Time for a change?

Jun 01, 2006 9:30 PM  By

If it ain’t broke, don’t fix it: We’ve all heard that adage. But sometimes it’s tough to tell whether something is broken until it’s far too late for repairs. A company’s relationship with its list broker can be a case in point.

Some marketers will stick with a list broker that has proven to be loyal even if results are ebbing. Others will leave a brokerage for another that promises a better financial deal, even if it means getting less bang for the buck.

“People look at their broker relationship when they don’t feel they have been effective in identifying new customer acquisitions or if they don’t think that the broker is negotiating the best deal for them,” says Alan Beychok, president/founder of Norcross, GA-based Benchmark Brands, the parent company of the FootSmart and WalkSmart catalogs. “They also look at it if the quality of customer service they’re receiving isn’t strong enough or if the analytics the broker is giving them are not strong enough. It could be one of those things or any combination that make you consider looking for a new list broker.”

Benchmark Brands switched list brokerage firms about a year and a half ago, to Hackensack, NJ-based Mokrynskidirect. “We were with a small brokerage,” Beychok says, “and we felt Mokrynski’s scale and size could provide us with better services.”

What makes for a good relationship with a list firm? “You have to expect a list brokerage to offer suggestions and things that go beyond a huge stack of data cards,” says Jake Hall, director of consumer marketing for Canton, MA-based wine merchant Geerlings & Wade. “You’re looking at your broker to bring that additional qualitative support. They need to help you analyze your numbers and bring fresh new ideas to the table.”

Geerlings & Wade isn’t in the market for a new broker — which is no doubt welcome news to its current brokerage, Greenwich, CT-based list services firm Direct Media. “Though people do it, it doesn’t make sense to swap list brokers left and right. Then they don’t get to know you or get to know your business,” Hall says. “I’ve definitely spent a reasonable amount of time at Geerlings & Wade hearing from brokerages who want to work with us. But I haven’t made a change because I respect the relationship I have with Direct Media.”

During his previous stint, with Medford, MA-based daily-living aids cataloger Support Plus, however, Hall was part of a team that searched for a new list broker. Like Benchmark Brands, Support Plus felt its business had outgrown its brokerage. And like Benchmark Brands, Support Plus chose Mokrynskidirect because it provided more services than its previous list brokerage had.

A list brokers’ breadth of offerings is important for marketers looking to grow their business, Hall says. The more expertise in various channels and tactics a list broker has, the better. “You may not get the attention of one single person servicing your account, like you would with a small broker,” Hall says. “But if you have a team of people servicing your account, each with a different expertise, then that’s even better.”

In keeping with that “the more the merrier” philosophy, some multichannel merchants use multiple brokerages. Gifts and tabletop items manufacturer/marketer Lenox Collections, for instance, has long used New York-based ParadyszMatera, but about three years ago it began also using Mokrynskidirect.

It’s not that Langhorne, PA-based Lenox was unhappy with ParadyszMatera’s work, says Robyn Mohr, Lenox’s associate marketing manager. Lenox was looking to revamp its Treasury of Collectibles book and replace its home decor title with the Lenox at Home catalog, and “for us it was about getting new ideas about where we want to go,” she explains. “We needed the different perspectives [the two brokerages] have on our books. They aren’t exact opposites in their thinking. It’s very interesting when you see them recommend the same lists. But it’s also interesting to see them think in two different directions or think of certain areas that you hadn’t thought of.”

More is more

In general, marketers are looking not just for more opinions from their brokers but also for more services. “Fewer and fewer companies are doing just list brokerage,” says Linda Huntoon, executive vice president of consumer brokerage for Direct Media. “Mailers in particular are looking for more services from their brokers, such as co-op list management and circulation management. Now they want to know when and how to mail catalogs, and they demand it from us.”

List brokerages are not what they were back in the 1980s and ’90s. Before the dawn of the Internet and the cooperative databases, prospecting to rented lists was one of the more economical ways to acquire customers. Catalogers in turn depended on list rental income as a profit center, says Michele Salmon, who heads corporate marketing for San Rafael-based catalog consultant Lenser. The faster you could grow your house file, the more money you’d make on the rental income. Ten or 15 years ago, she adds, it wasn’t uncommon for a cataloger with a 250,000-name 12-month buyer file to make more than $2 million a year in list rental income.

But rising postage and paper costs, the proliferation of the co-op databases, and the emergence of new prospecting media such as search engine marketing and online affiliate programs have led to a brokerage industry busy reinventing itself to keep pace with the rapidly changing direct marketing environment.

Donn Rappaport, chairman/CEO of Princeton, NJ-based list services firm ALC, says list brokers — and managers too — need to take on a more strategic role with their clients. They also need to do a better job communicating the value they provide to the client. ALC, for example, has developed quarterly executive summaries so that clients can see not just the standard brokerage results but also the company’s strategic contributions.

“We’ve gone from being a traditional list broker and we’re truly operating as a marketing consultancy,” says Andy Ostroy, chairman/CEO of New York-based Belardi/Ostrow ALC. “To keep our clients and win new ones, we need to identify who [the client's] customers are and how to adjust to them, and to look at business across all channels and titles from the top down instead of just finding out how to generate the most income for ourselves.”

It’s a challenge for list brokers, Ostroy says, but a good challenge. “Merchants are more focused on their customers now, and we’re helping them better understand how they can do that across all channels. You can look at the numbers and analyze them, but telling them what they should do next is really exciting.”

Broker shopping list Shopping for a new list broker? Thinking about shopping for one? Here are a few things to consider:

  • How well versed is the broker regarding your market segment? If you sell industrial supplies, a brokerage whose clientele consists largely of gifts may not be the best pick.
  • Will you be working with one person primarily, or will you be interacting with a team? One isn’t necessarily better than the other, but if you have a strong preference you should keep that in mind.
  • How thorough and creative are the proposals of any potential new list brokers? You don’t want a one-size-fits-all proposal, nor in this multichannel age do you want the broker to focus solely on recommending mailing lists.
  • How does the broker research its list and other recommendations?
  • Will the broker provide performance projections? If so, what is the game plan should performance fall short of goal?
  • Can you “try out” the broker? Because mailers don’t sign contracts promising to use one broker exclusively, “it’s easy enough to put a couple tests of [a potential new broker's] top picks in the mail and get a read,” says Jake Hall, director of consumer marketing for wine merchant Geerlings & Wade. “But I would always give the existing broker the order if it’s a list they also highly recommended.”