9

And business data decays a lot faster than consumer data: 30% a quarter in some sectors. That means your entire list dies every year.

What dose "30% a quarter" means here?

  • I understand this as meaning: Business data decays 30% faster than consumer data in some sectors when compared every 3 months. – Joe Dark Dec 21 '14 at 16:54
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    @Joe I understand it to mean that business data decays by 30%, and that consumer data decays by something less than 30%. – starsplusplus Dec 21 '14 at 21:14
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    It's worth noting, the second sentence is simply incorrect. If you lose 30% a quarter, you lose about 76% per year, not 120% as they seem to imply. – corsiKa Dec 22 '14 at 0:45
  • The data grows stale at a steady rate, with up to 30% of the original data volume becoming stale per quarter. Typically, this applies to things like sales leads, hardware inventory, etc, things which have a high volume of churn. To state that the data decays at 30% of the remaining volume (like radioactive material) suggests that a contact list you buy one year might still have viable contacts 5 years later (a volume of 1,000,000 still has about 800 useful contacts), when in reality, you will have had no viable contacts for about 80% of that time. – phyrfox Dec 22 '14 at 2:05
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It means 30% per quarter, or 30% each quarter, where a quarter is three months (a quarter of a year), a common period in accounting.

By the end of the first quarter, 30% of the data available at the beginning of the quarter becomes obsolete. You have 70% of your consumer data still "fresh" and applicable.

By the end of the second quarter, 30% of the remaining 70% becomes obsolete too. And so on.

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    No, it's 30% of the original volume, not the remaining volume. Data grows stale at a fairly constant rate. Compare: 1 year later, all data is useless, versus your description, where some small amount of the data would always be useful, even 20 years later. – phyrfox Dec 22 '14 at 1:44
  • Tnank you for the comment, @phyrfox! You could be right, but I'm not sure. CorsiKa's comment concurs with my post. You could post your own answer, explaining why you think we should abstract the annual declines from a constant "start-of-the period" figure, and if it turns out right, I will scrap mine. – CowperKettle Dec 22 '14 at 2:55
  • @phyrfox - yes, the sentence says "the entire list dies every year", but it couches the mode of the list's expiry in ambiguous terms, at least to me. I'm not much versed in English texts related to financial maths. – CowperKettle Dec 22 '14 at 3:00
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    It probably won't make a difference, because my answer is unfortunately long-winded, but it does describe (generally) how businesses tend to make purchasing decisions and therefore why lists have a limited shelf life. – phyrfox Dec 22 '14 at 18:07
  • Thank you for the posted answer, @phyrfox! I'll read it later. – CowperKettle Dec 22 '14 at 18:15
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Without the entire quote, this question is out of context. I found the original text, quoted here:

  1. Is my house list jammed with dead souls?

It doesn't matter how great your creative is. If you're not cleaning house regularly, the dead names on your list will be pulling down your response rate.

Over half of marketers check customer data is accurate sometimes or never.

And business data decays a lot faster than consumer data: 30% a quarter in some sectors. That means your entire list dies every year.

This author clearly has a weak grasp on the English language (e.g. "great your creative is"), or has poor grammar checking software, but the idea they are trying to convey is well known for educated/experienced business professionals. While I'm not educated in business, I am experienced in so-called "enterprise solutions," especially CRM (Customer Relationship Management) systems, which really has been an enlightening experience.

Most businesses run with four distinct quarters, usually aligned with the calendar, but with some variations as to the exact start and end dates for each quarter, usually for tax purposes. Budgets are based on these fiscal years. In other words, most businesses allocate a certain amount of money to spend in a quarter, and once that money is gone, it means that they risk missing performance metrics (net operating costs, etc). Since this money is allocated before the quarter starts, or possibly even before the fiscal year starts, that usually pushes purchasing decisions out between one (3 months) and four quarters (12 months).

This means that most businesses have a very small window of time to try and work their leads (potential customers) and groom their current client base, often just a few months. After all, the client wants to buy product between a particular 3 month window so it can be reported during that time against profits, taxes, etc. If a business misses this window, some other business will have made the sale by that time.

Some companies are in the business of collecting and selling data (this is where your lists may come from). Once you have a fresh list, that data starts decaying at an approximately steady rate. This occurs because of a variety of reasons: a person changes positions in a company, leaves a company, the company chooses a different direction, finds an alternative (possibly less expensive) solution to the problem that led them to appearing on the list, etc. Note that some industry sectors decay slower than others, because their purchasing decisions go out even further, 18 months or more in some cases.

Regardless of the reason, this rate of decay is exceptionally predictable within major industry sectors, and this will become apparent with experience selling and buying in these sectors. According to this author, over 50% of marketers don't bother to keep fresh data, and so are wasting resources, such as sending emails, cold calls, etc, that will never produce sales.

This article is trying to make a point. Business contact lists are time sensitive, and must be acted upon within a reasonable amount of time, usually less than year, or the opportunity for sales will be lost. That's one reason why most web forms that collect business contacts ("leads") ask for an estimated purchasing time frame, usually expressed as 0-3 months, 3-6 months, 6-12 months, 12-18 months, and unknown/undecided. This helps marketers and sales associates make decisions about which leads should be contacted and groomed sooner.

For fast-moving sectors, these decisions will be less than 12 months out, so by the time a year has elapsed, the entire list is worthless. The rate of decay may be as much as 30%, which works out like the following scenario. A company purchases 10,000 leads from a distribution list. Within three months, 3,000 of those leads will no longer be viable-- they have already made purchases, etc.

This churn corresponds to the 0-3 month category mentioned above. The next category will be the 3-6 month window, where another 3,000 leads may become "dead", followed by the 6-12 month window, in which all remaining leads have completed their purchasing decisions. There is a reason why those are the three most common categories to see on a lead capture form. Anyone you haven't contacted in a year won't be interested in your sales pitch, and will probably just delete your messages or ask to be removed from your lists.

With consumer-oriented data, lists tend to remain viable longer, perhaps indefinitely if it's a quickly consumable item. For example, marketing deals for restaurants will result in many more small sales than marketing to consumers for cars, which are usually only purchased every few years (or much longer, perhaps decades). Business-oriented contacts will almost certainly never remain viable for any real length of time, depending on the size of the deal. A company replacing their entire IT infrastructure, for example, will have a huge one-time sale for a vendor, followed by years of only light maintenance (usually in a retainer contract to help keep budgets under control).

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