DM News' Essential Guide to Lists & Database Marketing: The Art and Science of List Negotiations

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Brokers and managers traditionally have provided many services for their clients, and few are as important as the list negotiations that are prevalent today. Fortunately, in the years that I have been a broker, the process has become a little more scientific ? but the art remains an important component.


Years ago, when names were supplied on Cheshire labels, negotiations were volume based. If the client rented many names (sometimes many hundreds of thousands when those universes existed), the diligent broker asked for a reduced cost, something like a ?baker?s dozen?: 13 for the price of 12. The diligent and honest broker passed that savings onto the mailer.


Of course, merge/purge was a boon to mailers, and net name negotiations were a result. It soon became possible to produce reports that actually documented the process. Not only did we learn how many names were duplicated among the lists being merged, we also saw what names failed to reach other standards of deliverability.


It wasn?t long before the Direct Mail Marketing Association ? now the DMA ? began to collect do-not-mail names and make them available to service bureaus for suppression. As the computer developed, so did our industry, and the art of negotiating moved a little toward science.


Early in my career, much of my negotiations concerned segmentation of the files being rented. For example, I had a client who developed an offer directed to Visa or MasterCard holders. My job was to negotiate the release of the list owners? credit card buyers, since few segmented those names.


It was tough, and many refused at first. Those negotiations were filled with art ? mostly the art of communication. In those days, if you thought of something that might help your mailer, you were free to try to persuade the managers and list owners to let you try it. Those negotiations had little to do with science, but they were fun and filled with satisfaction for all.


Before I discuss the negotiations prevalent today, note two precepts that I use whenever I set out upon a negotiation process ? and it is a process. The first is really the reason list brokers and managers exist. To be a strong negotiator you have to care ? but not too much.


A good broker wants his mailer to do well ? the broker won?t survive if the mailer isn?t healthy. The good broker also wants to be respected by the industry and to feel satisfaction for a job well done. Those things are important, but the desire to secure names at a reduced cost for the sake of a successful mailing is much stronger in the mailer. That desire can become so emotional that reason is abandoned, with catastrophic results.


The same is true on the management side. A good manager wants to generate revenue for his list owner and is acutely aware of the value of the names being marketed. The good manager also knows the value of incremental revenue to the list owner. But the good manager is much more willing to understand the needs of the mailer and communicate them to the list owner than the broker or the mailer would be, were they to speak directly.


The second precept is even simpler. For a deal to be good, everyone has to win. It?s simpler, but not necessarily easier. The client has a firm idea of what winning means, and to most it means beating the other guy. The broker and manager are there to ensure that the deal is equally good for each in the long term.


Negotiations now tend to revolve around the cost and/or performance of the name, and these negotiations are more scientific. Today?s enlightened mailers share data with their brokers. We are privy to the merge/purge reports and have access to results. Many of us do the circulation plans and have the data needed for the work.


This is tremendous because it lets everyone do what is necessary to advance the clients? business. We have developed a program that lets us see the number of names mailed, by campaign, by list, for any range of time that the mailer has worked with us. I can see the retention pattern by season, offer and campaign and negotiate accordingly. When I ask the manager for a better net, I have the data to support my request, and the manager has the data to take to the owner. That?s pretty scientific.


Better pricing structure needed. Another area of negotiation surrounds the use of names for purposes other than mailing. Many mailers are creating match codes for fulfillment processing, and generally that?s straightforward and not too tough a negotiation. Some others are more difficult, like permission to use a tracking program to determine which medium is driving response. This is not always easy to achieve, though I am hard-pressed to understand why. Others involve the use of names for modeling processes, and that one is getting much more interesting.


As a broker, I would like to see a whole new pricing structure that better reflects today?s science. Why not rent 100 percent of the names at a price that represents the cost of producing and transferring them ? say, $10/M? Once received, the names would be merged and analyzed. The cost of the names actually mailed would be negotiated, as would the cost of the names that were used for informational purposes or for modeling in the future.


Technology lets us see these steps and report them. It would be a challenge to deal with the invoicing, but we?ve met tougher ones. Why should we be tied to ?rate card pricing? and ?one-time mailing? requirements from the past? They don?t reflect how names are used today, and they create questionable practices with which everyone is uncomfortable.


Let?s use the available technology to streamline our processes, grow our businesses and move into this century with confidence and the knowledge that we are the best we can be. Now that?s going to be an artful as well as a scientific negotiation!


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