Should It Stay Or Should It Go?

When looking over the kinds of B-to-B lists available for rent, you’ll notice that most of the categories comprise traditional mail-order or subscription businesses. These are businesses that grew up communicating directly to customers via mail, whether for selling or for product fulfillment.  For these companies, list rental is a natural business process. Some may decide not to put their names on the market, for various reasons, but all are large users of mailing lists, and are at least familiar with the business—and comfortable with its practices.

But there are plenty of marketers whose core business has nothing to do with direct mail, or even e-commerce.  These are the millions of companies who sell through person-to-person contact, whether through field sales, telesales, distributors or resellers. And in B-to-B, these companies are the mainstream. Compared to consumer marketers, these businesses are likely to have relatively fewer accounts, but each will represent much higher value. 

Why should companies like these even consider putting their files on the market?

Pro: The arguments in favor of putting your list up for rental

The arguments come in three flavors:

1. Found revenue.  After brokerage, management and data processing expenses, about 65% of the rental revenue goes directly to your bottom line. According to Direct Media’s vice president, Mike Mayhew, of B-to-B list management, B-to-B postal files rent for $100 to $250 per thousand, and if you provide phone numbers for telemarketing, you earn another $50 to $75 per thousand.  Email files go for even more: $300 to $450, including transmission. If the file turns sufficiently, you can expect to net between one and five dollars per name, per year, on postal files alone.
2. You don’t own the customer anyway. Marketers frequently get starry-eyed about “their” customers, deluding themselves that the relationship is somehow exclusive.  But mail-order companies gave up on that idea decades ago, when they recognized that it’s a rare mailbox that is “owned” exclusively by one marketer.  They found, instead, that their own best customers are often excellent customers of other marketers as well.  In fact, when they shared these names, even with their competitors, everyone was better off.   Business marketers, especially those in industrial and services markets, are unlikely to go that far.  But they should consider that an account with a large budget, who is “open to buy,” will make an attractive prospect for suppliers of all sorts.  Furthermore, competitive concerns are entirely manageable, because list owners may approve—or reject—rental requests from any company for any reason.  
3. Fairness.  Assuming you are building your business by renting names from other companies, it hardly seems cricket to withhold your own names from others.  One way to approach this is via exchanges or reciprocal agreements. 

Con: The arguments against

Now, let’s look at three reasons not to rent out your list:

1. Potential customer alienation. The main reason business marketers give for keeping their lists off the market is potential harm to the customer relationship.  They simply don’t feel the risk is worth taking.
2. Management distraction. When you are selling millions of dollars of products and services, a few dollars of list rental revenue may be too small to justify management attention.
3. Data hygiene.  Ironically, the state of the customer data itself may get in the way. Some B-to-B customer files are old, error-ridden or filled with duplicates, and simply not suited to list rental.

So how do you weigh the pros and cons?  Consider this story told to me by a prominent owner of a major list broker.  “Back in 1990 or 1991, I was with a list brokerage client, walking back to his office from lunch. We passed a Rolls Royce-Bentley dealership. In the window was a used late-model red Bentley convertible. My client, whose list was not on the market, told me he lusted after that red Bentley but just didn’t think he could swing the $100,000 price tag. I told him to give me his list for management and he could pay for the red Bentley convertible out of the first year of rental income. He bought the Bentley and his list provided $112,000 in the first year.”

Mike Thimmesch, senior marketing manager at Skyline Exhibits, gave me another perspective. “Renting our file is a source of market intelligence.  As part of the approval process, we are exposed to products, offers and formats that keep us up to date on the marketplace.  This is especially true when we look at telemarketing scripts from other marketers.  We’ve picked up some tips on objection handling that we then wove into our own scripts in-house.”

In most cases, the list-rental decision is rooted in the corporate culture. You can look at the rational factors—the revenue, the competitive intelligence, the opportunity for exchanges—and still decide to stay out of the game.  Open-minded business marketers will weigh the pros and cons, and make the right decision for themselves.