Here is a simple model to determine success of product sampling in e-commerce.
I was presented with some quick performance metrics on an e-commerce product sampling campaign for a supplement startup, which included the cost of the sample plus shipping ($.70), the average order value ($39) and the response rate at 20%.
That got my wheels turning and I quickly determined that this campaign could be a winner.
How? I made some assumptions, including that the average breakeven return on ad spend (ROAS) for a consumer product company is 2. So if 10 samples were sent at $7 total cost, and 2 orders were placed that is $78 dollars in revenue, which gives a ROAS of more than 11. That is fantastic, but I am missing another variable.
The unknown that I was not given was the cost to acquire a customer to send them a sample. That would need to be added in to get a sold ROAS number.
Here is the model I put together that gives a quick analysis and helps me do some what-ifs when the variable that changes is the cost to acquire a customer to send them a sample.
