A List Dilemma to Ponder
Some time ago I was the GM for a catalog division of a larger company. Our list broker made a recommendation to me that was the subject of some debate within my company. I wanted to share it with you since it was a great learning experience for me.
To set the stage, we were the number-two company in our particular niche of clothing accessories. You couldn’t really call us an apparel company, but we certainly had products that helped our market accessorize. There were three major players in the market, plus some smaller companies that weren’t really direct competitors (mostly re-sellers of the top brands).
It was a tight niche; prospecting was intensely difficult. The largest company was at least twice our size and number-three was close behind us, size-wise.
Our list broker recommended exchanging lists with our direct competitors. Just go ahead and release our precious, deeply loyal customers to our competition, and since our customers bought the exact same products, we were sure to be able to prospect at a profit — that’s what he said. Our broker also told us that we probably had many overlapping names that bought from both of us anyway. Some of us thought he had lost it, but we debated the risks and rewards.
On the one hand, if we could get the competition to go along, we had a slam-dunk new prospecting vein to mine. But we risked handing our competition our best customers. Would we lose our customers forever to the competition? Our customers were super brand-loyal and we had great products of exceptional quality — but so did the competition.
I spoke to a consultant who helped me weigh out the pros and cons, and it seemed like for us the, pros were in our favor. But in the end, I didn’t push the matter too hard, and eventually we all moved on to some other topic.
Many years later, I’ve worked for, and consulted to, enough apparel companies to know that I made a mistake back then. Many catalogers regularly exchange lists with their competitors. Some companies won’t let their names be rented, but will only work on a reciprocal arrangement.
One company I worked for was in a niche so tight, that every time it did a merge/purge on certain exchange lists, 60 percent-plus duped out. In other words, many of the competition’s customers (60 percent) were already its own customers; so much for brand loyalty, right? But still, these lists performed well, and lo and behold we didn’t lose our customers and go out of business.
So what would you do? I think it comes down to trusting your brand, your products and your customers. Let me know your thoughts by posting a response below.
Next week, we’ll look at datacards and how to read them. Speak to you then.
Jim Gilbert has been creating direct marketing programs that drive superior ROI for almost 30 years. Fluent in consumer or B-to-B, creative, operations, and analytics, he marries the strategic and tactical sides of direct and social media marketing in a seamless fashion that gets results. He's CEO of a multidiscipline direct marketing agency, Gilbert Direct Marketing, Inc., which focuses on direct mail, catalogs, DRTV, telemarketing, print, alternative direct marketing media and social media marketing. Jim has been involved in start-ups, expansions and turnarounds, and is an expert in helping multichannel marketers get to the "next level." He's a former adjunct professor, teaching direct marketing at Miami International University, and is President of the Board of Directors of the Florida Direct Marketing Association. Jim loves to talk direct marketing, and has done many lectures on direct and social media marketing.