Acquisition Economic Analysis
The Acquisition Economic Analysis demonstrates how a model can support circulation decisions. Response rates are a function of many factors - seasonality, creativity, delivery, elections, hurricanes - all things that impact a consumer's decision. A model does not predict response rates; rather, the model predicts the relative difference in response rates from one decile to another. Therefore, results are projected and dependent on an "expected response rate" (based on prior history of mailing the total marketable universe). The economic analysis requires entry of the marketing cost per thousand, a scoring cost for applying the model, and a cost per thousand for any additional data elements appended to the file. From these inputs, you get a report of the expected cost per response. This report enables the marketer to select a depth of mail where the incremental cost per response is lower than breakeven.
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Decile
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Customers
by Decile
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Cumulative
Customers
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Cumulative
Expenses
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Cumulative
Response
Rate
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Cumulative
# of
Responders
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Incremental
Cost per
Responder
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Cumulative
Cost per
Responder
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1
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2
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3
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4
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5
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6
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7
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8
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9
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10
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