Track 15 · Applied Statistics for Professionals · Lesson 9 of 12
Funnels and retention cohorts
Compute funnel conversion rates and cost metrics with the right denominators, and build and read a cohort retention table.
A marketing manager has to split next quarter's budget across five channels. Click-through rates, signup rates and cost per purchase all point in slightly different directions, and each depends on a denominator that someone chose. Getting the denominators right — and knowing what the numbers cannot show — is most of the job.
A funnel follows people through successive steps: an ad is shown (impression), someone clicks, signs up, and buys. Each step rate divides the count at one step by the count at the step before it — never by some earlier step, or rates from different steps get mixed up. The synthetic campaign_funnel dataset gives weekly counts for five channels of a fictional online furniture shop over 26 weeks.
Included with a Formula Quest membership
It has 8 graded exercises with feedback, hints and worked solutions. After it you will be able to:
- Compute funnel step rates with the previous step as the denominator
- Pool counts rather than averaging weekly rates when estimating an overall rate
- Compute and compare CPA, and explain why email and last-click figures need caveats
- Build and read a cohort retention table, leaving unobservable cells blank