Is your subscriptions marketing organised to FAIL?

A little while ago, the publisher of a magazine phoned to ask what I would charge for creating a direct mail pack. He wanted some subscriptions to lift annual revenue.

When I told him the cost, he began to negotiate the fee down, saying: "I only want around 1,000 subscriptions. That’s too much to pay for that."

In a small way, he was right. There would be no profit in the first year. I suppose I could have argued that from 1,000 subscriptions he would make around £10,500 profit over five years, but the money wasn’t really the issue. His attitude revealed a fundamental misunderstanding of how subscriptions publishing works. His magazine continues to struggle on, and I doubt he will ever build it into a more valuable asset.

This article, then, is my reply to that publisher because, at the time, I saw I didn’t have a willing listener and finished the call.

How marketing goes wrong

The publisher who phoned me had decided to commission and run a subscriptions campaign for his publication. He wanted to grow paid circulation. He had it all planned.

But I could tell, as soon as he started speaking, he was organised to fail. Like so many others, his thousand or so new subscribers would dwindle down to the level that existed before he started. Once he realised what had happened, he would become discouraged from doing any ‘serious marketing’ for a long while.

Why? Because he wanted a campaign to bring in 1,000 subscriptions and a campaign isn't what he needed. A campaign is a one-off promotion, usually to generate newstrade traffic (which the newstrade won't want to contribute to, by the way). But subscription marketing isn't a campaign – it’s an ongoing programme.

Why your subscriptions promotion is only the beginning

In my experience, the most common queries are the basic ones: drafting and designing a direct mail pack, converting a free magazine to paid-for, creating email promotions or a home page.

But creating these promotions is just the beginning. A successful marketing programme needs expert long term management and implementation. In that way, it is no different from managing your editorial and advertisement sales departments. Unless an expert eye is kept on day-to-day progress, things will go wrong. But that is where the similarity with your other departments ends.

Why your marketing department is special

Your marketing department is different. Unlike editorial and advertisement sales people, if marketing people are forced to work to a fixed budget and timetable, the results will be poor.

Unlike the weekly or monthly pagination targets your other departments work to, a marketer’s prospects are ever moving, like a shoal of fish. One moment it’s there, then it’s gone. Marketing departments spend their time hunting and testing their nets. But this way of working presents publishers with various problems:

* Why no fixed targets? When a market test throws up high response levels, you must be ready to haul in as many prospects as possible. It makes no financial sense to net just 1,000 subscriptions when there are big profits to be made from continuing to catch more.
* A lack of expertise: most publishers haven't the promotional expertise within the management team to handle proper subscriptions marketing. Those big numbers will always elude him, because he isn’t ready to bring in an unlimited catch. Unlike newstrade marketing, there is no COMAG or Marketforce to guide your expenditure. The lack of expertise isn't surprising. A good subscriptions marketer earns as much as an editor or advertisement manager.
* No long-term marketing programme: your promotion is just a first step in a sensitive chain of events that only ends when new subscribers are profitable and renewing five and ten years down the line. A high renewal rate is the key to a successful promotion: if subscribers renew at 90% instead of 65%, you’ll find it’s worth your while to do lots more promoting.

What does all this extra revenue cost?

I can already hear what a lot of readers are thinking: "Yes but what about the cost?!" Of course, marketing costs money. Publishing is, in reality, treated by most as a small business. A close eye is kept on expenditure. However, we should look at potential income before we try to reduce the costs.

So, let's look at the extra annual revenue that comes in through a successful marketing programme. For a publication with 10,000 subscriptions at £40, annual revenue is £400,000. You can see how attractive it would be to increase your subscriber base to 50,000 and bring revenue of £2,000,000.

If that kind of figure seems impossible to you, it could well be because your experience is with working with fixed budgets and ‘campaigns’. If so, you won’t have really tested the water. You may well be able to increase subscriptions by five times, if you're organised to achieve it. With planning, revenue of £2,000,000 is attainable.

