As an objective observer of the list industry, I really do wonder whether it isn't about time the role of the traditional business-to-business list broker was forced to change. After all, we haven't really seen any developments since the list industry started.
I'm certainly not the first to raise this question, and many others have been predicting a decline in the importance of list brokers for years, but they somehow manage to hang on in there. Perhaps this is because the basic premise is that list brokers are experts, are independent and have knowledge -- or access to knowledge -- of every list on the market, and will negotiate good deals for you. They discuss your requirements and then charge for their experience by taking a commission from the list owner (at an industry average of around 20% for business-to-business lists).
This sounds like an attractive proposition -- for all sides. For the inexperienced customers trying to navigate their way through the maze of business list owners, jargon and double speak, mystifying pricing structures and unsupportable claims, list brokers offer unbiased free advice.
Experienced high-volume mailers get to place the donkey work in a safe pair of hands for free, while list owners get an income stream from the broker channel. For many, however, the reality is somewhat different. From experience, it appears that far too many list brokers are unwilling, or unable, to devote time and attention to thinking through a brief -- they prefer taking orders.
There is also a great tendency for them to ignore the value of profiling and analysis in playing a role in targeting. If your requirement is small, you'll probably not get the greatest of attention, while on the other hand, if you're large, you'll probably be wasting a great deal of money.
The key problem is that list broking is a volume game. The more brokers sell, the more commission they get. This begs the question -- is it really in their best interest to give completely unbiased advice about the choice of list (where higher broker margins are offered); about volumes; about the terms on which the data is taken (single or multiple use); or about the use of analysis in targeting -- where the outcome is often to significantly reduce volumes by identifying key strengths and weaknesses?
Therefore, the current traditional approach often leads to higher than necessary volumes of data being sold, taken on a single use basis from multiple sources and, as a result, incurring higher data processing charges.
The outcome is high levels of wasted and unnecessary costs, inevitably lower response rates, and importantly little ability to build useable intelligence.
So what should really be happening? Well, one company we know has saved hundreds of thousands of pounds and increased their response rates by not following the traditional approach, and instead profiling to massively reduce volumes and licensing need-to-have data on a multiple use basis. Surely it's about time we all reviewed the way that this market works and found ways to reflect the value of experience on a transparent fee basis, and as such, delivering a greater value to clients?
A parallel might be found in the financial services industry where, due to the many misselling scandals, a strict compliance process has to be followed which starts with the client signing off a detailed fact-finding questionnaire. The broker makes recommendations based on those facts and requirements and must clearly identify the level of commission they receive for products recommended. Perhaps this should be the common approach for all.
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