Diversifying and Managing a Sales Portfolio
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Links to related articles and case studies: District managers play crucial role Online: low cost, great retention |
One of the positives was that it pointed out the need for diversification, especially to those newspapers that relied heavily on telemarketing for the majority of their sales.
With any sales channel, there is a point of diminishing returns. Through testing and analysis you’ll be able to determine the proper mix for your market.
In many ways, think of your sales sources like a stock portfolio. You want to achieve the proper balance or blend to produce the best return on your investment. You don’t want to overspend in any one area, and periodically, weekly, monthly or quarterly you want to revisit your portfolio to ensure that you are achieving the desired results.And like a portfolio you will want to maximize your scarce resources by analyzing each sales channel to determine it's cost per annual ABC unit and the contribution to your average net paid circulation.
Of course another advantage to sales diversification is the ability to “pump up the volume” in a given sales channel to make up for a shortfall in another.
Another reason to diversify: Just as we’ve seen with telemarketing, other order sources could become subject to restrictions – including door-to-door sales and some Internet sales efforts. Papers that have a broad mix of order sources are positioned well for long-term viability with the least volatility.
With these thoughts in mind, let’s take a look at the various sales channels available for your overall sales portfolio.
Seeking sales options beyond telemarketing
With the legislation affecting telemarketing, circulation professionals have recognized the importance of sales diversification more than ever before. While telemarketing continues to be a large source for producing subscriptions, circulators are looking to other sales channels to produce subscription orders and redefine the role and expectations as telemarketing subscriptions begin to decrease. Ancillary benefits from sales diversification are increases in pay rates, retention rates, reduced churn and a reduction in the overall amount of subscription sales needed to maintain circulation. However, the average cost per order increases and circulation managers need to adjust their volume budget as well as their budgeted expenses. Let’s take a look at some traditional and non-traditional sales sources and the advantages and disadvantages of each.
Carrier Sales. While once thought of as only a sales source with youth carriers, adults now do much of the selling in this channel. Rewards in the form of cash/gift cards (gas, oil changes) have encouraged this group to participate in sales efforts. High-end contests with big-ticket items like televisions, computers and trips also encourage participation.
Advantages – This group has customer contact, knows the route (move-ins and move-outs), knows the product and provides delivery service, which is an essential element of retention.
Disadvantages – This group can sometimes lack the motivation or self confidence to sell. That is why it is necessary to provide them with strong incentives and training to encourage participation in sales contests. Often the route is a second job and many carriers simply do not have time for sales. Don't forget to utilize carrier samples as a less time-consuming way of obtaining carrier sales. The sample can have a flier with a call-to-action and thus minimize the carrier follow-up time.
Bottom line – When you consider the retention rate of this sales source, carrier sales rank near the top. Providing them with a commission structure similar to telemarketing for orders that are produced with money paid upfront will reap benefits. But set realistic goals. Expect participation to be in the five percent to 15 percent range. In many cases the appeal of newspaper delivery for adults is that the work is complete at 6 a.m., and that is the extent of their availability and/or interest. On the other hand even 5 percent of a thousand carriers is still 50 more people selling subscriptions to friends, relatives and perhaps even former subscribers or new move-ins on their routes.
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Classified-Sales Team. This group has more contact with non-subscribers than you might think. Often, they accept ads from non-subs or single-copy purchasers. Offer classified reps a reward for each order they produce; commission can be based on the duration of the subscription and the type of payment they secure from the customer. One pitfall to avoid is the temptation to pay classified reps much less than outside sources. This can derail an ongoing program. Peg the rewards to retention and the quality of the subscription. Start off with a premium compensation for new subscriptions started on a recurring payment program, e.g. EZ Pay.
Advantages – The customer already believes in the value of your newspaper and you already have a team that is marketing savvy – they know how to sell. “Mr. Jones, I notice that you are currently not receiving home delivery of our newspaper. I can start your subscription today … shall I put it on the same credit card as your ad or would you prefer our EZ Pay program?"
