Develop Strategic Partnerships

What you’ll learn from this article:

- how to find companies to ally with; and

- types of programs you can develop together.

Want to reduce your catalog costs while increasing your new customer acquisitions? One way to do it: Develop strategic marketing through reciprocal partnerships and exchange relationships.

Creating reciprocal alliances takes a bit of initiative and a willingness to explore communications directly with noncompetitive mail-order companies. First, I’ll explore how to find companies to ally with, and then I’ll outline some programs you can develop together.

Identify Other Mailers in Your Niche

Many mail-order companies don’t have their customer lists on the rental market. And many of these companies don’t use list rentals themselves to acquire customers. Moreover, some traditional mail-order companies use magazine advertising, rather than list rentals, to target their markets.

Thus, several customer lists that might be appropriate for your offer won’t necessarily be on your list broker’s radar. By doing some research on your own, however, you can find companies whose products complement yours and whose customers have an affinity for your merchandise. Following are three research tips:

1. Look for ads in publications that cover your market and that appear to target the same demographics as you do. A review of these ads should tell you if these companies meet your criteria for developing an alliance (see “The Art of the Deal,” below, for more on setting criteria). If you sell apparel, look for shoe and accessory marketers. If you sell sheets, look for bed manufacturers. If the marketer includes a call to action, Web address, toll-free number and/or catalog request mechanism in its ads, assume it has a customer database.

Also, look at a bookstore’s magazine rack to expand your scope of publications serving your market. There are multiple publications for just about every niche market.

2. Use the Internet. Try www.catalogs.google.com, or The Direct Marketing Association’s www.shopthenet.org. Also a great source of leads for list exchanges is the “recommended links” pages of Web sites that serve your catalog’s demographic.

3. Use industry sources such Grey House Publishing’s Directory of Mail Order Catalogs and/or Belcaro Group’s catalog of catalogs Shop at Home. These will help you locate other direct marketers with whom you can exchange customer lists.

Types of Exchange Relationships

After you identify your target prospects, here are several ways you can work together.

1. List Exchanges. The most obvious way is to exchange housefile names, eliminating most of the cost of renting those names. Once you iron out the arrangement with the other list owner, have your list broker work this deal as a regular list order. Your broker will charge you a nominal fee (i.e., an exchange rate). You also can have the list sent directly to your service bureau. Your list broker should be involved in all of the lists you mail in order for your broker to provide the best possible recommendations to you in the future.

2. Package Inserts. Trading space in outbound package inserts can be an excellent source of both leads and orders. As you would with paid package-insert programs, set up tracking codes, and test creative and offers. For offers, try testing a catalog request vs. direct sale, or a hybrid of each.

As for finding companies to trade off with, you can use the above-mentioned sources, or your list broker can help you contact the list owners of some of the lists you rent (ones that don’t already have a package-insert program running).

3. Endorsed Deals. I love the concept of endorsing the right company’s products. It lets me provide customers with offers that are complementary to my merchandise, thus creating goodwill all around.

Endorsement programs can be as simple as sending an e-mail or postcard to your customers with a recommendation, or as complex as an elaborate syndication program with revenue sharing involved. How you structure the deal is dependent only on what you and the other merchant’s marketing team can dream up.

Some other ideas: a store within a store; trading pages within your respective catalogs or selling one another’s products on your Web sites. The sky’s the limit.

4. Banners and Links. Two other sources of new customers are through the trading of ads on one another’s Web sites, and inclusion on a recommended links page on one another’s sites. Keep in mind, however, that link trades also may be viewed by many customers as endorsements.

Incidentally, recommended links pages on Web sites can lead you to other companies you may want to contact.

The Art of the Deal

Before you begin calling other marketers to gauge their interest in reciprocal alliances, look on their Web sites to determine if they sell competitive products and if the Web sites are at the same quality level as yours.

Call their customer service departments to see how they handle calls. Order their products to see the quality. After all, you don’t want to build a partnership with a company that will have a negative impact on your business. (For more complex relationships check out the marketer’s ratings with the Better Business Bureau and/or Dunn and Bradstreet before you finalize any deal.)

Back to making the initial contact: Sometimes it takes time to get through on the phone. Establish right away that you’re not trying to sell them something; rather, you want to develop co-marketing programs. You even can use a two-step approach: Make a short, initial contact and then send a package that includes your catalog, other marketing collateral, and a letter introducing yourself and your intentions to help build one another’s businesses through exchange-driven marketing.

Conclusion

Allow me to offer two caveats:
Treat all marketing exchanges as a test. I had a client get 50,000 free names from a company on exchange. Needless to say the client was excited about the prospects of a “free” list, and wanted to mail the entire list. After some convincing, the merchant mailed a test quantity. The list bombed. Lesson learned.

Choose your marketing program carefully. Remember the basic rule of catalog affinity: The most “like” customers who’ve demonstrated the most “like” behavior likely will generate the highest response. Behavior is the key driver in the catalog business. I’ve mailed magazine lists that were perfectly targeted that bombed because those in the list weren’t, by behavior, mail-order catalog buyers.

Remember, whenever you test out of category, your results could be drastically different from anticipated. Hence, try to test with the least-expensive vehicle or the lowest quantity until you’re confident the exchange source will be a winner.

Any time you can add new customers and lower your customer acquisition costs you win.

Jim W. Gilbert is the former vice president of operations and direct marketing for Under the Canopy catalog. He is the president of Gilbert Direct Marketing, a catalog and direct marketing consultancy. He can be reached at (561) 302-1719, or jimdirect@aol.com.