List Watch: Going for Brokers

MOMS shares information such as response rates, average order sizes, and customer demographics with its broker.

Today, list brokers do much more than sell files — they help grow catalog businesses

There was a time when you might say list brokers had it easy: They would sell their lists like commodities, providing little or no background to mailers about the characteristics or performance of individual files.

“Ten years ago, it was more of a traditional vendor relationship: They would roll out their cart, and I’d pick two or three items,” says Tim Baker, general manager of the Valencia, CA-based Mail Order Medical Supply (MOMS) catalog, which sells healthcare products to at-home caregivers. “Now brokers consult on our marketing goals.”

Indeed, Baker considers his list brokers to be partners: “They’re specialists who understand my business. They’re not just making a hit on a sale but helping to grow my company.”

The rise of inhouse circulation professionals at catalog companies contributed to the change in the broker’s role. “At one time, brokers had all the information about a list, and no one else knew anything,” says Bob Patton, acquisition manager, Chicago-based J.C. Whitney & Co., a cataloger of automobile parts and accessories. “Now there are circulation experts [within catalog companies] who know about lists, which allows the broker to offer value-added services.

Donna Belardi, president of list firm ALC of New York, says that increased competition among list companies also led brokers to offer more comprehensive services. “Brokers are getting involved in mailing strategies and circulation planning. They are often helping with merge/purge, analyzing results, and making recommendations on a list-by-list basis,” says Belardi, adding that this has been a trend for the past five years.

Another key change is that brokers today are frequently expected to work with the competition: cooperative databases. “Our philosophy is, if you can’t beat ’em, join ’em,” says Baker, who adds that co-op databases are a substantial part of his prospecting, although he won’t disclose what percentage. In fact, Baker recently dropped one broker in favor of another who works with co-ops.

Share and share alike

For brokers to offer “value-added” services, catalogers have to be forthcoming with proprietary information. Robert Faville, director of direct marketing for San Jose, CA-based desktop telephony tools cataloger Hello Direct, provides brokers with revenue objectives, new product releases, and strategic shifts, such as his company’s recent emphasis on telemarketing vs. direct marketing campaigns. Baker trusts his broker with such information as response rates, average order sizes, sales per catalog, and customer demographics. But he does not share total revenue and profitability data.

Although some brokers charge fees for additional services, such as performing analysis, recommending additional selects, or working with co-op databases, most are simply paid a flat commission, typically 20%, and are not compensated for this extra work.

With all the sophisticated services catalogers now demand from brokers, not to mention the information they must share with their brokers, it’s not surprising that many mailers opt to rely primarily on one broker, rather than split the work among multiple brokers as they have in the past. “You need one person looking out for your best interest,” Patton says.

In fact, many mailers are loyal to a broker as opposed to a list brokerage firm. Case in point: When its list broker switched firms, Hello Direct did as well, following the broker to her new company. Ultimately, Faville says, “It’s not that our broker is just a vendor but rather a partner — we both benefit as our business grows.”

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