1 / 6

Direct Marketing Analysis

Direct Marketing Analysis. Basic DM Financial Analysis. Transaction Costs (Exh. 20-2) Variable cost of filling an order Contribution Per Order Revenue minus transaction costs Marketing Costs (Exh. 20-5)

kelsey-miller
Download Presentation

Direct Marketing Analysis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Direct Marketing Analysis

  2. Basic DM Financial Analysis • Transaction Costs (Exh. 20-2) • Variable cost of filling an order • Contribution Per Order • Revenue minus transaction costs • Marketing Costs (Exh. 20-5) • Front-end expenses (list rental, mailing, ads, telemarketing, etc.) associated with getting the offer to potential customers

  3. Basic DM Financial Analysis • Breakeven Response Rate (BERR) • BERR% = Mkt Cost per thousand Contribution per order x 10 • Contribution: A=$19 B=$30 See Exhibit 20-6

  4. Basic DM Financial Analysis • To Adjust BERR% for a Target Profit • Profit RR% = Mkt Cost per thousand (ContPO - target profit) x 10 • Avg Sale: A=$50 B=$80 Desired Gross Profit is 10% See Exhibit 20-6

  5. RR%, LTV & Contact Matrix • The response rate % can be used in connection with the LTV and your marketing cost per thousand to help determine your firm’s contact strategy. • Example: assume the LTV of your past customers is about $25. How many segments would you mail for Offer A?How about Offer B? • A contact matrix helps.

  6. Direct Marketing Contact Matrix

More Related