Should You Rent Your List?

The catalog industry is somewhat unique in that it has built itself on collaboration. Whether by plan or by accident, the strategy of renting one anothers’ customer lists has helped — and continues to assist — the industry to grow.

But most importantly, this practice helped to build larger universes of good quality, mail-order buyers who became responsive to the convenience of shopping from their homes.

A catalog company won’t prosper in the long term if it’s unable to add new customers to its file. Simply stated: Growth is essential to success. You grow by getting more sales from your existing customers and by adding new customers. Getting more sales from existing customers can be profitable, but eventually you’ll experience attrition. So the only way to grow a housefile is to prospect for new buyers.

For catalogers, prospecting can be done in many ways: space ads, package inserts, radio and DRTV, to name a few. But the easiest, quickest and usually most economical way to prospect is through list rental. And since you’ll want to rent the lists of other catalog companies, doesn’t it seem only fair that you also be willing to rent your list? After all, if those catalogs didn’t put their lists on the market, you wouldn’t be able to grow your business either. Following are other reasons why renting your list is a good idea.

Greater Income

Although list rental activity has declined over the years (due to shrinking housefiles from many companies), rental list income still can add a significant amount to your bottom line. Since there’s little expense associated with the revenue, a large percentage of the revenue will drop down to your profit line.

It seems, however, that smaller companies often are afraid to put their lists on the market. I’ve heard these catalogers express concern that if they rent their customer lists to other catalogs these other companies’ offers may end up suppressing future response to their own efforts.

Frankly, I don’t buy that rationale. I firmly believe that almost all catalogers benefit from renting their lists in two ways:

1. They add profit to the bottom line, which enables them to continue prospecting and growing their housefiles.

2. They increase overall purchasing activity in the direct channel, and that should benefit them, since the best customers usually are the ones who spend the most in mail-order activity across all companies.

It’s also naive to think you’re going to protect your customers from competing offers, or any offers at all, in their mailboxes. With the sophistication of cooperative databases (co-ops) and the large number of catalogs that are members, chances are very high that your customers already are in these databases. This means they’re already available for rental for any other company that belongs to the co-op. Therefore, chances are slim that you’d actually be able to protect your customers from other mail-order efforts.

When companies join co-ops, they learn how many of their customers aren’t already listed with the co-op. This number of unique customers usually is 10 percent to 20 percent. That means 80 percent to 90 percent of your customers already are buying from other mail-order companies that belong to co-ops.

Unless you’ve built your list from a unique alternative source and you’ve truly converted non-catalog shoppers into catalog shoppers with your company, then your customers aren’t exclusive to you. In other words, you’re already not the only catalog in their mailboxes. So by not putting your list on the market you merely decrease the funds you have available to build your file.

List Exchanges

In addition to being a revenue and profit driver, having your list on the market enables you to exchange your list with other companies. This exchange process doesn’t generate incremental revenue, but it still can increase your ability to mail more prospects by decreasing your costs and making your prospect lists more profitable.

Some catalogers promise their customers they won’t rent their names to other companies. But often those same catalogers will rent other outside lists in order to grow their own businesses. This strikes me as strange. Unless there’s a privacy aspect to your offer (i.e., a breach of a brand promise), then I don’t see a reason to withhold your list from the market. To meet The Direct Marketing Association’s guidelines, you must disclose to your customers that you’ll rent their names, and you must give them the opportunity to opt out of this.

Also, as the list owner, you’ll always have the right to deny a specific company from renting your list if you don’t believe that company’s offer is appropriate for your audience. Here’s the test I use when I’m deciding whether to rent my list to another merchant: If one of my customers got the other merchant’s catalog/mail piece and called to ask me where the mailer got her name, I want to be perfectly happy to let her know we gave her name to the other company. If I felt our customers would be disappointed to know we gave their names to a certain marketer, then I’d stop and re-evaluate clearing that list-rental request.

Conclusion

Not to sound trite, but I believe it’s your responsibility as a cataloger to make your names available to other catalog companies. It’s also good for customers, since mail-order buyers generally like to shop by mail and would love to find other great resources for their various distance-shopping needs.

So if your list currently isn’t on the market, I encourage you to rethink your decision. And hopefully you — and the catalog industry — will reap the benefits of access to additional, productive names.

Phil Minix is the senior vice president of catalog and tours marketing at Reiman Publications. You can reach him by e-mail at pminix@reimanpub.com.

Readers: This is Phil’s last column for Catalog Success. The editors thank him for sharing his cataloging expertise with readers these past few years. He will remain a member of the Catalog Success Editorial Advisory Board, and we will showcase his catalogs here on these pages early next year.