Outsourcing list management vs. handling it inhouse
Feb. 28 marked the end of an era for personalized gifts cataloger Lillian Vernon. The $264 million mailer turned over the management of its 10 million-name file to Peterborough, NH-based list firm Millard Group. Until then, the 40-year-old cataloger had managed all list rentals and its package insert program inhouse.
In 1996, Lillian Vernon spokesman David Hochberg told Catalog Age that inhouse management allowed the Rye, NY-based company to maintain control over the promotion of its list, preventing it from becoming “lost in the shuffle” at a busy management firm. Four years later, however, Hochberg lays out a simple reason for the company’s change of heart: money.
“Hopefully, Millard will increase our list revenue,” Hochberg says. And while the change pares down Lillian Vernon’s inhouse list rental team from two staffers to one, Hochberg says the savings from the head count reduction were immaterial.
Like Lillian Vernon, Omaha Steaks believes outside managers can generate more rental income. “We outsource our list management because we believe that this is the best way to maximize revenue,” says Maggie Nelson, manager of database and circulation for the specialty foods cataloger.
But there are other benefits to outsourcing list management, says Nelson, who relies on the resources of Omaha Steaks’ outside list manager, Ridgefield, CT-based D-J Associates. “They have access to new selects, updated counts, and pricing trends. List managers negotiate pricing using selections and use levels. They have the experience to know what it takes to make a marginal list into a well-performing list.”
But not all catalogers agree that outside list managers are more effective than inhouse managers. Take Irving, TX-based upmarket apparel and decor marketer Neiman Marcus, which boasts a file of approximately 500,000 active catalog buyers. Inhouse list manager Tina Carter believes that working closely with NM Direct’s house list gives her an advantage over an outside manager. “I’m familiar with the logic of our database, and I think brainstorming about selects can be more effective when you’re better versed with the system.”
Then again, Carter adds, inhouse list managers face their own challenges. For instance, “I have to work harder to make sure I know as much about the industry as an outside manager with access to other mailers’ orders, list reports, and offers. It’s important to get as much information as possible from brokers and trade shows to keep up,” she says.
Of course, economics plays a role in deciding whether inhouse list management makes sense or if you should outsource the function. “You have to decide that it’s worth the money to pay for the additional overhead of a list management department,” Carter says, who – as you would expect – disagrees with Lillian Vernon’s Hochberg and Omaha Steaks’ Nelson about whether outsourcing management can reap more list revenue. “I think you always make more money inhouse, even with the overhead,” Carter contends, “but when a company is growing fast and facilities are strained, some find it easier to outsource.”