Ecommerce Diagnostic 3 — Questions and Answers
Question 1: Customer lifetime value (CLV) is significantly lower than customer acquisition cost (CAC). What does this diagnose?
- The business is losing money on each customer acquired (Correct answer)
- The site is too fast
- Inventory turns too quickly
- The catalog is too small
Correct answer: The business is losing money on each customer acquired
Spending more to acquire a customer than they ever return is an unsustainable, money-losing model.
Question 2: Organic search traffic drops 40% overnight with no site changes. What should you check FIRST?
- Google algorithm updates or a manual penalty (Correct answer)
- The loyalty program tiers
- The packaging supplier
- The customer service phone line
Correct answer: Google algorithm updates or a manual penalty
A sudden overnight organic drop with no internal changes usually signals an algorithm update or penalty.
Question 3: A diagnostic shows 95% of refunds come from one product category. What is the best next step?
- Investigate that category's quality, sizing, or descriptions (Correct answer)
- Pause all email campaigns
- Lower prices site-wide
- Add more payment methods
Correct answer: Investigate that category's quality, sizing, or descriptions
Refunds concentrated in one category point to a product, sizing, or description issue there.
Question 4: Which metric best diagnoses overall checkout efficiency for completed purchases?
- Checkout completion (conversion) rate (Correct answer)
- Email open rate
- Pages per session
- Social follower count
Correct answer: Checkout completion (conversion) rate
Checkout completion rate directly measures how many who start checkout actually finish.
Question 5: Two ad campaigns have the same ROAS, but one has a much higher CAC. Which is generally the better signal?
- The lower-CAC campaign, as it acquires customers more cheaply (Correct answer)
- The higher-CAC campaign, always
- Neither matters if ROAS is equal
- The one with more impressions
Correct answer: The lower-CAC campaign, as it acquires customers more cheaply
At equal ROAS, the lower CAC means you acquire each customer for less, improving scalability.
Question 6: A diagnostic reveals high traffic from a country where you don't ship. What is the immediate concern?
- Wasted ad spend or geo-targeting misconfiguration (Correct answer)
- Too many product reviews
- Excess warehouse space
- An overly fast checkout
Correct answer: Wasted ad spend or geo-targeting misconfiguration
Traffic from non-shippable regions often means budget is wasted on audiences who can't convert.
Question 7: Bounce rate on the homepage is low but exit rate on the cart page is very high. What does this pattern suggest?
- Users engage but abandon at the cart stage (Correct answer)
- The homepage is broken
- There is no product imagery
- The site has no traffic
Correct answer: Users engage but abandon at the cart stage
Engaged entry but heavy cart exits localizes the problem to the cart step, not the landing experience.
Ecommerce Diagnostic 3
Customer lifetime value (CLV) is significantly lower than customer acquisition cost (CAC).
What does this diagnose?