Article 1 from Registered Representative
The following article was reprinted from the December 1997 issue of Registered Representative
PROSPECTING by Kevin Pilot
Shopping for a list of prospects? Here’s what you need to know about how lists are put together, why so many are bad, and questions to ask to make sure you get a good one.
List brokers are a necessary evil in the eyes of many brokers. Buy a list of active investors, 50 years and older, with $50,000 or more in income, and you may find that the phone numbers (the ones that aren’t disconnected) run the gamut from 12-year old pranksters who like filling out phony surveys to the deceased. Even though the majority of list vendors are legitimate and have dozens of happy customers, how do you know what you’re really buying?
A Clean List
The nirvana for most brokers who use calling or mailing lists is finding a clean list, one that in industry parlance isn’t “hammered”, that is, one that isn’t being sold over and over again.
List compilers and consolidators put the names and information together from direct sources, like surveys, public filings, subscription lists and other sources, and sell them at a wholesale price. List brokers who advertise in industry magazines often buy their lists from these sources and sell them to you. This means that even though you may get a guaranteed exclusive period to use the list from the company you buy it from, it may have been sold over and over again at the wholesale level. “It’s not the raw data that’s important but what you do to enhance it afterward,” says Gene O’Brien of C.D.S. List Marketing in Chadds Ford, Pa. O’Brien believes that the value added by a list broker is the accuracy, how often it is updated, and properly selecting a compiler. Of course, this extra effort can make a list more expensive.
Bigger isn’t Always Better
Dealing with a big list company doesn’t always ensure a better list.
“The bigger the list company, the more likely they use a compiler,” says Kathy McCarthy of InvestoLeads.com in Palm Beach, Fla. (561) 533-6691.
The problem with many big list houses, according to McCarthy, is that in order to pay for overhead, including salespeople, and to offer a large selection of lists, they often choose lower-cost data and they don’t work with the data themselves. When they take in an order, they simply pass it along to the wholesaler, who ships the list directly to the broker who made the purchase.
McCarthy prefers to develop her own proprietary list, which she sells directly. Her list of “qualified investors,” people with $1.2 million or more net worth and $200,000-plus income with current investment positions, is better because it’s proprietary, she claims.
“The best leads aren’t the ones everyone wants to sell you but the stuff that’s hard to find,” she says. The bottom line is, a good list can be worth its weight in gold. But finding it ain’t easy. Many burned brokers would agree.