What List Brokers Should Provide
The broker the company had been using did not address any of these problems, despite the healthy volume of 5 million to 7 million names annually. Even worse, the broker's recommendations usually were limited to lists it managed, and some of its recommendations were for lists that hadn't been updated for a year or more.
M&PA started discussions with a small boutique broker who was interested in meeting its needs and suggesting additional ways she could serve the account. The resulting changes in how the company selected and tracked lists had a major impact. Here are the six critical services M&PA got from its new list broker -- and the positive changes that resulted:
List-performance histories: M&PA had excellent data for individual list performance on a promotion-by-promotion basis, but the company didn't have the staff to compile and analyze the data. With the list broker maintaining list-performance histories, the company knew the overall profitability of a list historically and whether its performance was holding steady, rising or falling. These measurements were in net income, as well as response and break-even rates. They helped M&PA end a problem it had with continuations of marginally profitable lists.
List-usage histories: M&PA didn't have an adequate system to track list usage, so it wasn't catching re-use of the same names for more than one product within a short time frame. Since the company worked with a small -- and contracting -- universe, it strongly suspected that overmailing to the same names was depressing response. The list broker tracked the use of all of the company's rented lists across the entire product line and warned product managers before overmailing happened so that M&PA could ensure that no names were mailed more than two promotions a month.
Long-term point of view: The new list broker viewed her relationship with M&PA as a long-term partnership and didn't recommend lists that would mean a quick profit for her but poor results for the company. She ensured that all her recommendations were for lists that had been updated and cleaned within the past year. And by continually monitoring the results of the company's promotions, she learned what worked -- and why.
Really knowing the product line: M&PA insisted that the new list broker read its publications -- all of them. The response was enthusiastic, and judging by the substantive questions she asked about them, the interest was genuine. Needless to say, the list broker's understanding of the company's product line helped her make recommendations that were right on target.
Net name arrangements: The new broker suggested that M&PA pursue net name arrangements, something it had not pursued because it didn't have the staff to administer it. She made the process remarkably simple and handled it herself, based on the company's merge-purge reports. Since a typical dupe name rate was 20 percent on rented lists, that meant a substantial savings on those lists where net name arrangements were possible.
Split commissions: The proposal from the new broker included split commissions, which meant that she gave M&PA part of her 20 percent broker's commission as a credit against its invoices, based on volume. Combining this credit with net name arrangements meant substantial savings. In fact, M&PA determined that even though it was getting a 20 percent broker's commission on many of the lists it rented, it came out ahead by foregoing the 20 percent commission and taking advantage of the commission split and the net name arrangements.
Of course, it was critical that M&PA supply its broker with timely information to make this partnership work. The company made sure that product managers faxed the broker list performance spreadsheets, merge-purge reports and inter-list duplication reports the moment they were received. And they were added to the comp list for all the company's publications.
The broker helped the company slash its list reco time from days to hours and made an unpleasant and uncertain task into no big deal.
In addition to the obvious -- and immediate -- bottom-line results, the new broker could search the Internet for new lists and contact owners of lists that weren't on the market. As a result, the company got recos for lists it had never heard of, which helped test beyond its traditional marketplace -- a major tool for dealing with a limited and shrinking marketplace if I ever saw one.
David R. Yale was a vice president and director of marketing at Marketing & Publishing Associates, Fairlawn, NJ. He now is a free-lancer in Bayside, NY.