Ecommerce Analytics & Performance Metrics Flashcards

What does conversion rate measure in ecommerce?

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.

What is Customer Lifetime Value (CLV or LTV) in ecommerce?

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.

What does cart abandonment rate measure?

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.

What is Average Order Value (AOV) in ecommerce analytics?

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.

What is the purpose of cohort analysis in ecommerce?

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.

What does the metric 'Return on Ad Spend' (ROAS) measure?

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.