The mark of a great list is ‘buy rate’. Not just buy rate, but when they buy. The number of people you market to that buy and when they buy. In other words, a great list should have limited ‘shelf life’.
If the list is really good, the vast majority of the buyers will buy during the first few months and then fall off big time. Why? Because if the list is created from people actively interested in buying, it will have a limited shelf life as opposed to a list that is not made up from people’s active interest behavior. Marketing lists that do not use active interest behavior as their basis will perform differently than lists that are made up of active interest and will have a much, much longer ‘shelf life’, which is a bad thing in the case of direct marketing.
The one common factor is the tipping point. During the period of time where the consumer receives mail, email or other types of direct marketing from you, the number of buyers will be higher than several months after the messages have ceased. The place where lists created from behavior differ from those not created by behavior is what happens after the ‘tipping point’ period. Lists that use active interest behavior will show far less buying activity 8, 9, 10 or 11 months after the tipping point than will lists not using behavior. Of course the behavioral list will produce far more buyers during the tipping point period than the other lists, but will have outlived its shelf life much earlier than the non-behavioral list.
We proved this last year with some Berkshire Hathaway dealerships in the Phoenix area. BH uses a reporting system that takes a marketing list and then reports each month how many of the people on the marketing list bought from their stores in the area. In this case it was 3 Ford stores. We created the list and marketed on behalf of one of the three stores. Since the used inventory of all three stores was included in all links, there was reason for measuring the sales associated with this list for all three stores. The majority of the sales were recorded at the location where the marketing originated, which is logical from a geographical standpoint. We marketed for 2 months to the list using postal, email and Facebook. Over 90% of all the sales associated with this list took place within the first 4 months. Each month after that, accounted cumulatively for less than 10% of the sales to people on the marketing list. This would not have been the case if we did not use behavior (active interest) as the basis of the list. Based on statistics of buying rate for households in the population, sales associated with a list with no ‘shelf life’ would continue at a rate similar to the overall buy rate of households which is 1.2% a months for franchised dealers. The dealer would get their percentage of that 1.2% based on their share of the franchised market in the area.
Limited Shelf Life is a good thing when we’re talking about what makes a marketing list good or great. You want to catch people at the time they are interested in order to squeak those extra sales out of the population that results in your own market performance.