10 tips to boost rental income

Mar 01, 2005 10:30 PM  By

For most list owners, list rental income has been on the wane during the past few years. In fact, according to some estimates, the use of outside lists has declined as much as 40% since the beginning of the decade. Some of that is a result of the increasing use of cooperative databases rather than rental lists as a source of prospect names; a shift away from renting names to exchanging names in order to save money has also contributed. And of course, to compensate for the lackluster economy, many marketers cut back on prospecting altogether.

But a business can tread water for only so long. More mailers are realizing the importance of prospecting once again and that renting names is a key part of the prospecting mix.

How can you take advantage of this renewed interest in list rentals? By following these tips to make your list more desirable, so that you can maximize your list rental income.

  1. Grow your house file

    This seems pretty obvious, admittedly. The universe of names available on your file and the growth rate of your file are critical to the desirability of your file. Because testing lists is an expensive proposition, many mailers are hesitant to test files with fewer than 10,000 names. Even if the test worked well, there would be few names to roll out to. Finding good lists that a mailer can reliably and consistently use is one of the main points of testing, and small files lack the size to offer long-term, consistent usage.

    Of course, a large list isn’t desirable if the names are old. To grow your house file — and the number of 12-month, six-month, and three-month buyers — you need to prospect. In other words, to make more rental income from prospectors, you need to be prospecting yourself.

  2. Update your file frequently

    Mailers shy away from using out-of-date lists in which the most recent buyers are, say, seven months old. Ideally you want to incorporate the names of new buyers monthly. If that’s not possible, aim for quarterly. Keep your mailing schedule and seasonality in mind when deciding when and how often to update. Food mailers, for example, might benefit from updating every month during the busy fall/holiday season but only quarterly during the less active seasons.

  3. Be smart with exchanges

    Do not exchange with other catalogers unless their lists work for you. If their lists aren’t ones you’d otherwise rent, you’re losing money by not charging them to rent your names.

  4. Be flexible on pricing

    The days of adhering unwaveringly to the rate card are over. Be willing to negotiate select charges and net names. Waiving select charges or capping selects can be the difference between a mailer canceling an order or placing a successful test that results in subsequent continuation orders. Five continuation orders at a discounted rate of $135/M are better than no orders at a higher standard data card rate of $165/M.

  5. Offer tiered pricing

    If you don’t offer publishers or fundraisers reduced base prices, consider doing so. It can be an effective way to get marketers other than fellow catalogers to test — and ultimately continue with — your file.

  6. Offer the basic selects — and maybe some not-so-basic ones

    Geographic, gender, dollar, and recency selects are now so commonplace in the industry that you pretty much need to offer them to remain competitive. Beyond that, you should consider offering product selects. Without them, some mailers may find your merchandise mix too broad in comparison to the products they offer. Likewise, if you have a significant quantity of business addresses on your file, consider allowing these records to be selectable. This will make your file attractive to business mailers.

    That said, if your file has fewer than 10,000 names, offering more than the basic selections may not be feasible, as you might not have enough names to offer within a specific product or demographic select.

  7. Enhance your file with other data

    If you belong to a cooperative database, offer file overlays. In addition to paying for the names it would be renting from you, the mailer renting your file would pay the co-op a fee of roughly $45/M-$50/M to optimize the list. The result is a more-qualified selection of prospects.

    You can also have your service bureau overlay your file with third-party data from one of the large consumer databases. Again, though, size matters. Enhancing your file makes sense only if you’ve got 250,000 names or more. If the size of the list is too small there won’t be enough names to select once you start drilling down.

  8. Offer modeling

    Like file enhancements, modeling makes sense only with extremely large files — those with at least 250,000 names. Keep in mind that, just as some files seem too small to test, others seem too large. Some mailers view renting certain lists akin to renting the phone book. Get around this type of thinking 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 cost of the modeling. This can be handled by your service bureau; costs vary depending on the specifics of the job.

  9. Accept nonreciprocal orders

    Do not decline a mailer just because it cannot or will not allow you to rent its names. In the days before the co-ops, refusing nonreciprocal orders was common practice. But today, with more than 90% of mail order buyers available via Abacus, the practice doesn’t make sense.

  10. Create an efficient and speedy approval process

    The turnaround time of list orders is critical. Orders often miss cutoff dates because the offer is still pending list owner approval. Simplify the approval process by not requiring multiple layers of management to sign off on every list order. For example, if the prospective renter is a mailer that has rented your file before, grant the list manager power to approve of the deal.


Stephen R. Lett is president of Lett Direct, a Bethany Beach, DE-based catalog consulting firm specializing in circulation planning, forecasting, and analysis.