# KPIs and Business Metrics (Data Analytics) > CAC, LTV, MRR, ARR, churn rate, NPS, conversion rate, ARPU, funnel metrics, north star metric - 20 interview questions - Junior - [Interview Questions: Data Analytics](https://sharpskill.dev/en/technologies/data-analytics/interview-questions.md) ## 1. What is a KPI (Key Performance Indicator)? **Answer** A KPI is a key performance indicator that measures progress toward a specific business objective. Unlike a simple metric, a KPI is directly tied to a strategic goal and enables decision-making. For example, the conversion rate is a KPI for an e-commerce team because it directly reflects business performance. ## 2. What is the difference between a vanity metric and an actionable metric? **Answer** A vanity metric is a number that looks impressive but does not guide business decisions, such as total page views or cumulative downloads. An actionable metric, on the other hand, directly informs a decision and enables action, such as the conversion rate or D7 retention rate. Distinguishing between the two is essential for focusing analysis on what has real impact. ## 3. How is the conversion rate calculated? **Answer** The conversion rate is calculated by dividing the number of conversions (purchases, sign-ups, etc.) by the total number of visitors or users, then multiplying by 100 to get a percentage. This metric is fundamental in e-commerce and digital marketing as it measures how effectively a page, funnel, or campaign turns visitors into customers. ## 17 more questions available - What does CAC (Customer Acquisition Cost) represent? - What does a customer's LTV (Lifetime Value) measure? 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