It's time to return to the absorbing and intense issue of a decade ago: the state of technology at list rental companies. Things are moving backward at a rapid pace, and show almost no signs of progress.
To put it another way, we haven't solved many of the problems that confronted our industry in the early '90s, and there are few signs we're even approaching solutions to the problems that face us in the first part of this century.
What were these problems? What are they now? Well, valuable technology performs only two major tasks for most businesses: solving processing questions and performing analysis. In the list rental industry, processing hang-ups involve order entry and invoicing systems. Analytical programs examine the nature of list use and the creation of a set of predictability standards.
In the early '90s, many brokerage/management houses were without adequate list order and invoicing facilities. There was a sense that the old hardware and programming might not last much longer. Some of these systems had been purchased in the '70s, before desktops were even envisioned — but there were precious few companies on the market that could provide new systems and technology compatible with the old. The need was intense; systems were beginning to break down, and brokerage/management companies were finding — to their horror — that they were unable to transfer data from an old system to a new one.
Today for small to medium-size companies, generally, the processing difficulties have been dealt with. Technology is always at its best when conditions are at their simplest. Most of the smaller houses have purchased canned programs that do the job extraordinarily well. The companies that sell new order-entry programs have adequate programming, and some of them have state-of-the-art technology platforms on which to put them.
But none of these order-entry program vendors have sophisticated list analysis programs to offer brokers and managers, so they can go out to their clients with something that is sexy, sells, will solve mailers' problems, and eventually induce these mailers to bring business to them. By definition, these small to midsized brokers and managers have almost no facility to develop these programs by themselves. If they did, they probably wouldn't have turned to the canned programs in the first place! So while the small brokers and managers are getting along quite well, from a technological standpoint, their future prospects are somewhat clouded by the difficulties of creating sales and analytical programs around technology.
Certainly the sellers of canned order-entry programming systems can develop list analysis programs to offer their broker/manager clients, but they can't offer such programs to these clients exclusively. And it is this exclusivity — their ability to exhibit to their clients something that no one else has — that, possibly, will ultimately determine the growth rate of any number of brokerage and management companies.
“I still believe that one can learn to play the piano by mail and that mud will give you a perfect complexion,” said Zelda Fitzgerald. True, but first they have to have the piano and, of course, the face. Before future prospects appear on one's client list, one must market strongly to them — and marketing via technology can be a very effective inducement in this day and age.
There are only a handful of large brokerage/management houses in this country that have satisfactory order- entry and invoicing programs. The larger houses, by and large, really have problems.
Most of these problems can be traced to specific sources:
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As noted, the larger houses have been using two-decades-old computer systems and have had huge difficulties in transferring their data onto new computer platforms. A few years ago, a number of the large brokerage/management houses formed a consortium to solve this problem. They poured six figures into the problem — and got nowhere.
The simplest solution, of course, was to extract the eight or 10 elements of their older orders (going back about two years) and inputting them into a new system just to maintain a list history. But a huge outcry from the techies stopped that: technological problem, technological solution. The houses marched resolutely forward, in much the same way as the French troops marched forward at Agincourt. You'll recall that the final score on that one was 25,000 French dead, 25 English.
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In desperation, some brokerage/management houses have built terrifically sophisticated computer systems… and have little idea of the directions in which to take them.
This is an immensely delicate problem. In the past year, I have seen at least two systems that were so comprehensively designed, so impressive, that they beggar the imagination of a poor bloke like me who remembers that at one time actual typists — human beings — used adding machines to invoice.
Once again, technology is always at its best when conditions are at their simplest. And the other side is also true: technology is always at its most troublesome when opportunities abound.
Now that the programmers have built the damned machine, it's up to management to figure out where to go. The choices are virtually endless, because order-entry programs are virtually endless. But every choice, when made, leads to a considerable expense, and you can't shell out for these expenses endlessly. Improve your client reports with better list history? Your account executive reports? Go on to advanced list analysis programs? Client X needs some work done in connecting its database to the broker's computer — but it takes money, and time, and that takes away from everything else.
What's at stake is nothing less than management's choice about where the company is going. Try it sometime. Unless you have vision clear as eagle's and a sense of what will happen tomorrow in our industry, you're in a tough spot.
These are all human problems, and we can look at them with human sympathy, but before we extend any of that sympathy, let's examine the second function of computers in the list rental field: the development of list analysis programs.
A list analysis program is an “add-on,” albeit a valuable one. It is supplied by brokers for mailers, and by managers for list owners. Because these list rental companies seldom perceived through the '80s and '90s that list analysis was in their purview (and they didn't have the technology to develop these programs), the programs simply were not developed. For the most part, those few companies that pioneered list analysis technology simply did not have an understanding of how the programs could be used, and mailers had even less of an idea.
Now, in this decade, brokers and managers do recognize the value of providing list analysis programs for their clients. In fact, a small number of list brokers/managers do have such programs, and an additional small number claim to have them. But if you look closely, you'll see the relationship between sophisticated list analysis programs and the programs these latter brokers provide is somewhat like the relationship between actually dealing in real estate and playing Monopoly.
The development of these programs is worth a fortune to brokers and managers. Not only do they provide a valuable and needed service for their clients, but they also offer a platform for incredible publicity for the brokers and managers themselves! The recognition of these matters takes no great brain power on the part of list rental companies. So why hasn't much progress been made here?
There are several reasons:
Brokers don't know, by and large, what mailers need. (Sometimes mailers don't know what they need! But that's another matter.) Mailers are generally quite reticent about their needs, fearing big mouths and no discretion on the part of brokers — fears, I might add, that are generally unfounded. How can you build a program when you don't know what you're building the program toward?
Program development is very expensive. If managers don't know much about technology, they are entering dark and unexplored territory in which they are being called upon to spend a great deal of money. If brokers and managers know something about technology, they know how expensive programming is. Either way, program development loses.
You're a broker or a manager. You're making some money doing the work you know best. Or you're not making some money, in which case whatever investment you're going to make will be in the area of intensifying the work you know best. Very few of your competitors are doing much work in list analysis, although stories, fables and hallucinations abound. Why bother? Nobody's pushing you.
And finally, since most brokers and managers aren't technically oriented, they rely on their programmers and programming department to tell them what to do.
Unfortunately, though, that never works.
Bob Castle is a marketing and technology consultant in the direct response business.
