Marketing: What's in a Name?

December 1, 2010

List renting is a huge business in direct marketing. If you don’t know where to find the right customer list, or know what to look for in a list, your product promotion could literally fall into the wrong hands.

Direct marketing is being explored more and more by savvy nutritional supplement companies as a way of breaking into a new source of consumers looking to buy products to support their health and wellness. With heavy traffic in online retailing, there are many customers who primarily shop through direct-to-consumer marketing. These customers don’t visit retailers in search of products; rather, they wait for you, the marketer, to come to them.

Who Are Your Customers?
List renting is a huge business in direct marketing. If you don’t know where to find the right customer list, or know what to look for in a list, your product promotion could literally fall into the wrong hands.

First off, finding a qualified, reputable list broker is imperative to your success. In the direct-marketing industry, using a broker recommended by an industry colleague is a good bet. Once you find that broker, he or she will work closely with you to identify your target audience and recommend lists that have been generated by similar offers sent by companies in your industry. Below are some of the key considerations list brokers will factor into their recommendations.

How was the list generated? People purchase from many sources-infomercials, e-mails, magazine ads, direct mail. Obviously, you should start with lists that have been predominantly sourced from the same channel you’ll be targeting.

What are the buying habits of those on the list? You will want to consider how recently the customer’s previous purchase was made. Was it a first purchase or a reorder? What was the product’s sale price? Also, how often did the companies that successfully used the list send out promotions, and what were their offers?

How much should you spend on a given list? List for nutritional supplement buyers range anywhere from $60 to upwards of $170 per thousand names. If you want to take targeted segments of a list, the costs are incrementally higher. This means you are spending anywhere from six to 17 cents for each name rented, and this option usually affords you the opportunity to send your product promotion just one time. It can be a very expensive investment, but a good list broker will be able to confidently make recommendations based on knowing the track records of the lists and how they’ve performed for your competitors. They can also negotiate discounts and reciprocal pricing on your behalf. Brokers are commissioned so the fees for working with them are built into the cost of the list rental.

At this point, you may be asking yourself why other companies (essentially your competitors) would even consider renting out their customers’ details, knowing that a competitor might use them to promote a competitive offer. There are a few different schools of thought on this.

A small number of companies adamantly believe that their names are absolutely unique and the best buyers on the market. They adhere to a strict policy of never renting their names. In most cases, this staunch approach is short-sighted, as most likely the names are not unique. Likely, these names are already out in the marketplace and being rented among competitors.  

Other list owners allow their lists to be rented by anybody and everybody. There are list owners who build a list simply to make it available for rental and to collect that income. This is when you will want to question how the names on the list were sourced. These types of lists tend to be bombarded with promotions, resulting in names that aren’t as highly qualified or targeted.

The most balanced approach is to review and approve list rental requests on a case-by-case basis to ensure that the offer being sent, while appropriate, is not directly competitive. This is also a good way to ensure your customers aren’t overly inundated with promotions all at once. This method allows you to benefit from notable list rental revenue while maintaining the integrity of your list.

Targeting the right prospects is one of the most important steps in executing a successful direct-marketing campaign. Additionally, it will provide you with an abundance of competitive data and a direct relationship with your customers. As terrific as the additional revenue stream will be, these two things will also prove invaluable to your growing business.