Where subscription marketing goes wrong - part 2

In the first part of this article, we found most publishers fail to offer any kind of on-going customer service. Only 30% of the top magazine websites actively encourage you to register. Most visitors must hunt around for a sign-up box that has been placed in the wrong area, is badly designed and gives no incentive to join.

(Click here to see the first part of this article: Why aren’t publishers marketing?

If people buy a subscription, the publisher cuts and runs – that is the last you’ll hear from them.

The smaller publishers lead the way: look at the new media site TheMediaBriefing. The home page has a box in the right hand column offering digital media, B2B and seven other free newsletter updates. And after every article summary you’ll find this notice:

Newsletter Subscriptions – If you liked this article you can sign up to receive free weekly newsletters from the site by clicking here

Clearly, if a Johnny-come-lately band of young entrepreneurs can include that level of customer service, why can’t the people running our ‘leading’ media companies?

It’s not as though it’s a tough or costly challenge. Anyone can do website design these days. And the systems are not difficult to install. There are huge profits to be made: the more registrants you attract and the more you discover about them, the more you can sell them paid-for content, ‘gold memberships’ and other products.

If it’s measured, it’s managed
If we want to build more profitable subscribers, we must measure results and use the evidence to plan and manage profitable subscription marketing programmes.

Your source code analysis show where the most profit comes from and where and when your best customers are to be found. This evidence forms the strategy you adopt when you promote to new subscribers:

By examining and testing the above six points you will increase subscription profits for your company. This research and measurement area is where most creative effort must be directed.

How subscription renewal figure analysis reveals huge losses
A recent survey across a broad range of publications found that, of 1.4 million subscribers recruited in 2009, 1.1 million lapsed in the same year.

Those poor subscriptions marketing people probably think they are doing well!

A simple analysis will usually reveal big errors in strategy. For example, we know for a fact that subscribers who come in from the ‘easy’ channels such as retail subscription promotions through Tesco usually have a first year renewal rate of less than 30 percent.

In-magazine inserts renew on average at 59 percent.

But without an energetic and effective subscriptions upgrade programme it’s not possible to make money on these short-term customers.

But today, these promotional areas are where most publishers ‘marketing’ efforts are made. Why?

Low renewal rates are not good business and not good marketing. But those loss-making figures are usually hidden and glossed over by an overall renewal figure of 70 to 75 percent.

The loss-makers are propped up by the long-term, loyal subscribers renewing at 90 percent and more.

By keeping accurate records you can measure profitability and discover which subscribers cancel early.

Although we all know it’s vital to avoid loss-making promotions, in the real world a marketing manager will often just go ahead and produce something she or he ‘likes’ and copies from another promotion, without knowing how well it performed long-term. And she does that because other more profitable activity is denied to her.

And her bosses aren’t really looking at the problem.

How managing directors limit profits
Most profitable marketing avenues are blocked. The marketing manager isn’t managing marketing, she is managing her budget. She hasn’t the budget to organise useful customer research. She can’t re-design her publication’s website, and she can’t commission revenue-generating email marketing messages or direct mail packs. She is told it’s all ‘too expensive’.

Subscription marketing enterprise, innovation, investment and competition are constrained by the managing directors ‘command and control’. Put simply, subscriptions marketing managers aren’t free to make profits for their company.

The result: little true innovation, no organic growth and no clear competitive advantage. All the established magazines in our top ten are losing sales.

How much profit should a subscription marketer make?
If good marketing is the foundation stone of any business (and it is) why are so many marketing department relegated to low-level, unprofitable activity? Why aren’t the marketers leading the company into the new, profitable media streams, as they should?

By the end of each year the marketer should at least have doubled the money in her budget, and get to reinvest it in growth. That’s a pretty basic benchmark measurement among marketing-led publishers, both consumer and business. The money is doubled year on year, and so on until market saturation.

If the subscription marketer fails to achieve the benchmark figure, the publisher may as well take the budget away and put it in a bank to earn interest.

It’s not a tough target. Among my clients, the best upgrade and upsell programmes multiply the value of a new subscriber by an average of four times.

Is agressive subscription marketing just for the big publishers?
Does this kind of strategy apply just to the big companies who can afford ‘marketing’? What about the smaller companies?

Well, the opposite is true: with subscription marketing it’s the smaller players who lead the way.

The bigger company execs appear to confuse ‘marketing’ with ‘promoting’ and ‘distribution’. Promoting is when you advertise your product. (Promotional expenditure is what is being cut back at the moment).

Distribution is the route you use to deliver your product to your readers. That job should now be handled by editors –after all, they are closest to their audience and can find out where they are, online and offline.

‘Marketing’ is about finding your audience and selling to them, from launch to death and it’s the foundation on which business is built. Marketing strategy decides your advertising, distribution, market penetration, readership and profits.

Mostly, it’s the managing directors and publishers who decide the marketing strategy. Unfortunately their experience has usually gone no further than advertising, editorial and distribution. That’s why the big companies are failing in their marketing and their titles are not growing. They don’t really know what subscription marketing is.

Publishers who rely on internet bureaux, loose inserts and retail promotions are merely changing the method of distribution from WH Smith to the Royal Mail. No copywriting or marketing strategy is required. All the promotional material is simply copied from other publishers who just about manage to keep their subscriber numbers at around the same level each year.

Building subscriber value
A marketer or publisher’s primary objective should be to use his creative team to build and increase the value of each subscriber.

Maximising and exploiting your subscriber and registrant list is where the money is to be made and where the centre of publishing creativity should lie. New products are created to increase revenue and marketing copy communicates the benefits of your upgrade and renewal offers.

To see how poor UK media is at marketing, check how few of our top magazine websites collect names for marketing purposes:

Top 100 actively purchased magazines 2010

1. TV Choice ; 1,309,469 ; -2.0%
2. What’s on TV ; 1,206,300 ; -5.0%
3. Radio Times ; 941,882 ; -2.3%
4. Take a Break ; 848,843 ; -7.1%
5. Saga Magazine ; 654,566 ; -2.7%
6. New! ; 573,731 ; 47.5%
7. Closer ; 517,404 ; -1.0%
8. Glamour ; 481,418 ; 1.5%
9. OK! Magazine ; 460,514 ; -16.4%
10. Star ; 436,471 ; 41.9%

Source: ABC

Subscriptions marketing: confidential information for sale

The Subscriptions Strategy newsletter publishes international case studies of ‘best practice’ marketing for the Internet, websites, newsletters, books and magazines etc.

As publishers ourselves, we live or die by results. If a promotion doesn’t work, we lose money. If it works we record the results and use it on our own, and our clients’ websites and publications.

Every issue of the Subscriptions Strategy newsletter carries examples of successful marketing.

How you benefit by removing risk
As far as we are concerned, our testing means the difficult and costly part is over. As far as you are concerned, you can benefit from this tried and tested knowledge because the risk of failure has been removed and profitability is assured.

You will also find Subscriptions Strategy a great resource for training staff in all aspects of subscriptions marketing.

Please click on the link below for instant access to your subscriptions marketing starter pack. You receive:

1. 20% off the full price of an annual 6-issue subscription to the digital edition of the Subscriptions Strategy newsletter (a saving of £40)

2. Subscription Marketing Workbook worth £33: 15 Subscriptions Marketing Innovations Every Publisher Should Know

3. Subscriptions marketing ‘rapid update’: three special Subscriptions Strategy reports worth a total of £99 to bring you up to date with best practice marketing procedures for online and traditional subscription marketing

*Start now! Click here to order an annual subscription and collect your four special reports worth £132

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