Business Metrics >> Business Metrics for Data-Driven Companies
1. Which of the following is NOT an example of a business metric?
- The percentage of returning customers at a chain restaurant
- The New York State sales tax rate
- The average time visitors remain on the company’s web site
- Sales revenues for three brands of baby formula for a month
2. Which of the following business metrics is an example of a revenue metric?
- Percent defective items from an assembly line
- Rental prices of apartment leases by locations
- Customer satisfaction with a product
- Average days inventory
3. Which of the following business metrics is an example of a profitability metric?
- How many fresh baked cakes have to be thrown away at the end of the day unsold
- The annual sales record of a company that makes phone apps
- Total annual costs of goods sold of an office product store
- A grocery store’s tracking record of customers’ fish purchases
4. Which of the following business metrics is an example of a risk metric?
- The loss due to unsold fresh fruits each year at a grocery store
- Monthly negative cash flow for a start-up
- Winter jacket sales during summer time
- Days inventory of computers in an electronics store
5. Identify which category the following business metric belongs to:
Units sales segmented by new and recurring customer
- Revenue metric
- Profitability metric
- Risk metric
6. The amount an airline spends on aviation fuel each month is what type of metric?
- Revenue metric
- Profitability metric
- Risk metric
7. An airline’s daily flight from Phoenix to New York is usually full, except for flights on Tuesdays and Wednesdays. What is the first change the airline should try?
- Increase the number of flights per day on Mondays, Thursdays, Fridays, Saturdays and Sundays.
- Decrease flight crews on Tuesdays and Wednesdays.
- Make advertisements about traveling on Tuesdays and Wednesdays to encourage more people travel on these two days.
- Offer discounts for Tuesday and Wednesday flights to customers.
8. The case above (Question 7) is an example of a ______ metric.
- Revenue
- Profitability
- Risk
9. One online shopping business found that 20% of shoppers quit during the checkout process without buying anything. A good next step would be:
- Send those customers a letter, email, or text with detailed instructions on how to use the checkout feature.
- Offer discounts to the 80% of customers who complete checkout as an encouragement for their patience.
- Add a small pop-up window on the checkout page with the texts “We are sorry if you are having trouble when checking out. We will fix it later.”
- When the reason that shoppers are dropping out of an online checkout is unknown, concluding that shoppers don’t understand the process well enough, are having second thoughts because prices are too high, or are simply irritated and need an apology, would be nothing more than a guess. A much better approach is to determine the real factors influencing dropout rates. This can be done through randomized experiments known as “A/B” Testing.
- Shoppers are randomly assigned to one of two groups: a group using the current process, and a group where minor changes are made to the process which may improve customer retention. Changes that result in significant improvement are kept, and others discarded. The video, Revenue Metrics: Amazon.com as a Leading Example of the Use of Dynamic Metrics – Part 2 at 3:23-4:46 discusses Amazon as an example of the sophisticated use of A/B testing for revenue optimization.
10. The average number of days inventory is held should be minimized for ALL of the following reasons EXCEPT ________.
- Customers are frustrated if something they want is not in stock
- The longer a product stays in inventory, the less likely it will be purchased
- It costs money to store the products
- Some products will be wasted completely if they don’t get purchased by a certain time
- The longer the negative float, the more interest a business has to pay
11. What is the estimated days inventory of Company X based on the information below?
Company X’s annual report listed a year-end inventory of $35.4 million, and annual cost of goods sold of $137.9 million.
- 93.7 days
- 67.2 days
- 3.9 days
- 94.3 days
12. A company sells its services “Net 60.” If it delivers the goods and provides an invoice in March, when can the company expect to be paid?
- March
- April
- May
- June
- July
13. The primary reason Egger’s Roast Coffee ran out of cash was:
- Rapid growth
- Inefficient production
- Unsold inventory
- Lack of innovation
14. To be a best-seller on Amazon, your book needs to…
- Be one of the top selling books in its Amazon topic subcategories
- Be popular and have good reviews
- Be sold all over the world
- Be one of the 1,000 best-selling books on Amazon
15. Amazon’s “frequently bought with” feature _________.
- Offers discounts if you buy two books
- Tells you how frequently the two books are bought together
- Is optimized to maximize Amazon’s revenues
- Is customized for your search terms
