The redemption is an indicator that shows the percentage of performance gained from a direct marketing initiative based on the response rate.
In practice, it represents the total number of contact responses during a direct marketing campaign over a certain period of time.
The main metrics used to measure the effectiveness of the advertising campaign concern the cognitive, affective, and behavioral response rates.
The key performance indicators for direct marketing include the CPC (cost per contact), the cost per response, and the cost per order.
How to Calculate Redemption
As we have already mentioned, redemption is indicated in percentage.
It is obtained by dividing the number of responses by the total number of contacts made.
The result is then multiplied by 100.
Example of Redemption
If we send 1,000 letters to potential customers and get 15 responses, we achieve a redemption rate of 1.5%.
To calculate a good redemption rate, it's important to consider various factors that influence it, the most important being the communication medium chosen for a particular advertisement.
How to Calculate Cost per Order
The cost per order corresponds to the cost spent for the purchase of each individual product.
This is obtained by dividing the total investment by the number of orders acquired.
So, if for example 1,000 letters are sent out at a cost of 1,500 euros.
If there are 15 orders, the cost per order is 100 euros.
Therefore, the goals of a redemption are to test sales to the target audience and evaluate response and conversion times.
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