Disadvantages – Training will need to take place. Keep in mind that selling subscriptions is not the primary function for classified-ad reps, so the program needs constant reinforcement and immediate rewards.
Bottom line – With the right training and motivation, this sales team could produce additional subscriptions each month with a high percentage of pre-paid, credit card and EZ Pay subscriptions.
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| What can circulation executives learn from life on the savannah?
In Africa, diverse animals such as giraffes, eland and Zebras will often co-mingle in large herds. They collaborate for their mutual benefit. These animals graze on different parts of the savannah, so their competitive impulses are reduced. Giraffes, for example, feed on foliage high in the trees, so they pose no competitive threat to zebras. Their common gathering serves a vital life-and-death purpose. Together, their various sensory powers are more effective at detecting danger. For example, the elevated viewpoint of the giraffe serves as a lookout for the entire assembly of different animals. Together, these animals are able to feed in greater security and with less danger because of their partnership. Similarly, newspapers have a lot to gain by partnering with other businesses and organizations to help each other reach their goals. Newspapers already do this to a very large extent in the single-copy arena. Retail merchants are the direct partners, and often promotional partners are brought in for bundled sales, etc. In home delivery, partnerships are more rare. In the Close-ups you will find some examples, though:
There are more potential partners. Apartment complexes might like to bundle a subscription with new rentals. Cellphone providers are always looking for a way to differentiate. Sports franchises have a vested interest in a fan base that follows their team in the paper each day. Why not bundle a subscription with a term tied to start and end dates of season tickets? Take a look around. Why go it alone, when there are so many partners who could enhance your success? |
Advantages – This is the most active of all sales channels. Target marketing is part of the process. Unlike more random, mass-outreach channels, this is highly concentrated effort. Circulation sales managers are able to devise a strategy to ensure that the most productive areas are targeted. Again, payment should be collected at the time of the sale.
Disadvantages – More than eight youth representatives can be unmanageable. There’s no direct supervision once the salesperson is on the doorstep making the sales pitch. Because of costs, crewing is inefficient in rural areas or subdivisions with large lots. This channel can be expensive but is worth it if you seek prepaid, high-value orders. Additionally, crews made up of school-age kids are often subject to state regulations which can make it difficult to be effective. Be sure you understand your state's regulations.
Bottom line – Use well dressed, well-managed, well-trained youngsters, young adults (i.e. college students) or even senior citizens -- crewing is a great form of exercise. Newspaper logo-wear and identification badges lessen the reluctance of potential customers to open doors, talk to crew people and pay with credit-card information. A well-trained crew can produce EZ Pay orders and longer-term subscriptions. Use role-playing during the training process to help the crew overcome objections.
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Direct Mail. There are many variations, but in most cases a creative mail piece, generally with a mail-back card, is produced and distributed to a large audience during a specific time frame. This sales channel provides marketers with the chance to be creative and promote the benefits of their product. Direct mail is generally a passive sales channel because it requires the prospect to complete the call-to-action. There is little sales pressure, so retention is greatly improved because a direct mail order is similar to a volunteer subscription start. It is common to only get a 1 percent response, however the high retention rate can make this a valuable sales channel in your marketing mix.
Advantages – Direct mail reaches a large number of potential subscribers in a short amount of time. List brokers provide demographics to reach specific audience segments, preferably those that mirror your current base to provide you with the greatest chance of success. Tracking is easily handled through sales and promotion codes.
Disadvantages – Direct mail can be expensive on a CPO basis (it looks better on a CPU basis) and requires testing to ensure you receive the best bang for your buck.
