Productive Broker/Manager RelationsDeal negotiations are important in the list business, for both list management and list brokerage. List managers need to meet clients' revenue expectations, whereas brokers need to save on costs and add to their clients' net profit per acquisition campaign. Cost-effective customer acquisition does not occur unless a relationship has been built between the respective manager and broker.
As a consumer publishing list broker, I find that deal negotiations are an interesting part of my responsibility to my clients. Small and large mailers alike look to reduce costs and add to their bottom lines. The industry is more price sensitive than ever. However, it takes more than just a simple request to be successful. I have outlined the most important points list brokers should adhere to when negotiating on behalf of their mailers:
1. Build relationships. A tough negotiator does not necessarily mean a tough attitude. Do not burn bridges with list managers. At some time in the future you will need to approach the same list manager for another issue. Burning bridges can haunt both you and, more importantly, the mailer.
2. Be honest. This is a continuation of No. 1. When working toward a deal, the list broker should be fair and honest, negotiating only on the files that truly need concessions, including marginal files and ones where a large volume of names are consistently ordered.
If the broker seeks a net/net and does not provide the list manager with a true estimated net out percentage, it can lead to skepticism of future deal requests. Model optimization has become more common with publishing mailers; it's not unusual to net 7 percent to 20 percent. If you are going to be netting out at 9 percent and are requesting a net/net deal, that information must be relayed to the list manager as he will need to work out a cost-effective solution and be able to calculate true cost per thousand for the list owner.
3. Prove it! A good list manager will ask for this; a good broker will be able to do it. One cannot ask for a deal and expect to get it if it is not warranted. A manager needs to optimize list owner revenue, and brokers should recognize this. A net request is a good example. It looks great to your mailer on paper when you get them a 70 percent net - but have you really done anything? If you are asking for a 70 percent net and your mailer nets out 85 percent on that particular list, the savings are minimal. Most mail plans are created using a profit/loss benchmark.
Before requesting a deal, a broker should know what cost qualifications will get a certain list into the plan. For example, cost per thousand of $98.50 will not make the plan, but lowered to $89, the list will make it to the bottom of the plan. Knowing this will help the broker and manager reach a solution benefiting both mailer and list owner. Research is important before requesting any deals. Without it, you can lose credibility quickly with the list manager and your mailer.
4. Work toward alternative solutions. Sometimes, a broker thinks a price concession is the only option. However, knowing the roots of the request allows for a more knowledgeable discussion. If payment were an issue on a list, what are some alternative selects that might help boost pay? If upfront response was poor, are there source selects or other alternatives that might help the gross? Would a deal be allowed if a higher quantity were ordered? Is reciprocity an option?
Knowing the answers to these questions not only might help build a relationship with the list manager, it also might add to the lifetime value of your mailer's customers and long-term acquisition efforts.
5. Work closely with your mailer's list manager. You just received a deal for your mailer that puts the list on exchange or reciprocal list rental. Is an exchange or reciprocal deal going to help (or hurt) your mailer on the list rental side? Though initial terms of these arrangements seem attractive, you must be sure this is the best thing for your mailer. The goal is to minimize the workload of your mailer. A healthy relationship between you and your mailer's list manager is imperative. Such a relationship allows for minimal involvement by your clients, freeing them to focus more attention on the most important aspects of their daily workload.
List managers and brokers share a bond as they work with the same companies. The difference is that their respective efforts appear on different sides of the balance sheet. Strong relationships not only help the industry in general, but also optimize our clients' revenue and cost-savings expectations.