It’s no surprise that the lingering recession combined with the war in Iraq has suppressed catalog prospecting. By some brokers’ estimates, list rentals are down 10%-25% from a year ago.
That means list rental income is down significantly too. So what’s a catalog list owner to do? Start to spruce up the list now so that by the fall/holiday mailing season, the file is much more desirable than the competition’s. Below, a few suggestions.
- Reactivate old buyers
Promotions such as “We missed you! We’d like to offer you free shipping on your next order” can reactivate dormant buyers, says Joy Contreras, vice president of consumer for Pearl River, NY-based list firm Edith Roman & Associates.
- Try new prospecting methods
Another relatively inexpensive way to boost the size of your list, Contreras says, is to test such alternative media as blow-in programs. “You can pick up a different type of customer, and it’s worth testing this to do some name acquisition now,” she points out.
- Update names more frequently
In December, New York-based teen apparel marketer Delia’s began offering monthly, rather than bimonthly, updates of its list to attract renters seeking hotline buyers. Vice president of marketing Luz Carrillo says that Delia’s has already seen its list revenue increase by more than 5% as a result. While it depends on the size of your list, to update a file monthly, standard service bureau pricing is $1/M names input. “So if you deliver, say, 20,000 new names,” says Susan Hanshaw, vice president of list services for San Rafael, CA-based consultancy and list firm Lenser, the update would cost $20.
- Enhance your files with overlays
Delia’s recently began offering data overlays with household income, presence of children, catalog buying history, and catalog buyers who’ve placed orders online. Most list owners don’t offer overlays “unless they have a universe of 50,000 names or more,” Hanshaw says. The list owner pays the service bureau for the processing, then it pays license fees for the appended data elements it can sell.
For instance, if presence of children is offered at $10/M, the list owner would typically pay the data provider a portion of that revenue — sometimes 50%, she says. “Then, the list owner can make a profit by increasing the price of the data element.”
- Consider net-net deals and price reductions
Net-net deals allow renters to pay only for those names that pass through a merge/purge with their lists. Most list owners favor net-name arrangements, in which the renter agrees up front to pay a minimum percentage. For instance, if the renter agrees to an 85% net-name agreement, he will pay for at least 85% of the names, even if only 70% of them aren’t already on his house file.
You might also consider net deals, says Lenser president John Lenser, in which the renter agrees to pay for at least 65% of the names it rents, rather than the more common 85%.
- Improve your sales pitch
Elmsford, NY-based wine accessories mailer The Wine Enthusiast this spring made a point of explaining to brokers the demographic and psychographic profile of its customers. “Our customers purchase products across numerous merchandise categories according to market research we gathered from [co-op database and services provider] Abacus,” says vice president of marketing, Chris Topping.
- Get creative
The Wine Enthusiast decided to promote that its 12-month buyers are twice as likely to buy gourmet foods than the average Abacus name, Topping says.
So earlier this year the company’s list manager sent out mailers to all the major brokers with a sample of the company’s menu light product atop the sort of wine vintage chart one might find in a wine book. Response so far “has been terrific,” Topping says, “and we’re planning for a 10%-plus increase in rental activity this fall/holiday over last year.”
Sometimes all it takes to improve the marketability of a list is a thorough cleansing. In fall 2002, the Edmund Scientific consumer catalog division of Tonawanda, NY-based VWR Scientific Products purged from its house file customers who hadn’t made a purchase in more than three years, customers who moved and left no forwarding address, and undeliverable addresses.
“We got a new list management company that’s much more sales oriented than our previous manager,” explains Edmund Scientific president Randy Burkard. “The manager encouraged us to take a hard look at our entire database and cleanse the whole thing.”
In the past, “the assumption was, ‘Everybody knows Edmund, so why bother promoting it?’” Burkard says. “But as it turns out, the merchandise has evolved, focusing more heavily on optics. So the number of potential new mailers to rent it has grown. Now we have the interest of not just science teachers and families with children but also bird watchers, home-gadget enthusiasts, and photography enthusiasts.”
Edmund Scientific has already benefited from improved rental activity, Burkard says, and “we’re looking to double our rental volume this year. When we started this last fall, we saw an immediate increase in rental revenue, getting business from companies this catalog never got before.”
Winter Cast a Chill on Rentals
According to the latest mailer survey from Hackensack, NJ-based list firm Mokrynski & Associates, list performance this past January and February was woeful. Only 21% of the mailers surveyed said that revenue from rented lists exceeded projections; 24% found that prospecting revenue met plan, and a 55% said that rented names fell short of performance goals.
Catalogers may nevertheless look to increase prospecting mailings this coming fall/holiday season, says Mokrynski senior vice president of list brokerage Steve Tamke. “Even with disappointing results, there’s concern among mailers about keeping their house file numbers at an acceptable level,” he explains. In other words, if they don’t replenish their house file with new names, their customer databases will shrink too dramatically. “Some are mailing older names than they otherwise would to make up for some of it,” Tamke adds.