There are two very different types of lists that get the best results for any business. Knowing which type is best for your business can make all the difference between lukewarm sales and truly exceptional sales.
So let’s dive in and look at each of these distinct types of lists. And by the end of this short post, you’ll know exactly which type of list will be the most profitable for your business.
Old school becomes new school
The other day I was working with one of my consulting clients on driving more traffic to his web site. He lamented that in the “old days” – meaning before the internet when list building was done with direct mail and space ads – it was a lot easier to build a list of qualified leads.
“How so?” I asked.
“Well, all you had to do was find the right list or trade journals,” he replied. “For example, if I wanted to find more gym and spa owners for our training programs for that industry, all I had to do was rent a list of the gym and spa owners in the state where we would be presenting our next seminar. We’d send out the mailing and fill up the room.”
“And what’s different now?” I asked.
“Well, first of all, the email lists that you can rent pretty much all stink,” he said. “How are you supposed to build a big list when the lists you’re renting are garbage?”
Now, for the most part, what he said is true, so what he was asking looks to be a fair question. But there’s a lot more to this. You see, while it appeared that he was comparing old school results to new school results, he was missing a critical factor.
And that critical factor is…
What type of list are you trying to build?
“OK, let’s put this theory to the test,” I suggested. “When you were presenting your seminars in the ‘old days’, how many people did you need to put in the room for it to be profitable?”
“20 to 30 would do the trick. Our training programs sell for around $60,000, so if we closed just a couple, we were doing great,” he answered.
“And how do you sell the program now? Are you still doing live seminars?” I asked.
“No, now we have a live webinar, but the problem is that only half the people actually show up who register,” he answered.
“OK, that’s pretty typical, but I don’t think that’s your real problem. How many people do you need to have attend your webinar in order to close two sales like you used to at your seminars?” I asked.
“As many as possible. Because only half of them show up and a lot of those are just tire kickers, the more we can get to attend, the better,” he answered.
And that is the real problem. The fact is, my client is trying to build the wrong type of list for his business – and because of this, he’s going about it in the wrong way. So he’s compounding his own problems without even knowing it!
A simple solution – understanding the 2 types of lists and building the type that’s right for your business
Let me start by showing you exactly what my client’s real problem is. His business sells high-ticket training programs to gym and spa owners who want to increase their customer base, expand their sales, lower costs and increase profitability. And the average fee for these programs ranges from $40,000 to $60,000 per client.
His overall sales are in the range of $4 million annually. Because of the nature of his business, he actually has relatively low traffic needs. But he’s renting large email lists and mailing to them in hopes of trying to build the largest list he can. He figures – incorrectly, I might add – that because the quality of the leads on the lists he can rent are so poor, he needs a massive list.
All he’s really doing is spending more and more money to build a larger and larger list of unqualified prospects!
What he really needs is to build a smaller list, but one that’s made up of far more qualified prospects.
There are any number of ways to do this including paying more for only certain segments of the lists he rents, placing ads in highly targeted ezines and banners on highly targeted web sites.
Now, on the surface, all of these methods appear to be a lot more expensive than the lower rates he’s paying for poor quality lists.
But when you’re in a low traffic business like he is, you’re far better off paying through the nose to build a smaller list of highly qualified prospects than you are wasting nearly as much money on renting and mailing to large, unqualified lists but at a far lower return on investment.
For nearly all the clients I consult with who sell high-ticket products or services, this logic is counter-intuitive. After all, doesn’t nearly every expert and every article you read tell you to build as large a list as possible?
But that simply isn’t accurate with high-ticket sales. Because far fewer customers will be qualified to buy at higher prices, the quality of the list trumps the size of that list every time.
Flipping to the other side of the coin
So when do you want to build as large a list as possible? Primarily if you sell “commodity” type products or low-priced products.
For example, if you sell knitting supplies that are the same as the majority of your competitors, you’re going to need as large a list as possible to maintain a reasonable sales volume. You’ll also need to distinguish your business from your competitors’ with better pricing, better service or some other advantage. But even with a strong distinguishing factor working for you, you’re still going to need to build this second type of list – a list driven by quantity more than quality.
This isn’t to say that quality doesn’t matter. But for products where price isn’t a barrier, the quality of your prospects tends to be much more even than with high-ticket products and services.
Grow your business by building the right type of list
What I’ve just shown you here may seem obvious once you think about it. But in my experience, most businesses don’t intentionally build the type of list that’s best suited to their business.
It’s easy to fall into the trap of trying to collect as many names as possible on your list. But as you’ve just seen, the quality of your prospects should always be your main priority over the quantity of your list when you’re selling a high-ticket product or service.
And with lower-priced products or products that are nearly identical to your competitors, you’ll want to focus on quantity with the understanding that the quality of most of your prospects will be the same.
By choosing which of these two list types is right for your business, you’ll save a substantial amount of time and money and get much better results than you would by shooting in the dark.
Got a comment?
Do you agree or disagree with me? Or do you have an experience with this topic that you’d like to share? Then feel free to leave a comment below.
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