16 Ways to Maximize List-rental Income

List-rental income for most list owners has decreased during the past few years. Mailers have shifted from renting outside lists to selecting prospect names from a cooperative database.

There’s also been a shift from renting lists to exchanging names as a way to save money. With the use of outside rented lists down as much as 40 percent, what can you do to maximize the amount of list-rental income you generate? This month I’ll explore ways to maximize your list-rental income during these times of uncertainty and change.

1. Grow your own housefile. The biggest factor that affects your list-rental income is the total universe of names available on your file. Another important factor is your housefile’s growth rate.

Since testing lists is an expensive proposition, many mailers hesitate to test small files. Some view them as having few positive aspects. Even if the test works well, there will be only a few names on which to continue.

Finding good lists that you consistently can rely on to work is important. Small files lack the size to offer long-term, steady usage. This isn’t to say small files aren’t good and shouldn’t be used. But as a general rule, larger files — assuming their content is solid and dependable — are more attractive to mailers. And if you view the names on your list as a commodity that generates income, a greater volume of names certainly can generate a greater volume of income.

For example, a 12-month buyer file with a universe of 150,000 names that’s growing at a healthy and consistent rate (e.g., updated monthly or quarterly) should generate more income than a similar list with a 12-month universe of 50,000 names updated only once or twice a year.

2. Update your file frequently. Often, a file gets out of date, and you may shy away from using it. Let the size of your file and your mailing schedule dictate the update schedule. Ideally you’ll want to update monthly if possible, but no less than once a quarter.

3. Prospect, prospect, prospect. The growth of your housefile is directly proportional to the amount of prospecting you do. As your housefile grows, so does your list-rental income. You can grow your housefile only by continuing to prospect. Very simply, the more you prospect, the larger and more quickly your housefile will grow. If you reduce the amount of prospecting you do and slow your own rate of growth, you’ll negatively impact your list-rental income. It also will affect the growth rate of mailers who depend on your list.

4. Be smart with exchanges. Don’t exchange with other catalogers unless their lists work for you. Too many times I see catalogers racking up large exchange balances they’ll never use. Some list managers pressure catalogers to accept names in exchange for their own economic gain. If you already have a large exchange balance with another mailer, or if a list isn’t working for you, don’t exchange.

5. Stay flexible on pricing. Work with a mailer to be sure your list is affordable and reasonable. Be willing to negotiate charges on using your list’s selects and net names. Don’t hold hard and fast to your rate card. Deals are being negotiated every day.

Catalog list prices often are prohibitively high. Waiving select charges or capping selects often can mean the difference between a mailer canceling an order or placing a successful test that results in future continuation orders. Five continuation orders at a discounted rate of $135/M is better than no orders at a higher standard datacard rate of $165/M. Note: I’m not talking about giving away the store. Often, a discount of $10, $15 or $20 per thousand is all it takes to get the order.

6. Offer basic selects. Selects such as geographic, gender, dollar and recency are so commonplace in the industry they must be available on your file. One or more of these basic selects often are imperative for a mailer to consider testing your file.

7. Offer product-category selects, e.g., apparel buyers, jewelry buyers or even Irish-product buyers. This may entice certain targeted mailers to rent your list. Without specific product selects, some mailers may find your product mix too broad in comparison to the products they offer.

The more you drill down and target specific segments of your file, the more attractive your file becomes to a mailer. Remember, it’s all about making it as appealing as possible to mailers so you can pull in the test orders.

8. Enhance your file with other data. Offer file overlays through one of the cooperative databases (assuming you participate in a co-op). You also can have your service bureau overlay your file with third-party data from one of the large consumer databases.

Enhancing your file makes sense if you have a 12-month file size of 500,000 or more. If the size of the list is too small, there won’t be many names to select once you start drilling down on the details.

9. Offer modeling. Like file enhancements, modeling only makes sense with extremely large files. Keep in mind that, just as some files seem too small to test, others seem too large. Some mailers liken renting certain lists to renting the phone book. Dispel this analogy by offering free geographic or other basic modeling services with a modest commitment of rental names. If your file is strong, continuation orders will more than cover the modeling cost.

10. Increase the quantity of test orders. It sounds simple, but must be stated: The more test orders you get, the more mailers will discover that your list works for them.

Identify a realistic quantity of test orders you want per month. Know the mailers and brokers who should be using your file, and go after them aggressively. Entice other market mailers who wouldn’t normally consider your list by offering deep discounts or even a free test. If they’re big enough mailers with some potentially large continuation orders, a free test is well worth it. There are too many lists other than yours for mailers to consider. Test orders don’t just happen. It’s your responsibility to go out and get them.

11. Offer tiered pricing. To increase your list-rental income without any additional cost to you, offer tiered pricing beyond publishers and/or fundraising rates for food, insurance and clubs.

12. Don’t decline mailers who can’t reciprocate. I know this goes against one of my former rules, but times are changing. As long as you can rent your list to legitimate mailers, knowing their list isn’t available can increase your rental income and your bottom line.

13. Make your list attractive to businesses. If you have a significant quantity of business addresses on your file, allow these records to be selectable.

14. Offer fast turnarounds. Use a service bureau that can process orders and provide counts without delay. Sometimes the only determining factor between renting one list vs. another (assuming, of course, that the lists are comparable) is how quickly a particular service bureau can turn around the order. Know how your service bureau is performing in this regard.

15. Use a list-management company that makes the process of ordering your list easy. Some managers take such an overly protective posture regarding their lists that they hinder business instead of facilitate it.

Of course, proper approval and credit procedures must be in place and carefully followed for the owner’s protection. But these policies shouldn’t be so overwhelming that they prevent brokers or mailers from touting your list. There’s a fine line to walk between being too protective of your list and being too complacent about it, but it’s a line that must be walked if your goal is to maximize your list-rental income.

And as stated previously, find a management company that will proactively market your file. It needs to be in front of the appropriate brokers and mailers, because very few files sell themselves. Your list manager can’t wait for the orders to come in. Expect and demand test orders. If your current manager isn’t getting you test orders, find one who will.

16. Create an efficient and a quick approval process. Orders often miss cut-off dates because they’re awaiting list-owner approval. Clearances often aren’t converted to orders because list owners take too long to approve. Set up a system in which clearances and orders either are approved or disapproved in two to three business days at most.

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He spent the first 25 years of his career with leading catalog companies. He can be reached at (302) 541-0608 or visit the Web site www.lettdirect.com.