Bottom line – Create an attractive mail piece with a clear offer, benefits statement and call to action. “Receive 13 weeks of XYZ Newspaper and save 40 percent off the newsstand rate! You’ll receive the ….. Complete the form below and return it along with your payment to … or call to begin receiving home delivery tomorrow!” Emulate direct mail pieces that have been successful for other newspapers and businesses. Response to direct mail increases when partnered with other sales channels – sampling campaigns, crewing activities, newspaper inserts and telemarketing. It is important to maintain continuity of the offer when using multiple sales channels.
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Direct Response Broadcast (DRB). Radio, TV and billboard campaigns can play a role in your marketing mix. These are generally best used in the form of branding campaigns and will affect single-copy purchases as well as subscriptions sales.
Advantages – Your message is heard/seen by a large audience – this is mass marketing. Working closely with your advertising colleagues you may be able to secure trade agreements to exchange unsold newspaper ad space for airtime or billboards. Be aware that this can have implications for advertising revenue, so it needs to be carefully coordinated internally before approaching other media outlets to discuss trade terms.
Disadvantages – Broadcast and billboard ads can be expensive; results are difficult to measure; and when offering a discount, a disclaimer needs to be present, such as “This offer valid for people who have not subscribed in the past 30 days.” Because ads are rather passive, don’t expect a deluge of otherwise-unsolicited in-bound calls. Do, however, track voluntary starts when ads are on the air!
Bottom line – Advertising on radio, TV or billboards works well for branding campaigns with subscription solicitation as a secondary goal. Ads are a way to boost the synergy to liven-up a multi-channel campaign. Ads can also drive newsstand sales for special promotions, sections or series, i.e.: “Read our four-part series on local crime beginning Sunday in ….”
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District Sales Managers. DSMs are often given a sales goal to acquire new subscribers, either by the week or by the month. Sometimes carrier starts are part of their goal as well.
Advantages – Because the DSMs know their areas well, they may have information about new move-ins, new developments and non-subscribers. Provided with the proper resources, they can set up kiosk or sampling programs and then follow-up.
Disadvantages – Any telemarketing or cold calling they make is subject to the do-not-call list, so this activity should be limited and well coordinated. DSMs are very familiar with the inner-workings of the newspaper and may “cycle” customers just to hit their goal. Because of the hours during which they work, especially in a morning operation, their hours may not be conducive to sales or may require them to work a split shift.
Bottom line – Often, the DSM’s role is more important on the retention/renewal aspect by the service that they provide to their customers. Consider reducing DSM goals and have them write only pre-paid orders, and pay them a fair and motivating commission. Usually a DSM is either a salesperson or an operational person, and your organization probably needs both types.
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E-mail – A list can be purchased through a list broker that has e-mail addresses and the demos you want. The newspaper is able to target a particular audience with a tailored message.
Advantages – E-mail solicitation is fairly inexpensive; most campaigns can fall in the a few cents per e-mail. The overall reach is large. This channel provides newspapers with the opportunity to reach the younger demographics. Like direct mail, e-mail messages and offers can be tested with numeric precision. Low costs and low labor allow you to reach large numbers of people.
Disadvantages – While more and more people own computers, there is still a percentage that does not have access to e-mail. Those that do own computers are becoming increasingly annoyed with unsolicited e-mail and may not open your message. Expect the ratio of people who open your email to be quite small. The “environment” for your message is not as good as other alternatives – your solicitation falls in with spam, porn and other undesirable matter. You risk being branded along with the spammers.
Bottom line – Keep the text messages short and make your sales pitch in the subject line – “13 weeks of the XYZ Newspaper for $19.50”, “Save $20.00 off the cover price of the XYZ Newspaper.” Be sure your name, or a shortened version of it, appears in the from line, so people know it’s a local message. Be certain to analyze the results of each blast and modify subsequent messages to your market. Pay attention to the time of day and week when the message is sent – midweek Tuesday through Thursday afternoon has worked best, but test varying times for your market.
