List Managers Gear Up to Minimize DownturnThe buzz in the list industry is that direct marketers are scaling back prospect mailings for 2001, which has savvy list managers working every angle to keep rental income rolling in for their list owners.
"We're all nervous about 2001 list income," said Ed Bocknik, executive vice president of list management services at Direct Media Inc., Greenwich, CT. "Anyone who says they're not worried about this year's list income is either being silly or is just afraid to face the facts. It's going to be a tough year."
Given the uncertain state of the U.S. economy and the generally pessimistic outlook of consumers, it is not surprising that mailers are decreasing their circulation for upcoming offers.
But tough times are not new to the list industry, and most managers will not sit back and wait for orders.
"We've been on this roller coaster before, and I think that it's made our industry a lot better at understanding how to turn things around faster," said Chris Montana, senior vice president of list management at Mokrynski & Associates Inc., Hackensack, NJ. "No one can stop a downward trend, but you can minimize its impact."
Though list brokers always seek deals for clients, deals become more critical when rentals are down. Sometimes a deal makes or breaks a mailer's decision whether to rent a file.
"Inflexible list owners will lose business," said Linda Thompson, director of catalog list management at Millard Group Inc., Peterborough, NH. "It's been proven that if you're flexible with pricing, you will definitely see an increase in list rental income."
Still, Montana cautions against no-holds-barred dealing. Though out-of-category offers may not pose a threat, he said, list managers must ensure their list owners don't give their lists away to competitors.
"I'm not saying don't deal, but you have to deal sensibly," he said.
Quantity commitments are an effective way for list managers to give a better deal yet guarantee that a mailer will use a certain number of names from their list over the course of the year.
"If they are already successfully mailing 50,000 names, we try to give them incentive to rent 150,000 names," Bocknik said. "Everybody wins."
If the mailer does not take the committed quantity by the end of the year, the list owner can bill the difference for the full rental price.
Selectivity and file enhancements are also important in keeping rentals coming in and adding revenue. Though select charges are incremental income, they add up, Thompson said.
Mailers are more apt to stick with the most targeted files when circulation cuts are necessary.
"It means that if your list is not as highly selective as others, it may be cut out," Montana said.
Then there is proactive selling.
"The single most important thing we're trying to do in management is take a much more aggressive stance with mailers," Bocknik said. "Rather than waiting for the mailer or broker to call us and say they can't use a list because it's too expensive, we want to go after them to cut a deal and get them to use more names."
As the marketplace shrinks, a company takes orders away from someone else every time it increases its market share, Montana said. Without a strong sales force, orders will be lost.
Still, selling tests may not be the way to go. Though list managers agree that conducting new tests is crucial, they know that a soft market isn't the best time for testing.
The real payoff from successful tests usually comes the following year, when a mailer has retested a file and is ready to roll out, Bocknik said.
"The real way to boost revenue and hit budgets in the immediate year is to go after the top 20-30 mailers using a list and get them to take 20, 30, or 40 percent more names," he said.
Montana stressed that getting a mailer that already uses your file to test an additional segment will be more likely to bring a bigger test order than one that would come from a mailer that has never used the file. The test segment might be 20,000 to 30,000 names rather than a typical 10,000- to 15,000-name test.
Though list managers use these tricks on a daily basis, they play an even more important role in tough times.
For now, list managers seem to agree that the rest of 2001 will be challenging.
"Mailer cutbacks will be the trend until we see signs of a recovering economy and stronger consumer confidence," Montana said.