Renting Your Database... Best Practices

by Stephen Lett

I am still surprised by the number of consumer catalog companies who do not rent their buyer file. While most do, some catalogs still feel they are keeping others from mailing “their” customers by not renting their buyer file. Fact or fiction? This may have been true 15 or 20 years ago prior to introduction of cooperative databases. Today, those that continue not to rent their housefile are missing out on the opportunity to mail “good” names themselves or on additional list rental income. This month, I want to discuss best practices when renting your database and the advantages of doing so.

It is estimated that less than 10% of all consumer catalog companies and 25% of all business-to-business catalogers do not rent or exchange names with any outside company.  Conversely companies will exchange names only with companies whose list they wish to use.  These companies make-up about half of all consumer catalog companies who do not rent or exchange names with others.  It used to be that a cataloger would have difficulty obtaining lists if they were not willing to rent their own file.  This mindset has changed since companies are hungrier for list rental income to help their bottom line.  But, there is no question that not renting or exchanging names can and does impact the lists that are available to you for prospecting.

If you are a consumer catalog company, I see no reason why you should not rent your customer file.  For business-to-business catalogers, the decision to rent or not to rent might be more difficult.  Marketing business-to-business, the decision maker is often difficult to reach therefore your own list could be more exclusive and proprietary. However, if the offer is non-competitive, why not rent?  If the offer is more competitive, you might want to consider an exchange.

Consider the impact of cooperative databases, i.e., Abacus, NextAction, Wiland, etc., has had on your housefile and on your list rental income. There is a strong probability that a high percentage of your customers are already on one or more cooperative databases. In fact, Abacus has over 95% of all catalog buyers on their database already.  Each time a cataloger joins the Abacus Alliance, only a very small percentage (1.0% to 5.0%) net new names are being added to the Alliance database. Your customer names are already being rented if not by you by the coops (even if you don’t participate in a single coop).  Catalogers who do not rent their customer file in more cases than not are only hurting themselves and missing out on list rental income that helps the bottom line. The truth is, catalogers are not protecting their customers from mailbox clutter or from other offers if they elect not to rent.

In study after study, it has been proven that a customer list, which is used by others, performs better for the list owner over time.  The companies who have tested this have “flagged” names three ways; (1) names to receive all list rental offers, (2) names to receive only non-competitive offers and (3) names to receive no outside offers.  These tests are generally conducted over a two or three-year period and the names are “frozen” over time.  The results, in all cases, showed that the names receiving all offers, including the competitive offers, responded best to the company’s own offer.  Worst case from the studies I have seen shows that there was no affect on the response rate to one’s own offer if they rented their file.  In well over half the tests I am aware of, the names, which are rented, perform better!  Conclusion: Active mail order buyers are worth their weight in gold.

One change in recent years has to do with the number of companies who managed their file in-house. Most catalogers are now looking to the outside to handle this for them. There are two main reasons for this. One, they do not have the internal staff and secondly, they realize they need the extra exposure only an outside list manager can provide.

 

BEST PRACTICES

 

When it comes to best practices, there are a few angles to consider as follows:

  1. Be careful of the mail piece. For example, if it is a lower-end market, many mail pieces can be misleading these days and several of these type of offers are being declined. The list owner needs to feel comfortable with the company who is obtaining access to their file.
  2. Keep your list updated regularly so that the names are fresh. Otherwise, mailers will shy away from using your file. Names that are older than six months are often considered too old to mail. Recency is key.
  3. The more list selectivity, the better. This will give you, the list owner, access to additional markets. It will also give the mailer the opportunity to find other pockets, i.e., selects, within the file if it doesn’t work the first time a particular list is tested.
  4. Keep the pricing competitive and remain flexible. Be willing to negotiate with non-competitors.
  5. Obviously, you should always screen and approve who wants to rent your file.  Look at it from your customer’s point of view and eliminate the offers which are not appropriate based on your own definition.
  6. Try holding back some of your house file for a period of time.  Some companies hold back their “best” names out of their 30-day hotline buyers.
  7. Always comply with the DMA privacy promise.  In October 1997, the Direct Marketing Board of Directors made a Privacy Promise to American consumers.  The Privacy Promise is a public assurance that all members of the DMA will follow certain specific practices to protect consumer privacy.  Those practices are designed to have a major impact on those consumers who wish to receive fewer advertising solicitations.
  8. Use the DMA Preference Service suppression files for every mailing you make.  This will eliminate those mail order buyers who do not wish to have their name rented or exchanged with other firms.  I know for my clients, this is standard operating procedure as it is for most reputable catalog companies.
  9. You might want to consider exchanging on a name-for-name basis using the same selection criteria, i.e., last 3-months over $100 buyers.  And, be careful not to let your exchange balance get to skewed one way or the other.
  10. Consider a mail date restriction if you feel it is necessary.  In other words, don’t let a competitor use your file prior to the mailing of your own catalog.  Be sure your catalog is in the mail first.
  11. Only rent or exchange with companies who are willing to share their list with you.  The use of a list must be a reciprocal arrangement.

Twenty years ago, it made sense to keep your list off the rental market as a way to stop others from mailing your same customers. Not true today. Consumer catalog companies who elect not to rent their housefile are missing out on the opportunity to have access to “good” lists and/or on list rental income that will add to the profitability of the company. That’s because approximately 95% of our customers appear on one or more the cooperative database. Even though these catalog buyers are not being mailed from you list directly, they are being mailed. Follow our “best practices” suggestions and rent and/or exchange your buyer file with confidence. Don’t be afraid to do so. And don’t feel you are protecting or keeping your customers all to yourself.