What is a Lift Chart?

Have you ever looked at customer data or various forms of predictive modeling and felt as if your first assignment should be going back to school and getting a degree in statistics? Although intimidating at first, data is something we’ve all got to get comfortable with at some point in time. After all, understanding it and utilizing it results in smarter business decisions, improved targeting, increased conversions and reduced marketing costs.

So, what is a lift chart, aside from a common tool used within our industry?

A lift chart graphically represents the expected penetration of using a ranked list in comparison to the expected penetration of “business-as-usual” (“business-as-usual” utilizes a random data set).  The ranked list represents various portions of your data set and shows which models work best.

This is very important data to uncover, especially when utilizing direct mail campaigns to market your company. If you can determine which portions of your data set get the best response rates, you can mail fewer pieces to achieve a new number of customers. This data could also be used to acquire new customers within a particular budget. By utilizing the ranked list, you are not wasting money on very large data sets with an overall low response rate.  You identify who the “worst” customers are, or the prospects that are unlikely to respond, and you no longer need to spend money on postage and printing for these contacts each month.

Lift charts are often linked to profit charts because profit charts display all of the same information, but also display the projected increase or decrease in profit by utilizing each model. In the perfect scenario, the ideal line in the lift chart represents a prediction that is never wrong. The reality however is that the model will likely fall between a random guess (utilizing a random data set) and a perfect prediction. Any improvement over the random guess is considered to be a lift – where your company loses less money and does not waste funds targeting individuals or companies that will never become your customers.

Does your marketing department need to get better control of its spending? At Natimark, we have been providing better data and better results for over 20 years. If you want to acquire more customers while spending less, contact our team today:  (866) 923-3403.