Reference no: EM132717813

Public radio station WPSU has a membership drive aiming to get listeners to sign up as members for $25 annual subscription. As reward for signing up WPSU provides a coffee mug as a souvenir, which costs $7, plus mailing cost of $1. An email campaign using Mailchimp has an initial set-up cost of $10,000 and a pay-as-you go price of $0.03 per email. It receives a delivery rate of 90%, a click-to-delivery rate of 20% (note: CTR as a fraction of deliveries), and a conversion rate of 25%.

Question 1: If 5,000 emails were sent, calculate the email campaign's profitability. What do you infer about the cost effectiveness of the campaign at the scale initially chosen for it (# of emails = 5,000). Use Microsoft Excel to create a graph of total campaign costs and net returns. Assume that campaign parameters such as the delivery rate, the click-to-delivery rate, and the conversion rate remains unchanged with the scale of the campaign. You might want to set up the x-axis to track the number of emails sent, at 100 unit increments, from 0 to 20,000. On the vertical axis, you may represent both costs and net revenues.

Question 2: What is the minimum scale (# of emails to be sent) for the campaign to break even?

Question 3: Identify the breakeven volume on the graph.