Measuring Marketing

Chapter 59 Direct Marketing Gross Profit

Measurement Need

To determine if a campaign of a certain size will produce a gross profit based on a specific number of marketing communications to be sent and response rates for their business.

Solutioni

This calculation tells you whether your direct marketing campaign produces a positive gross profit:

$P_g=DM\times P\times S_a\times R_r\times C_r$

Where

Pg = gross profit

DM = number of direct marketing pieces

P = profit goal in percentage terms

Sa = average sale

Rr = response rate

Cr = conversion rate

Using the example of the auto supplier, let’s plug in the numbers from Chapters 57 and 58:

$\begin{array}{l}{P}_g=88,889\times .30\times \$300\times .02\times .75\\ =\$120,000\end{array}$

Impact

The marketing team’s gross profit looks healthy suggesting ...