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Free Standing Inserts (FSIs). FSIs utilize single sheets fed into single-copy and sample newspapers with an attractive offer and promotional design. This is similar to Direct Mail with the call-to-action in the form of a mail-back card. Many papers insert once a week and will vary the day to appeal to different readers. Be sure to track your results by offer as well as day of the week to identify the best type and timing of inserts.
Advantages – Depending upon printing costs, FSIs can be an inexpensive method to attract subscribers. When placed in single-copy issues, the audience is already familiar with and interested in your product – an advantage unmatched by most other sales channels. Additionally, this is one of the lowest cost sales channels that exists at most papers. Consider adding more days in the week until diminishing returns dictates otherwise.
Disadvantages – There are few disadvantages, provided the piece is machine inserted. If hand inserted there will be some additional costs involved. And remember, many people prefer to buy a single-copy paper; for them, it may be more convenient than home delivery, and you are unlikely to persuade these loyal single-copy readers to subscribe.
Bottom line – Every circulation department should employ some form of FSI. It is often an underutilized tool, when you consider the fact that it reaches an audience already predisposed to buying your product.
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Fundraisers – Many newspapers contract with a group, school or organization and have them sell subscriptions and renewals to their constituents and members to increase funding for their project. The money you donate for each subscription sold is the equivalent of a commission that you would pay to another source.
Advantages – Fundraising opens up doors that may not otherwise be open to sales efforts. Done properly, it creates an atmosphere of goodwill within a given community or school system. Consider this: Schools are going to do fundraisers; they can either sell candy and popcorn, or they can sell newspapers! You have a motivated audience that is committed to a cause.
Disadvantages – Fundraising can be difficult and time consuming to implement initially. Training, sales materials – flier and subscriptions forms – must be created to promote both the benefits of the organization and the newspaper. Young children must be cautioned against selling door-to-door without a parent.
Bottom line – The ability to sell will depend on the organization and the commission/profit they receive from each order. This type of sale often works best when the organization has a specific goal in mind, i.e. “We want to raise $10,000 for band uniforms for a trip to New York to play in the Macy’s Thanksgiving Day Parade.” The participants can set up a kiosk or booth at events (high school football games) or other areas.
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Kiosk/Intercept – Kiosk/booths are set up outside or inside grocery stores, mass merchandisers, convenience stores, department stores and events (wherever people gather), and a sales presentation is made. In an effort to encourage people to stop, giveaways or raffles are performed, or a sample newspaper is placed in the hands of prospects.
Advantages – This channel provides the sales representative the ability to collect payment up front and creates partnership opportunities with the store. It also provides the salesperson with the ability to sell a wide array of terms, offers and payment methods. Unlike door-to-door sales, people may feel more comfortable and receptive when approached by sales representatives in a public place. They come armed with credit cards and check books and are in a buying mindset. This can be fertile ground for EZ Pay sales.
Disadvantages – It can be difficult to gain store managers’ or corporations’ permission to sell in the store. It takes time to recruit and train the right salespeople. This is one of the more expensive sales channels when commissions and premiums are factored into the equation. Sales representatives are at the whim of customer flow.
Bottom line – The use of gift cards (from that specific location) will help in acquiring subscriptions and securing locations. Most people will consider the gift card as “found money” and spend more on their visit to the store, which provides a compelling reason for the store to provide access. Try to offset the higher cost by selling longer term subscriptions and EZ Pay subscriptions. Use multiple locations and various times to find the best mix for your market.
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New-mover programs – There are many ways to implement a new-mover program. All generally focus on reaching out to movers within your market. This can be done through a third party and involve other sales channels such as direct mail or telemarketing. Some newspapers use their own internal research by reviewing real estate transactions on a weekly basis, but this will miss renters, and the information is not always timely.
Advantages – People tend to purchase more items within the first 30 days of moving into a new residence than at any other given time. Habits have not been formed so this provides you with a prospect that has an open mind. Being new to the area they are often looking for a source of information about their new community.
