CASE STUDY: Sales Analytics: Acme.com Online Electronics Sales

You are the marketing manager for Acme.com online electronics sales. Acme.com sells premium consumer electronics goods. One hot seller is the 3 for 3D bundle, which includes a 50 inch Samsung AMOLED television, wireless 3D glasses, and an advanced speaker setup for 3D sound.

You sell to three segments:

• Segment 1: High-income early adopters. This group wants the very latest. It is relatively price-insensitive.
• Segment 2: Mid-income pragmatists. This group waits for the verdict of Segment A before buying.
• Segment 3: Value-conscious shoppers. This group care more about price than about the latest features.

You drive traffic from prospective customers (prospects) to Acme.com using three sales campaign tools:

• Campaign A: Newsletter: Online newsletters discussing new promotions, sent to list of opt-in prospects
• Campaign B: PPC: Pay Per Click (PPC) search engine marketing (SEM), like Google AdWords.
• Campaign C: Social Media: Facebook and Twitter accounts discussing consumer electronics news

After analyzing historic sales performance, you assemble the data shown in Table 1.

Table 1: Sales history data, Acme.com online electronic sales

Input: Sales	Annual Data (averaged)
Sales Forecast	$200,000; Total sales, equal to sales over 4 quarters
Average revenue/order	$1,000; Constant over time
Segment 1: % of Sales	50%; Constant over time
Segment 2: % of Sales	30%; Constant over time
Segment 3: % of Sales	20%; Constant over time

After analyzing campaign sales performance, you assemble the data shown in Table 2.

Table 2: Sales campaign effectiveness data, Acme.com online electronics sales

Input: Campaigns	Campaign % of Sales	Conversion Rate	Cost per Lead
A: Newsletter	40%	2.0%	$2.20
B: PPC	35%	1.0%	$1.00
C: Social Networking	25%	1.5%	$1.40

Note: US-English conventions are used in this course: periods (.) are used to separate whole numbers from decimals and commas (,) are used to separate thousands.

To answer the questions in this case, you will need to build and execute the E-Commerce Sales Model described in this module's lectures and in the recommended textbook.

To build the model, apply the following equations. Follow the format given in the lecture and in the recommended textbook.

Equations:

• Orders = (Sales Forecast) / (Revenue / Sale) * (Segment Sales Split)
• Responses = (Orders) / (Conversion Rate) Budget = (Responses) * (Cost per Response)
• Budget/ Sales = (Budget Requirement) / (Sales)

Definitions of Variables:

• Sales Forecast ($): Revenue forecast for quarters, typically totaled for fiscal year (operating year of organization)
• Revenue/ Order ($): Average revenue generated per order (sale), also known as Deal Size or Order Size
• Segment Sales Split: Percentages of sales contributed by different market segments
• Campaign Sales Split: Percentages of sales contributed by different sales campaigns
• Conversion Rate (%): (Completed orders) / (Responses from qualified prospects)
• Cost per Response ($): Average cost to generate response from prospect, to propel them toward final sale

Note: You only have one opportunity to answer each question.

Problem 1

Which of the selections below best represents the total number of orders over the year for segment 1?

a. $200,000

b. $1,000

c. 200

d. 100

Problem 2

Which of the selections below best represents the number of orders over the year for segment 1, just for Campaign A?

a. 40

b. 100

c. 60

d. $1,000

Problem 3

Which of the selections below best represents the number of responses for segment 1, campaign A?

a. 1000

b. 2000

c. 4000

d. $4,400

Problem 4

Which of the selections below best represents the budget required for generating responses for segment 1 using campaign A?

a. $1,500

b. $2,333

c. $3,500

d. $4,400

Problem 5

Which of the selections below best represents the budget/sales ratio achieved generating the number of responses required for selling our target amount into Segment 1 using Campaign A? When calculating the budget/sales ratio for Segment 1 using Campaign A, please assume the a sales amount of $40,000 for the sales into segment 1 using campaign A. We calculate that amount using the following method: Sales, Segment 1, Campaign A = (Sales Forecast) * (Segment Sales Split) * (Campaign Sales Split). Substituting the values given to us in the case, we get: Sales, Segment 1, Campaign A = ($200,000) * (50%) * (40%) = $40,000

a. 11.0%

b. 20.4%

c. 5.2%

d. 101.0%