Cost per Order (CPO)

Cost per Order (CPO) - Almost no direct mail prospecting is done at a profit. There is a promotional cost to buy a new customer. This cost is the differential between gross profit on sales and cost in the mail per 1,000 pieces.

Example:

Cost in mail (all promotional costs) - $300 Per M Order Margin (Gross Profit Per Unit) - $30 If Sales = 8 x $30 order margin = Gross Profit - $240. Cost in mail - $300 Less Gross Profit on Sales -$240 = Loss of $60 $60 Gross Profit Loss - Divided by 8 Sales = Cost of Order of $7.50.

[Category=Database Marketing ]

Source: Postcom, 23 February 2010 09:09:58, http://postcom.org/public/admail_image/glossary.htm