Disadvantages – Determining which vendor or third party to partner with can be a challenge. In some cases, newspapers will partner with two different sources, which ensures redundancy.
Bottom line – New Movers are some of your best prospects, and you need to reach out and market to these people as soon as possible. Even if they were your customers at their prior residence, there is no guarantee that they’ll be your customers at their new residences. Look to partnering with a utility such as the telephone company, electric company or cable or a third-party vendor who has these relationships already established.
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Online/Internet – Subscription sales are made through banner ads, pop-up, text links and promotions to people who visit the newspaper Web site. Web sites serve as a great introduction to an area for new movers – some who may not be in your market – thus providing the chance to lock in a subscription before the customer moves into the market. This sales channel is gaining speed as the world continues to move digital.
Advantages – Internet marketing has the lowest acquisition cost and the best retention rates of any commonly used sales channel. Retention rates are extremely high because this channel is similar to the voluntary channel – people feel that they have made the purchasing decision without pressure. The offer/price can be changed relatively quickly. You also have the ability to gather e-mail addresses through this approach.
Disadvantages – Internet selling requires specific technology skill sets. This channel is passive in approach, which means higher retention, but low volume. Pop-up ads are intrusive and can have a detrimental effect on your ability to sell. They may also decrease the amount of people who continue to visit your Web site.
Bottom line – Consistent numbers can be achieved by using a clear concise offer/message to visitors. Ensure that you capture the e-mail address for future e-mail campaigns. Sales are often made by repeatedly asking for the order, make sure the customer who wants to subscribe can do so easily. The biggest mistake many papers make on their sites is burying the subscription links; these should be positioned prominently, and frequently, throughout the site.
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Retention/conversions. While retention is not considered a sales source, it should be. That’s because the retention operation within a newspaper aids the acquisition process through verification of orders, billing conversions (carrier collect to PBM or EZ Pay; PBM to EZ Pay), loyalty programs, upgrades (converting weekend customers to seven-day delivery), billing marketing pieces (gift subscriptions), billing reminder calls/letters/e-mails and stop-saver programs. In some operations, retention staff may sell specialized promotions such as new mover orders. They may also follow-up on samples. Unless 100 percent of your subscribers are on paid-in-advance, lifetime subscriptions, the retention team should be considered whenever you evaluate sales channels because of their ability to upsell.
Advantages – Upsell orders and conversions are generally low-cost orders. Representatives are extremely customer-relationship focused. Customers are familiar with the product, so you can focus on terms and offers.
Disadvantages – The retention staff must adhere to federal and state telemarketing regulations; however, the majority of calling conforms to the “existing business relationship” rule. Turnover of personnel and training are continuous.
Bottom line – As circulation departments find it more difficult to market to and attract new subscribers, the attention of retaining their subscriber base intensifies. Each customer that is saved, or each subscription that is lengthened, decreases the number of new subscriptions that must be sold. Sales reps should be experienced at overcoming objections.
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Telemarketing. Sales are made over the telephone through the use of call centers, both internal and external. Telemarketing’s share of the mix is shrinking, due to many factors, including the poor rate of retention associated with telemarketing orders, as well as recent regulatory restrictions.
Advantages – This method allows a marketer to solicit a vast audience in a short amount of time compared with other methods. CPO can vary, but upfront selling costs are generally low in comparison with other sales channels (see correlating disadvantage in the next paragraph, however). Representatives can read from a script that can be easily tailored for each sales campaign. Telemarketing also provides the ability to target certain segments and areas where population is scarce. For example, telemarketing represents the most efficient sales channel in rural areas.
Disadvantages – Practices must adhere to the national and local do-not-call lists, which limits the audience that can receive this message. Although CPO is lower than some other sales channels, retention rates are poor, and churn is high. The annualized cost-per-unit of circulation, or CPU, typically runs higher, and this is a crucial distinction. Pay rates and retention runs lower in this category although more phone rooms are requesting and receiving payment upfront.
