META MARKETING ANALYTICS PROFESSIONAL CERTIFICATE

Course 4: Data Analytics Methods for Marketing

Week 2: Analytics for Planning and Forecasting

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CONTENT

This week you will get an overview of common descriptive metrics for marketing, including Return on Ad Spend and Return on Investment. You will be introduced to the importance of Customer Lifetime Value and how to forecast marketing outcomes using linear regression analysis.

Learning Objectives

  • Define the most commonly used descriptive metrics for marketing
  • Understand the importance of Customer Lifetime Value (CLTV) and how it is calculated
  • Describe linear regression
  • Forecast marketing outcomes using linear regression

PRACTICE QUIZ: DESCRIPTIVE METHODS

1. You can have multiple secondary KPIs. True or False?

  • False
  • True (CORRECT)

Correct: That’s right! We should have one primary KPI but can have multiple secondary KPIs.

2. “How has inventory moved in the last 12 months?” is a question that would use _____ analytics to find the answer.

  • Prescriptive
  • Predictive
  • Descriptive (CORRECT)

Correct: That’s right! Descriptive analytics look at what happened.

3. What is the ROAS for the campaign displayed here?

Product Sold$2,000
Advertising Cost$1,000
ROAS for Campaign Display
  • 200% (CORRECT)
  • $3000
  • 100%
  • $100

Correct: That’s right! Remember our ROAS formula is ROAS = (revenue made from ads / advertising spend) * 100 and should be expressed as a percentage.

4. What are the two key differences between ROI and ROAS?

  • ROI is generally used in advertising, while ROAS is generally used in finance
  • ROI only uses direct advertising spend, whereas ROAS uses all costs
  • ROAS uses revenue, not profit (CORRECT)
  • ROAS only uses direct advertising spend, whereas ROI uses all costs (CORRECT)

Correct: That’s correct!

5. Which of the following could be examples of customer profitability segmentation strategies? (Choose all that apply)

  • CPM analysis
  • Persona-based segmentation (CORRECT)
  • RFM analysis (CORRECT)
  • B2B vs. B2C segmentation (CORRECT)

Correct: That’s correct! If you use behavioral data to define your persona’s, you can find different segments based on the profitability of your customers

Correct: That’s correct! RFM analysis specifically focuses on identifying profitable segments.

Correct: That’s correct! You could segment customers based on their profitability and find different segments in your business to consumer sales vs. business to business sales.

PRACTICE QUIZ: CUSTOMER LIFETIME VALUE

1. What is the acronym for customer lifetime value?

  • CLV
  • CTV
  • CLTV (CORRECT)
  • CULV

Correct: That’s right! CLTV is used as the abbreviation for Customer Lifetime Value. Sometime people will also use LTV.

2. COGS stands for…

  • Cost of goods sent
  • Core of goods sold
  • Cost of goods sold (CORRECT)
  • Cost of goal sold

Correct: That’s right! We use COGS in our profit margin formulas.

3. If the average customer retention period is 2 years with an average of 7 transactions over that time period and the gross profit margin is 30%, what is the overall CLTV of the following data set?

Customer                                                Sales  Number of transactions
Customer 1                                                $200                                           2
Customer 2                                                $300                                          4
Customer 3                                                $250                                          3
  • $150
  • $300
  • $250
  • $350 (CORRECT)

Correct: That’s right!

4. If the average customer retention period is 2 years with an average of 7 transactions over that time period and the gross profit margin is 30%, what is the CLTV of Customer 2?

Customer                                                Sales  Number of transactions
Customer 1                                                $200                                           2
Customer 2                                                $300                                          4
Customer 3                                                $250                                          3
  • $315 (CORRECT)
  • $350
  • $300
  • $250

Correct: That’s right!

5. If your revenue is $3,000 and your COGS is $1,800, what is your gross profit margin?

  • 30%
  • 50%
  • 40% (CORRECT)
  • 60%

Correct: That’s right!

