What if there were no telemarketing?
Here's a Close-up of one paper's efforts to put it all together in the new era. This example shows what happens if you remove telemarketing from the mix. Completely.
Annett Graham, vice president of circulation and operations, at the Bakersfield Californian gave some inside information on effective ideas and promotions that work for the paper.
The first topic is managing a sales portfolio. All orders at the Californian are sold on a "paid in advance" basis, including voluntary starts. The Californian’s primary payment term is currently EZ Pay, followed by 12-or six-month payment terms. The paper offers an introductory discount for all customers signing up for EZ Pay.
The impact on retention Since telemarketing was eliminated, the paper's primary sources of sales come from kiosk, voluntary, direct mail, sampling, and classified reps cross selling (in that order). As a result, the overall retention rate at 120 days has increased from 39 percent to 80 percent. Churn is at 25 percent. Current sales channels and retention results at 120 days after the customer started for major sales channels for The Bakersfield Californian are:o Kiosk 86%
o Direct Mail 95%
o Sampling 84%
o Voluntary 82%
The paper has been surprised that the kiosk program is retaining better than voluntary starts. The offer is the same and service is same, so the reason is not entirely clear, but it suggests that the kiosk sales reps are very effective.
The main reason their retention results are so high is due to targeting and requiring customers to sign up for EZ Pay with payment in advance (for all orders).
Before telemarketing was eliminated, the paper began to wean it from the sales portfolio. After that, they eliminated telemarketing all together.
Two key strategies
The Californian's sales strategy is two-fold:
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Increase penetration in areas that match the profile of loyal and profitable customers.
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Match volume growth with household growth using a “New Movers” program.
Effective tactics and execution
Direct mail is targeted to customers most likely to respond to a direct mail piece and read the newspaper. The paper is doing more testing and predictive modeling to improve response rates and profitability while keeping costs minimized.
Kiosk selling is limited to areas where customers are apt to retain for the long run. In the event a potential customer is from a lower-retaining area or lifestyle code, the requirement for pay-in-advance significantly improves chances they will stay for a longer period of time.
The Californian receives over 1300 new resident listings monthly. The paper offers a four-week sample inside a package, which includes advertising, that is delivered to the door. Follow up is done with a direct mail letter two weeks after the sampling has begun.
The paper no longer uses outside vendors for kiosk or door crewing programs. The outside vendors made more money in commissions by churning their customers with short-term offers. Before the paper eliminated telemarketing, it faced the same problem with telesales reps who were motivated to churn customers repeatedly.
Looking ahead
Moving forward, strategic alliances with companies that have access to high volumes of consumers is critical. For example: the paper considers aligning with cable companies for cross selling. Cable providers could sell new newspaper subscriptions and, in turn, newspapers could sell cable service or upsell subscribers who are current cable customers (e.g., add HBO or additional channels). Another idea is contacting employers in the area and establishing programs where new employees could receive a special introductory offer, and the company could consider it as a benefit for employees.
Looking ahead, the paper also expects more volume coming from direct mail as managers lace more emphasis on this sales channel. Predictive modeling will help develop loyalty programs for the future to further build customer retention.
The best offense is a good defense
Eliminating telemarketing is only possible if retention is taken seriously. At the Californian, it's just short of a religion. "It is all about reducing stops, not about how many more starts you can add," Graham said. Since all start pressure causes some degree of churn, finding the optimal mix of starts that will keep stops minimized is key. The Californian has developed a model that helps forecast home delivery volumes using their own starts, stops and retention rates as the independent forecast variables.
The result of running the model indicated clearly the immediate need to eliminate telemarketing sales, which they did in September 2003. As a result, stops fell from a high of 118 per day to 31 per day by October 2004. The other reasons: all orders are paid in advance with six-to 12-month terms; and target marketing.
Daily, the paper analyzes its starts and stops. They also look at sales sources and the ZIP codes that were sold, to ensure their sampling or direct mail programs, for example, are targeting the areas where customers are apt to subscribe in places that advertisers want to reach.
Developing "what if" scenarios is very helpful, especially when contemplating the move from high-volume sales sources with low retention (e.g. telemarketing) to more emphasis on low-volume sales sources with high retention (e.g. direct mail). Creating a spreadsheet to show how different scenarios will affect start volume, retention rates, and, ultimately, stop volume is helpful.
Pricing for retention and loyalty The Californian’s customers, who were paying either a year or 6 months in advance, began complaining that the monthly price was the same whether they paid a year in advance or one month at time. The paper listened and changed its pricing so there is a significant discount for customers paying 12 months in advance or participating on the EZ Pay plan, as opposed to paying the office one or three months at a time.The paper positioned the price changes, which occurred gradually over two years, as “Beat the price increase with a price decrease.”
Graham said the most successful efforts entail an integrated direct marketing approach, where the paper first samples customers, following up two weeks later with a direct mail piece, and then finally visiting them at the door. The paper has seen its overall response rate increase as a result. Kiosks and direct mail are performing well. Targeting the pieces to non-subscribers who are most apt to read the newspaper and respond to a direct mail piece has provided response rates in excess of 2 percent. The most cost-effective channels been kiosk sales. Direct mail cost-per-order continues to shrink as the paper moves up the experience curve.A sound Internet strategy
An Internet strategy that complements the print product is paramount, as opposed to one that simply lumps all the news for free on a Web site. The Californian is developing an access strategy to their website that allows different types of access based upon the customer's loyalty as a print subscriber. For example, seven-day per week subscribers will have full access. Non-subscribers will have access to article summaries only. Weekend customers may only have access to the full paper online Saturday and Sunday. The paper is still working out the specifics.