Question

Suppose you are now a Founder and CEO of Rent the Dresses, Inc., an online rental site for premium dresses primarily for women. Because the business is a start-up, there is no accountant on the management team yet, so you have been doing the accounting. You notice that an average of 100,000 visitors come to your website, of which 60% browse through the website. 20% of them register and put at least one item in the shopping cart. One out of three registered customers actually checkout and pay for the items. Calculate the following (and show your work for partial credit!) a. Bounce rate b. Conversion rate c. Average monthly revenue, assuming AOV is $200.

Answer 1

ANSWER (A)

Bounce Rate : Single page visit / Total website visit

In the given question 100,000 visitors come to the website and 60% of which browse through the website. It means 40% left out the website from the single page they entered. So the bounce rate will be 40%.

ANSWER (B)

Conversion Rate : Number of visitors who took action / Total number of visitors

In the given question 20% from the 60% who browse the website get registered with the website and put one item in the cart. It means 12% (20%*60%) is the conversion rate as 12% took action on your site.

ANSWER (C)

Average monthly Revenue:

Conversion rate is 12% it means 12% of 100,000 = 12000 is registered with the site and One out of three registered customers actually checkouts and paid.

Total checkouts = 12000 / 3 = 4000

Average Order Value (AOV) = $200

Monthly revenue = $800,000