GRADED QUIZ: PLANNING AND FORECASTING

1. If the average customer retention period is 2 years with an average of 7 transactions over that time period and the gross profit margin is 30%, what is the CLTV of Customer 1?

Customer                                                Sales  Number of transactions
Customer 1                                                $200                                           2
Customer 2                                                $300                                          4
Customer 3                                                $250                                          3
  • $300
  • $250
  • $150
  • $420 (CORRECT)

Correct: That’s right! Remember the formula is average value of a sale x average number of transactions x customer retention period x profit margin

2. If your revenue is $4,000 and your COGS is $1,000, what is your gross profit margin?

  • 50%
  • 75% (CORRECT)
  • 60%
  • 25%

Correct: That’s right! Remember that the formula is revenue minus cost of goods sold all divided by revenue.

3. Questions that can be answered using linear regression include: (select all that apply)

  • Does customer satisfaction impact sales?
  • Which of these website designs will increase sales?
  • What are the main groups of customers in my customer base? (CORRECT)            
  • Do increased email open rates lead to increased sales? (CORRECT)

Correct: Exactly! This is a question that can be answered using linear regression.

Correct: Exactly! This is a question that can be answered using linear regression.

4. Univariate is a type of linear regression. True or False?

  • False
  • True (CORRECT)

Correct: Exactly! This is a kind of regression.

5. You can only have one secondary KPI. True or False?

  • False (CORRECT)
  • True

Correct: That’s right! We should have one primary KPI but can have multiple secondary KPIs.

6. The ROAS for the following numbers is 50%. True or False?

Product Sold$2,000
Advertising Costs$1,000
  • False (CORRECT)
  • True

Correct: That’s right! Remember our ROAS formula is ROAS = (revenue made from ads / advertising spend) * 100 and should be expressed as a percentage.

7. COGS stands for Cost of Goods Sold. True or False

  • True (CORRECT)
  • False

Correct: That’s right! We use COGS in our profit margin formulas.

8. Does customer satisfaction impact sales? Is a question that can be answered using linear regression. True or False?

  • False
  • True (CORRECT)

Correct: Exactly! This is a question that can be answered using linear regression.

9. Which of the following are not types of regression? (Select all that apply)

  • Logistic
  • Linear
  • Multinomial (CORRECT)
  • Legitimate (CORRECT)

Correct: Exactly! This is not a kind of regression.

10. CLTV stands for Customer Lifetime Value. True or False

  • False
  • True (CORRECT)

Correct: That’s right! CLTV is used as the abbreviation for Customer Lifetime Value. Sometimes people will also use LTV.

11. The acronym for customer lifetime value is CLV. True or False?

  • False (CORRECT)
  • True

Correct: That’s right! CLTV is used as the abbreviation for Customer Lifetime Value. Sometimes people will also use LTV.

12. The acronym for Cost of Goods Sold is…

  • CGS
  • COG
  • CG
  • COGS (CORRECT)

Correct: That’s right! We use COGS in our profit margin formulas.

13. The ROAS for the following numbers is 200%. True or False?

Products Sold$2,000
Advertising Costs$1,000
  • True (CORRECT)
  • False

Correct: That’s right! Remember our ROAS formula is ROAS = (revenue made from ads / advertising spend) * 100 and should be expressed as a percentage.

14. ROAS use Revenue, ROI use Profits. True or False?

  • False
  • True (CORRECT)

Correct: That’s correct! This is a key difference between ROAS and ROI.

15. If your revenue is $2,000 and your COGS is $1,500, what is your gross profit margin?

  • 60%
  • 25% (CORRECT)
  • 50%
  • 75%

Correct: That’s right! Remember that the formula is revenue minus cost of goods sold all divided by revenue.

16. If the average customer retention period is 2 years with an average of 7 transactions over that time period and the gross profit margin is 30%, what is the CLTV of Customer 3?

