I was reading an article recently about keeping your list rental file updated, and I came across a comment from a list manager who said: “Most lists, if updated on a regular basis, won't see sales dwindle.”
Many list owners struggle to determine if the market, the list or the performance of the list manager causes disappointing list sales. There are usually many factors that drive revenue shortfalls and each should be evaluated independently. If each area is monitored consistently, revenue shortfalls will not always be prevented but can be curtailed and combated.
File size and source. Monitor file size and source breakdowns monthly. Your file size may be increasing, but if the source mix is changing you may not see the income benefits from those gains unless you are well prepared. If the list manager is well prepared for the source change, their sales plan can incorporate it into their efforts, ensuring full benefit of these names. Another misnomer is that, if file size increases or declines, one can see a parallel result in income. This isn't necessarily the case. File size variation is dependent upon how many of your list users take all of the names within their selection.
New business. New business growth is good, but list owners (and list managers) put too much emphasis on the number of tests rather than the long-term value of tests. Avoid list management firms that provide a financial incentive for the number of tests without regard for the conversions. A good new business strategy will consist of strong market research — knowing which markets will produce long-term usage. Evaluate not only the number of tests but the conversion ratios as well. Use mailers as building blocks to penetrate a market category fully and to avoid prospecting markets that don't convert well.
Continuation business. Since few list owners know how to analyze list sales results (and if you have a good list manager, you shouldn't have to), a simple look at the top 10 user trends and reliance can tell you a lot about where list rental sales are headed. Top users can account for a substantial percentage of income. If these users are aggressive mailers with strong growth within their businesses, you probably have nothing to fear in the year ahead. But if your top users are a mix of volatile mailers in a high-risk market (i.e. sweepstakes), look out. You could be headed on a downward spiral that could make your head spin.
So what do you do if you're in the latter group? Know the mailers that make up your revenue and obtain reports on their upcoming plans. Preparing for mailer losses will enable you to minimize them. Additionally, a good sales strategy will always consist of a plan to reduce mailer reliance. If new business is bringing in long-term value, and not just one-shot testing, you can effectively offset some major mailer losses.
Consortium databases. Most list owners participate in consortium databases for the customer acquisition benefit, not for list rental income. However, the decision to participate in a database usually does not include an evaluation of list rental impact. If you participate, and you want to keep list rental losses to a minimum, then the list rental strategy must incorporate such an evaluation. Know which other mailers are participating, which mailers are accessing it and how much of the database your file represents. Put measures into place that will continually monitor benefits and impact.
Segmentation and market presentation. This is probably one of the most critical elements to list rental success. All segmentation offered should provide penetration of additional list rental markets. Never offer a segment that will cannibalize usage. Understand the benefits of each segment offered and, once again, evaluate its results consistently. Ensure that the sales strategy provides exposure directly into the market category for which the select is intended.
Of course, a clean, frequently updated list is important, but is just basic and fundamental. Increasing list rental income or trimming losses in a down year is the result of a sound list rental plan that incorporates and evaluates each of the areas above on an on-going basis. Similar to a circulation plan that evaluates front-end, back-end, pay-up and lifetime value, a good list management plan is part good list and part good list manager.
Joanne Capria is president of Novus Marketing Inc. List Management, Valhalla, NY. Her e-mail address is [email protected].
