Loyalty Marketing No Panacea for Newspapers
by the editors of Retention Alert!
Loyalty vs. renewal — what's the better approach? "IWantMedia.com" recently interviewed John Sturm, president and chief executive officer of the Newspaper Association of America regarding a variety of current newspaper topics. In the interview, titled "Reading Newspapers Provides Psychic Satisfaction," Sturm says:
"The sort of psychic satisfaction that comes from the experience of reading the newspaper is rather substantial. Getting up in the morning and reading the paper – at the breakfast table, on your way to work, at the office – is a pleasing, comfortable routine. There's a true, almost emotional connection readers have with their paper. You've heard people say 'my newspaper.' But when is the last time you've heard somebody say 'my Channel 4'? It's a special connection, and it's not going to go away."
There's no doubt readers form a special connection with their newspapers, but we wanted
to know if media companies could use that "psychic connection" to
create profitable loyalty programs. So the editors of Retention Alert! decided
to conduct our own interview with resident specialist Rick Matsumoto, executive
vice president of ASTECH InterMedia. Matsumoto has conducted ASTECH's Retention
Marketing Seminar for over 100 newspapers across the
RAlert!: Do you agree with Mr. Sturm's assessment that readers have a "psychic connection" with their newspapers?
Matsumoto: I agree with what he says about consumers getting satisfaction from the experience of reading. But people don't really say "my newspaper" because of some deep, emotional connection. They say "my newspaper" simply because there isn't another choice for a daily newspaper in most markets. And the reason you don't hear people say "my Channel 4" is because viewers are emotionally connected to the on-air personalities, not the station or the network.
RAlert!: So, are you saying people are generally more loyal to TV than to newspapers?
Matsumoto: Not exactly. I'm saying people are generally more emotionally connected to on-air personalities than they are to newspapers. I know that's blasphemy to most of our [Retention Alert!] readers, but it's true. I'm a Katie Couric fan, for example. To me, she's a down-to-earth person that I can relate to … she gets visibly upset when reporting on tragedies, she gets in an interviewee's face when they're avoiding a question, she smiles so big sometimes you see more of her gums than her teeth! These are personality traits that I can see because it's television. I can't attach any of those traits to a newspaper.
"Loyalty" carries a slightly different meaning. You can be a loyal newspaper reader without being emotionally connected; and you can be emotionally connected to on-air personalities without being a loyal TV viewer.
RAlert!: Then where is the opportunity for newspapers to establish a connection with readers and how do they use that connection to create a profitable loyalty program?
Matsumoto: I think the emotional connection for newspaper readers comes from being better informed and better able to participate in discussions with others about current events. I know I always get this guilty feeling when someone says, "Did you read about…?" and I have to say no. My ego wants me to be knowledgeable all the time!
As for loyalty programs, we've always steered our newspaper clients away from them. Most experts agree that in order to create a successful loyalty program, you need to make your offer compelling — the offer has to have enough value to change consumer behavior. In the newspaper industry, offers are limited in value to 50 percent of the subscription price by ABC regulations. There's just not enough perceived value to induce higher renewal rates or longer renewal terms … not in a profitable manner anyway. And if it's not profitable, it's not worth doing.
RAlert!: Then in the Retention Marketing Seminars you conduct, how do you suggest newspapers improve retention?
Matsumoto: We teach our students that a dollar spent on better renewal marketing practices goes further than one invested in a loyalty marketing program. With this in mind, newspapers should focus on term, pricing and payment tactics that make it easier for people to subscribe and renew for a longer period of time and at the full value of the product.
RAlert!: Can you give us some examples of these tactics?
Matsumoto: Sure. Implement tiered pricing structures that give your subscribers an incentive to subscribe for longer terms. Use sampling programs instead of discounts to induce trial without diminishing the perceived value of the product. Take advantage of credit card payments — it's been proven that retention rates for payment by credit card are higher than any other payment method. It's not brain surgery. If you can measure the performance of these or any of your other marketing efforts in terms of cost per unit rather than cost per order, the tactics that are effective are easy to spot.
If you're interested in finding out more ways to improve circulation marketing, or would like to provide feedback on this article, send a message to Rick!
Reproduced here from the April 17, 2001 edition of Retention Alert!, a free monthly e-newsletter from ASTECH InterMedia. Rick Matsumoto is the executive vice president of ASTECH InterMedia. He can be reached at 303.296.9966 x13.