Customer                                              Sales                                       Number of transactions
Customer 1                                              $200                                                   2
Customer 2                                              $300                                                   4
Customer 3                                              $250                                                   3
  • $350 (CORRECT)
  • $300
  • $250
  • $315

Correct: That’s right! Remember the formula is average value of a sale x average number of transactions x customer retention period x profit margin

17. Questions that cannot be answered using linear regression include: (select all that apply)

  • Do increased email open rates lead to increased sales?
  • Does customer satisfaction impact sales?
  • Which of these website designs will increase sales? (CORRECT)
  • What are the main groups of customers in my customer base? (CORRECT)

Correct: Exactly! This is not a question that can be answered using linear regression.

18. “How many clicks did the ad get this week?” is a question that would use _____ analytics to find the answer.

  • Descriptive (CORRECT)
  • Prescriptive
  • Predictive

Correct: That’s right! Descriptive analytics look at what happened.

19. “How much inventory will be moved in the next 12 months?” is a question that would use _____ analytics to find the answer.

  • Descriptive
  • Predictive (CORRECT)
  • Prescriptive

Correct: Exactly! This is a question for predictive analytics.

20. If I’m trying to answer the question “How many gadgets should I order to sell next Christmas?” I would use…

  • Predictive analytics (CORRECT)
  • Descriptive analytics
  • Probable analytics
  • Deductive analytics

Correct: That’s right!

21.

Product Sold$1,000
Advertising Costs$500

What is the ROAS of this campaign?

  • $500
  • $200
  • 500%
  • 200% (CORRECT)

Correct: That’s correct!

22. When doing an RFM analysis, your segments are as follows:

  • Recency: (5) last 24 hours, (4) last week (3) last month (2) last year (1) more than a year
  • Frequency: (5) 10+ (4) 7-9 (3) 4-6 (2) 2-3 (1) 1
  • Monetary: (5) $500+ (4) $300-$499 (3) $200-$399 (2) $100-$299 (1) <$100
  • Given the table below, with recency in days, what is the RFM score for customer 2?
Customer IDRecencyFrequencyMonetary
132481
294530
3126435
  • 335 (CORRECT)
  • 334
  • 414
  • 424

Correct: That’s correct! Recency is 3, frequency is 3, and monetary is 5.

23. How many primary KPIs should you have per objective?

  • 1 (CORRECT)
  • 2
  • 3
  • Unlimited

Correct: That’s right! We want to make sure we have one KPI per objective.

24. A customer lifetime value analysis helps us… (Check all that apply)

  • Analyze shifts in the marketplace
  • Increase ROI (CORRECT)
  • Segment our customers (CORRECT)
  • Focus on acquiring profitable customers (CORRECT)

Correct: That’s right! A lifetime value analysis can help us focus on customers who are more likely to purchase, thus increasing ROI!

Correct: That’s right! A lifetime value analysis can help us segment out our user base to reach those with a high CLTV or even a lower CLTV but higher propensity to buy.

Correct: That’s right! Calculating CLTV allows us not to just focus on the first transaction but all transactions holistically

25. The formula for CLTV is:

  • Average value of a sale x ________ x customer retention period x profit margin
  • Average number of transaction (CORRECT)
  • Customer NPS
  • Average spend
  • Linear profit margin

Correct: That’s right! This is the missing part of the formula.

26. Given the inputs below, what is the customer lifetime value?

  • 2019: 35 customers
  • 2020: 31 customers
  • Total sales 2020: $713
  • Number of transactions 2020: 68
  • COGS 2020: $398
  • $18.83
  • $23.00
  • $14.21
  • $16.62 (CORRECT)

Correct: That’s correct!

27. What is the goal of a linear regression analysis?

  • To determine customer profit
  • To compare 3 or more variables
  • To learn if one variable correlates with another (CORRECT)
  • To determine lifetime value

Correct: That’s right!

Previous – Week 1
Next – Week 3

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