And what about the renewal rates? Your annual income will increase by £500,000 if renewal rates lift from 65% to 90%. As renewals are almost universally neglected, I can guarantee that this will be the easiest half million you will ever make!

Solving the problem of securing marketing investment

Now comes the next, difficult step: to enlist support among colleagues. Unfortunately, meetings and casual discussions are poor places to explain the principles of direct marketing. Disagreements can quickly develop because those you are trying to convince often feel they know about the subject and can contribute their point of view.

Here are the people who will all need convincing - and each will need a different argument:
* Board, MD or bank
* Publisher
* Editor
* Advertisement manager
* Circulation manager
* Finance director
* Potential subscriber

Although subscriptions are now an accepted means of circulation in the UK, there are certain environmental facts that must be overcome. Subscription marketing is still just a small element of publishing as a whole, so you will need support from all areas of your business. You will be regularly fighting for understanding, cooperation and an adequate budget. Selling to your potential subscribers can only be done once the internal fight is won.

Fighting your corner

Each person's ideas must be handled with great care or you'll find you have created an enemy in the camp. Why is this? Editor and finance directors rarely need to explain their procedures. So why are you constantly challenged on yours?

Your position won’t receive the same respect because those you are trying to convince have all received a subscriptions promotion and have thrown it away. They therefore assume the mailing piece has failed. This is why the direct marketing industry is rarely held in high regard, except by some who work in it. I personally regard our branch of direct marketing as embodying all that is great about running an independent business: you die or get rich by results. You find the only people who always appreciate our work are those interested in the cheque and credit card payments that come flowing in.

We know that not everyone can edit or do accounting. But an editor or finance director will rarely recognise that the application of good common sense, while extremely useful in their job and in meetings, doesn’t work with subscriptions marketing. This is why we hear statements like (and these are all real):

"No one reads these long letters. People need to see a sample copy. An order form with a copy of the magazine enclosed would be better." (Editor of a magazine for parents)

"Our readers are in the personal finance field and highly unlikely to be interested in a wristwatch calculator." (Board director of publishing company)

"We don't like this outsert on the front cover. It will hide the cover-lines and newstrade sales will drop. Research done by COMAG found that cover-lines have most influence on a reader's purchase." (Editor and managing editor of a consumer magazine)

"Readers won't subscribe just to get a plastic stop-watch. I don't want to be associated with these gimmicks." (Editor of athletics magazine)

"Nobody will read this!! This is really indigestable. Nobody will wade through it - even the highlights!" (Director and editor of environmental and finance magazines commenting on an eight page letter)

Those outside marketing don't understand what makes a promotion work - but they believe they can speculate, through their own likes and dislikes, on how to win new subscribers. Never have so few personal prejudices destroyed so many thousands of willing prospects!

9 points to get across to colleagues

Your message to your colleagues must be clear. Your job is much more scientific than assumed. A formal presentation is often needed to educate those who influence decisions. Here are nine points to make. Many, you will need to explain, fall into the ‘strange but true’ category:

1. Your marketing programme will be addressed to a tiny percentage of prospects - just one percent or so will respond. ‘Intuition’ cannot establish what this tiny proportion will respond to.
2. Our industry is driven by testing. Only trial and error will tell us what will work. There are industry standards, based on historical testing, that must be followed.
3. Testing has its limits. There is no need to test what is already known. You must protect your budget.
4. Long letters work. But enclosing a sample of your publication kills response, unless you are marketing to one of a few specialised markets. (Many find these points difficult to accept.)
5. Your marketing strategy should have already been tested and results documented. You just want the budget agreed to roll out.
6. Your marketing efforts cannot follow a pre-determined timetable. Promotional money can only be spent when one of your tests brings in strong response. Then it’s all hands to the deck.
7. A good proportion (if not all) of the money you bring in should be re-invested in further marketing, otherwise subscriptions won’t grow. The company should take its profit from renewals.
8. Understand the importance of giving prospects credit. Offering credit in a ‘Please bill me’ payment option is generally more profitable.
9. Offering three or more payment options to consumers doesn't help, because more options mean lower response.