what is the response rate if: $10 off doggie day spa; 5,000 postcards; spa package booked 130 =

Question

You decided to send postcards to a total of 10,000 people (5,000 for each message promotion)  You have budgeted $3,000 for the test.  Calculate the Response Rate & Cost Per Order (CPO. Round your answer to the nearest tenth of a percent.

 

$10 off Doggie Day Spa	5,000	130
Purchase Doggie Day Spa get free flea bath ($10 value)	5,000	65
Total	10,000	195

 

Answer 1

The response rate is 195/10000=0.0195 or 1.95%=2.0% to the nearest tenth of a percent.

The budget is $3000 for 10000 promotion cards, or $0.30, the CPO. 130 orders will incur a loss of $10 per order for the spa and 65 orders will incur a loss of $10 per order for the flea bath vouchers, a total loss of $1950, but this cost is offset by the revenue from the discounted charge (130 orders) for the spa and the full charge for the spa (65 orders).