Question

Use the Online Consumer Purchasing Model (Figure 6.11 below) to assess the effectiveness of an e-mail campaign at a small Web site devoted to the sales of apparel to the ages 18–26 young adult market in the United States. Assume a marketing campaign of 100,000 e-mails (at 25 cents per e-mail address). The expected click-through rate is 5%, the customer conversion rate is 10%, and the loyal customer retention rate is 25%. The average sale is $60, and the profit margin is 50% (the cost of the goods is $30). Does the campaign produce a profit? What would you advise doing to increase the number of purchases and loyal customers? What Web design factors would you use to keep customers coming back and increase traffic? What communications messages would you convey to current and potential customers?

Answer 1

Campaign cost = 25 cents x 100,000 emails

                        = $25,000

            Click rate through success      = 5% of 100,000

                                                            = 5,000

            Customer Conversion Rate     = 10% of 5,000

                                                            = 500

            Profit per client           = 50% of $60 which is average sale

                                                = $30

            Gross Profit from campaign    = $30 x 500

                                                            = $15,000

            Net profit (loss) from campaign          = $25,000 - $15,000

                                                                        = ($10,000)