Direct Marketing Math & Finance Seminar

SELF ASSESSMENT QUIZ

Before starting a project, you need to ask and answer questions like these to avoid the risk of a potentially major – and often preventable loss: Are you prepared?

1. If a promotion sent to 25,000 people produces net sales of $20,000, what are the sales per thousand? Is this a good outcome?
   
   
2. If a promotion costs $600/M and each average sale of $100 contributes $40 to promotion cost and profit, what is the net sales/M I need to break even?
   
   
3. Is a $7 cost per buyer too much to spend to acquire a new customer?
   
   
4. Your business markets widgets selling for $50 in several media. Your ad agency says you should estimate the cost to acquire a new buyer by dividing the promotion cost by the number of buyers each promotion acquires. Is this correct?
   
   
5. An Internet marketing effort costing $500 results in $1,200 in revenue from 20 first time buyers. The average contribution per order is 30%. How much does each of these 20 new buyers cost to acquire?
   
   
6. A space ad costing $2,500 that solicits requests for more information about a life insurance policy generates 100 leads. The insurance company estimates that on average new policy holders generate $500 in contribution to promotion cost and profit over their first three years. What is the cost per lead? Is this ad successful?
   
   
7. You ran a split test of a control vs. a test package which involves only copy changes. In roll-out quantities the package promotion cost/M will be the same. The test beat the control by .5%. Applying the proper statistical test shows you can be only 80% certain the test result truly is better. Do you adopt the new package as your control?
   
   
8. Your business is able to acquire new customers at breakeven or better and has therefore adopted a rule to only roll-out efforts that exceed breakeven. You therefore believe there is no need to establish the long term value of a customer. Is this view correct?

You’ll need only basic arithmetic: +, -, x, and ÷. No complex math here – just practical tools presented in a language anyone can understand.

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