total net revenue (or profit) a business expects to generate from a customer account throughout the entire business relationship.
Question 3: What does cart abandonment rate measure?
- The percentage of shoppers who add items to their cart but leave without completing the purchase (Correct answer)
- The percentage of orders cancelled after payment is confirmed
- The rate at which customers abandon wish lists without adding to cart
- The percentage of returns initiated within 24 hours of purchase
Correct answer: The percentage of shoppers who add items to their cart but leave without completing the purchase
Cart abandonment rate measures the share of initiated shopping sessions where items were added to the cart but the transaction was never completed.
Question 4: What is Average Order Value (AOV) in ecommerce analytics?
- The average dollar amount spent per transaction on the store (Correct answer)
- The average number of items per customer order
- The average discount percentage applied per order
- The average shipping cost per completed order
Correct answer: The average dollar amount spent per transaction on the store
AOV is calculated by dividing total revenue by the number of orders over a period, indicating how much customers spend per transaction on average.
Question 5: What is the purpose of cohort analysis in ecommerce?
- To track the behavior and metrics of groups of customers who share a common characteristic over time (Correct answer)
- To compare the performance of different product categories side by side
- To analyze the seasonal trends in monthly revenue
- To segment customers by geographic region for targeting
Correct answer: To track the behavior and metrics of groups of customers who share a common characteristic over time
Cohort analysis groups customers by a shared characteristic (e.g., acquisition month) and tracks their behavior over time to understand retention, CLV, and purchasing patterns.
Question 6: What does the metric 'Return on Ad Spend' (ROAS) measure?
- The revenue generated for every dollar spent on advertising (Correct answer)
- The percentage of ad budget spent on returning customers
- The ratio of organic to paid traffic after a campaign
- The total cost of advertising as a percentage of gross revenue
Correct answer: The revenue generated for every dollar spent on advertising
ROAS measures how much revenue is earned for each dollar invested in advertising, calculated as total ad revenue divided by total ad spend.
CES Ecommerce Analytics & Performance Metrics 1
What does conversion rate measure in ecommerce?