Bottom line – Although newspapers recognize the need to reduce their reliance on this staple sales source, it remains an important part of the mix. Its use will shift to a narrower, more strategic role. Use this sales source to target specific geographic areas and particular demographics and customer types. Combine this sales source with other methods such as sampling and crewing, using a consistent sales and branding message.
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Sampling: Third Party with FSIs. Sampling is a sales channel that has gained popularity over the course of the past few years with the relaxing of ABC third-party qualifying rules. Sample copies of newspapers are paid for (cash or barter arrangement) by a third party and then distributed to non-subscribers in a targeted area or venue (sporting event, hotel). The newspapers have an acknowledgement insert or sticker notifying the consumer who paid for the newspapers. In addition, an FSI is delivered along with the newspaper with a subscription offer.
Advantages – As a stand-alone sales source, sampling will produce a limited quantity of orders by itself and is more effective when combined with a crew or telemarketing blitz. The added and immediate advantage comes in the form of paid circulation, provided all of the ABC-required paperwork is completed properly to document the third-party payment.
Disadvantages – With volumes in the thousands, distribution challenges increase, as well as ensuring that you have enough inserts for the third-party “event.” ABC is now requiring newspapers to notify them of large-scale distribution days, sometimes called power days, so that a team of auditors can be flown into an area, at the newspaper’s expense, and conduct a field audit. ABC rules are subject to change in regard to third-party sales, so each campaign must be carefully re-evaluated for compliance.
Bottom line – Sampling can be a double-edged sword. If not managed properly, a newspaper can distribute a large number of newspapers in an area and boost single-copy sales for a particular day or week. The revenue generated by the payment from the third-party sponsor may not cover expenses; still, sponsorship allows a newspaper to count samples as circulation, something that was not permissible several years ago.
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Voluntary – A non-subscriber contacts the newspaper, usually by telephone, to subscribe.
Advantages – An inexpensive and well-retained subscription order. No one had to convince the customer that the newspaper was a good bargain. This type of order is often at full price, so it will not affect your discount sales budget.
Disadvantages – Of course, voluntary starts are unreliable in terms of the amount of order production each month – you can never have enough.
Bottom line – Covet these orders and give these folks outstanding service to maintain their subscriptions.
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Like an investment manager overseeing a stock portfolio, the circulation sales and marketing manager needs to achieve the proper mix of sales channels with regard to the market and timing. For example, summer months may be more conducive to crew sales with youths out of school and longer daylight hours. Newcomer programs may be more active in August when people are in the midst of moving before the start of a new school year. To ensure success, you’ll need to test different sales sources and the timing of those sources within your own market. By using a varied mix, you’ll always have a selection from which to choose, should one or two sales sources become unproductive.
What we can learn from the African catfish
There is a breed of catfish, Synodontis multipunctatus,that lives in Africa’s Lake Tanganyika. These catfish have found an ingenious way to get other fish called cichlids to foster-parent the catfishes’ babies. When cichlids lay eggs, catfish rush to the scene and eat as many cichlid eggs as they can, and deposit look-alike catfish eggs of their own in the same spot. The mother cichlids, bewildered by the melee, will raise the catfish eggs along with any of her own eggs that managed to survive the catfish’s deception. Catfish eggs hatch faster than cichlid eggs. When the baby cats hatch, they immediately begin to feed on the slower-hatching cichlid eggs! Essentially the catfish have outsourced the mothering and feeding of their young to the cichlids.
The moral of the story: In the new era of sales-channel diversification, it’s unlikely you can go it alone. There are too many things to do, and too many diverse skills needed. Outsource key functions to others who have the specialized skills, equipment or labor force needed to fulfill your goals. This may include list brokers, direct marketing firms that specialize in direct mail, etc. This will allow you to pursue more opportunities than if you try to hatch and feed every sales program yourself.