How can you tell if a new prospecting list you are testing for the first time has a chance of success? Look carefully at the gross-to-net percentage of a new list. If the new list doesn’t have a good percentage of overlap with your existing house buyers, it will probably fail.
What’s a good percentage of overlap? Look at the range of overlap of your proven prospecting lists. If they range in net percentage after the merge from 88% to 65% in net names, then a list that only overlaps 1% and yields a net name percentage of 99% will certainly fail.
This strategy is not just for new prospecting lists: Look at all the lists you’ve put in the merge to see if any of them raise a red flag because they don’t overlap with your house lists. Sometimes the wrong list gets shipped and or a list gets put into the merge by mistake. If you set a threshold of acceptable gross-to-net percentage, you can identify new lists that won’t work before you spend the postage and printing money and put them in the mail.
If you identify a bad list upfront, you are out the $.10 in list rental (and that may be negotiable,) rather than the $.75 or $1.00 it costs to put the catalog in the mail. If you save one 5,000 name test per year, you’ve dropped $5,000 to your bottom line.
Jim Coogan is president of Santa Fe, NM-based consultancy Catalog Marketing Economics.