Why upgrades are big business
For some consumer and business publishers ancillary products bring in far more revenue than subscriptions. One publication I work with pulls in a multiple of 4.5 times the subscription rate. It has become the major part of their business. These publishers hold subscription rates low — to keep the volume of new subscribers and ancillary sales high.
Some publishers have just one small circulation publication. They launch because they have faith in their idea. This is what motivates them. The publisher writes and produces each issue, bringing in just enough revenue to produce the next one. Then somewhere along the line, they wonder if their little publication could ever be a big one.
Unfortunately, the owner has omitted to establish a marketing plan to find out how to maximise his or her small publicationâ€™s growth. The business is trapped in a pretty common situation: there is no money for marketing — and without marketing there can be no money.
So what is the function of â€˜marketingâ€™ and why is an upgrade program so often left out of the publisherâ€™s original plans? Marketing maximises revenue by:
Establishing a flow of enquiries and new subscribers
Establishing the optimum, most profitable subscription rate
Creating a series of ancillary products to upgrade subscribers
Itâ€™s important to build a list of enquiries because theyâ€™ll be integral to your upgrade programme. Your customers will often buy an ancillary product rather than a subscription â€“ a workbook for example. And list rental revenue brings a welcome injection of cash to the bottom line.
The potential of an upgrade program is clear. Without it, many well known publishing businesses would find themselves substantially poorer, including big international names such as Readers Digest and National Geographic, as well as many very clever smaller publishers like Melcrum Publishing and Electric Word.
Why leave marketing out of publishing?
Back to our original question: why is an upgrade program so often omitted from launch plans? Itâ€™s usually through ignorance â€“ the publisher / owner either knows little about marketing, or doesnâ€™t see its relevance. He or she sees marketing as something to perhaps add-on after launch. After all, isnâ€™t circulating a new title a kind of marketing in itself? People will surely see the publication and buy it?
And canâ€™t you learn all there is to know about marketing from searching the internet and chatting to a marketing expert over lunch or a cup of tea?
The answer to those questions is, unfortunately, no. Going into a market without a serious plan is rather like learning how to control air traffic from visiting the airport canteen. Itâ€™s very dangerous to your health, financial and otherwise. I have seen some great titles fold recently because of this. Others only realise their potential once sold off.
In fact, marketing should take precedence over the product. Again, this will upset many readers. But establishing a workable plan, including an upgrade programme is the first step in publishing. Marketing determines basic business information and maps the way forward â€“ and itâ€™s not the kind of information you can pick up over a conversation. You need worthwhile investment to make a worthwhile return.
Iâ€™m sorry to spring this on you reader, but free information has little value.
Channel your motivation and enthusiasm into a subscription promotion that includes a series of price tests to see who will pay what for your idea. Once you have your list of interested people, test a whole inventory of attractive and distinctive products to see what they like. Iâ€™m reminded of a great Gene Hackman quote from the movie: Prime Cut:
â€œWhatever theyâ€™re buying, Iâ€™m sellingâ€.
The publisher of a computing magazine once told me: â€œWe donâ€™t want more than 15,000 subscriptions. The magazine is so heavy we lose money on each issue we mailâ€.
It took just a few months for us to achieve his 15,000 target. Then I asked: â€œWhat about the advertisers? Donâ€™t you increase the advertisement rate as your circulation jumps up?â€The answer was intriguing: â€œNo. Advertisers have a limit theyâ€™ll spend and wouldnâ€™t go beyond it.â€
The publisher couldnâ€™t see beyond his advertising revenue and had failed to set up an effective upgrade programme. He had also failed to educate their advertisers and draw them into the magazineâ€™s growth. This required investment and commitment. Having spent his â€˜budgetâ€™ on reaching 15,000 subscribers he had no more money left. His hands were effectively tied by his company management.
The folly of restricting growth is far reaching. Instead of giving the publisher a simple profitability and turnover target, management had reduced his whole marketing operation to secretarial level â€“ order some copy (or write it yourself) organise some mailings and make sure you bring in a fixed number of subscribers. Although the publisher is a competent and intelligent manager, running one of the leading magazines in its market, he had no autonomy to make the kind of profit it deserved. Here is what he could have achieved, given the freedom:
Many subscribers are on direct debit. With the right approach, subscription rates can be increased until each subscriber is profitable.
Computer users are avid information junkies. There is lots of scope for â€˜confidentialâ€™ insider email updates and newsletters â€“ all paid-for. This would be the kind of â€˜frankâ€™ editorial the editor couldnâ€™t carry in the main magazine.
There is an abundance of interesting new products readers would like to purchase â€“ a perfect situation for creating a reader club, with special offers and events.
Each magazine requires its own special kind of upgrade program to suit its position in the market. Whatever it takes, itâ€™s worth the small investment to run a test to find out what works for you. It always pays off in the medium and long term.
Failing to upgrade a subscriber is like a shopkeeper refusing to let a customer back in his shop until his original purchase has reached the end of its life. And you wouldnâ€™t do that, would you?