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    Question

    To help a retail business increase its conversion rate,

    a data analyst should start by defining which of the following metrics?
    A Customer Acquisition Cost Correct Answer Incorrect Answer
    B Sales Revenue Correct Answer Incorrect Answer
    C Conversion Rate Correct Answer Incorrect Answer
    D Inventory Turnover Correct Answer Incorrect Answer
    E Gross Margin Correct Answer Incorrect Answer

    Solution

    The conversion rate is the critical metric to define when aiming to increase it, as it measures the percentage of visitors who complete a desired action, like making a purchase. Analyzing and improving this metric directly impacts the effectiveness of customer engagement strategies. A data analyst, by focusing on the conversion rate, can identify factors affecting customer behavior and suggest improvements. This KPI is crucial for targeting specific interventions to boost sales without solely relying on broader metrics like revenue, which may be influenced by external factors. The other options are incorrect because: • Customer Acquisition Cost focuses on the cost of acquiring customers, not conversion. • Sales Revenue reflects total earnings but not the efficiency of conversions. • Inventory Turnover pertains to stock movement, not sales conversion. • Gross Margin concerns profitability, not the customer’s purchase behavior.

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