How to handle lists negotiations
At an annual direct marketing conference some 10 years ago, I arranged a meeting between my client and I and a list owner and his manager to discuss discounted pricing and a more favorable net name arrangement. As we talked, the list owner suggested to my client that he bring me along the next time he decided to buy a car.
While I am still unsure whether that comment was intended as a compliment, we did, in fact, get most of the concessions requested.
The main reason: we offered a win/win proposition to both parties in the negotiation. Let me explain how.
My client needed a favorable net and reduced selection charges because he could only mail particular surnames in any one promotion. Since he took all available on a recency basis, the client ordered large quantities of (primarily male) names over a 12-month period. Because a substantial percentage of these were lost to surname suppression and merge/purge, the client could not afford to pay card rate.
The incentives we offered the list owner were two-fold.
We provided indexed response data for his list and promised to not only continue ordering it on a regular basis (if the response held up), but to also test females and unknowns.
If there were other lists in the same family, we agreed to test them as well, in order to maximize our business with that list owner. We also agreed to make whatever deals he offered us reciprocal.
Typically, we found that the females and unknowns worked well, although not as well as the males, and everyone benefited from the arrangement.
As costs continue to rise for paper, printing and postage, direct marketers seem to feel that the only way to cut costs is to hammer list owners with requests for increasingly deep discounts.
Since many list owners are also mailers, however, they feel that they are being pressured from both sides and, increasingly, are unwilling to budge when approached for pricing concessions.
It is extremely important, therefore, to ask only for what you actually need and be willing to document it. Don't ask for a 50 percent net when you only lose 10 percent of a list in merge-purge.
Rather than requesting a better net, consider asking for a reduction in the base price and/or for selection charges to either be waived or capped at a lower rate, if using multiple selections.
Since service bureaus often charge list owners far lower production costs than are charged to mailers, list owners often have flexibility there.
Be sure your broker takes advantage of discounts often available to certain categories of mailers, such as nonprofits, catalogs, publishers, etc. Take advantage of advertised free or reduced price tests, and request them even if they are not generally available.
Consider what you as a mailer can offer to a list owner to show your good faith and all parties will ultimately benefit.