The PPA and Royal Mail commissioned Wessenden Marketing to map out scenarios for the future of the magazine subscription by looking at how other industries approach the customer journey and applying those insights to the magazine business. Jim Bilton summarises the main findings.
"The Customer Journey" is a term on everyone’s lips: the subject of endless trade press articles, workshops and worthy academic books. In addition, the whole area of customer loyalty has become an industry in its own right with a plethora of theories and practices, much of which seems removed from the day-to-day realities of running a business and certainly a magazine business.
Yet as consumer markets have matured and become more competitive and volatile, so the issue of retaining customers has assumed a massive importance. It is no longer just about improving company profitability by stretching customer lifetimes; it is about commercial survival through holding on to customers who have decreasing levels of brand loyalty and whose brand relationships are becoming shorter, more complex and increasingly erratic.
Responding to declining loyalty
The report details a number of different approaches as to how to track and respond to customer loyalty. Yet behind them lie a number of simple and commonsense principles. The difficulty is putting them into practice in every part of the organisation and in every process:
* Get the product right. That means understanding what consumers want, not what we think they want, or what we believe they should want if they were sensible about it (ie. if they thought the way we do!).
* Understand how that product fits into their overall lives. Map out what apparently unrelated external events may affect their consumption of the product.
* Communicate the product benefits effectively and consistently through all the range of marketing materials.
* Provide the back-up services to support every aspect of the delivery of the product within what is realistic financially.
* Keep innovating to ensure that the product keeps pace with the consumer, whose demands may change subtly, but significantly over time.
* Ensure that all staff, but especially those who have contact with the consumer, live out the values behind the brand.
* Add on loyalty rewards if so desired, but make sure that they add real value to those customers who need to be retained. Yet be aware that the true loyals will not actually need them and may actually react against being offered them.
The customer journey in other industries
For the purpose of the project, five companies outside the magazine publishing industry were interviewed in order to obtain a different perspective on the whole area of tracking and serving customer needs from a practical and operational perspective. These companies were in the following sectors: Financial Services, Newspapers, Communications, Mail Order and Membership.
The process revealed many detailed insights into current practice and what the challenges facing these companies actually are:
* The importance of the Early Life / Nursery Period in retaining customers and shaping future spend and usage levels.
* The importance of an engagement process in addition to a welcome process to educate consumers how to make the most of the new service.
* The importance of knowing not just what consumers think of the product / service, but understanding how they actually use the product / service, where it fits into their lives and what they really value (which may be more basic than currently thought). Get these basics right first before attempting to build added-value services on top.
* Linked to the previous point, the need to understand the "leave points" – what prompts a consumer to stop the relationship.
* Modify the focus on leveraging as much revenue as possible from the name to "right-sizing" the service for the individual consumer which will help to extend customer lifetimes.
* Be clear what one wants customers to do and then construct the mechanisms to prompt and reward those behaviours.
* Central to a customer behaviour strategy is a coherent and logical pricing structure which should reward loyalty rather than penalise it.
* Build customer segmentations on transactional patterns rather than research.
* Customers want to feel valued. What makes them feel like that? What are the practical and cost-effective ways to achieve that?
* Linked to the previous point, do all contacts need to be sales contacts?
* Data Protection issues can actually be extended into providing a more secure and protected environment for the consumer where trust can be built up.
* Increasingly, modern consumer marketing is built around brands or at least the aura of trust and reliability that brands engender. Magazine publishers already have immense brand power which they are not using to the full.
* Magazine publishers and the benchmark companies are moving in opposite directions in terms of the scale of their files. Most of the benchmark companies are breaking their mega-files down into smaller, segmented brands, but recognise that they could lose scale efficiencies and add complexity if they go too far. Magazine publishers need to move in the opposite direction: to consolidate their fragmented brand approach into a more efficient way of working.
* Concentrate on the best customers as this will deliver the best ROI.
* By focusing on what the consumer really wants from the product or service will produce simple, actionable and effective marketing solutions. Try to keep it simple!
What this means to magazine publishers
The project then moved on to interview marketing and circulation professionals in fifteen magazine publishing companies where there is a very wide range of practice, but where there is also a common theme: that most publishers know that they are not truly customer-focused and that there is still so much ground to make up on other industries both in terms of improving the whole customer experience and of generating more revenue from the subscriber name.
The interviews themselves covered eight key areas:
* The role of subscriptions within the company
* Customer touchpoints
* Customer segmentation
* The customer journey
* The database
* Customer service
* Structural and operational issues
Magazines have a range of strengths and weaknesses (see table below), but their principle asset is the power of the brand and the potential to leverage more benefit from that, both in terms of enhanced retention and additional revenues.
The key influences which are shaping the subscription environment include:
* The rapidly changing, fickle and demanding end-customer.
* The growth of online.
* Factors, many of them internal magazine publisher issues, which are altering the business model, but the key pressure being the online-driven trend towards free content.
* Internal staff and organisational issues which can stifle change.
* Technological change.
The key subscription variables which drive the future subscription model include:
* Content package: bundled or an a la carte menu of choices?
* Delivery platform: increasingly multi-channel.
* Contract strategy: opt-in or opt-out?
* Payment strategy: increasingly a mix of free and paid.
* Pricing strategy: Hi-Lo, EDLP or Premium?
The result is that there is no one single subscription model for the future, but a multitude of variants dependent on localised market conditions, built around four basic brand options in terms of how publishers develop the revenue opportunities around their community of users:
* Superbrands, which develop their own range of products and services around the core magazine product.
* Coop brands, which partner with other publishers or third party companies.
* Solo brands, which develop a smaller range of products and services.
* Non-brands, which concentrate on the core magazine subscription.
There is a long list of potential publisher challenges, but these revolve around three core issues:
* Understanding better the whole "customer experience" of magazine subscribing and the full "customer journey".
* Leveraging more value from the strong bond which exists between reader and magazine: making the most of "the brand".
* Making more consistent, long-term and strategic decisions about investing in serving the customer better.
What lies behind all this is a realisation that there is no single subscription future which fits all publishers or all markets. The future is complex. It is also very specific: to individual markets and to individual subscribers within those markets.
Just as there is no single customer journey, so there is no single subscription model for the future. The future is all about constantly refining and adapting the management of the customer touchpoints in new, creative and profitable combinations.
|Magazine Strengths & Weaknesses
* The power of magazine brands with strong emotional links between magazine and reader.
* A wide (and expanding) range of customer touchpoints.
* High frequency delivery of the core service to the consumer allowing repeated and justifiable contact.
* A robust contract / opt-out subscription model.
* High and increasing penetration of direct debit.
* Simple (but not always high quality) physical fulfilment of the product.
* Relatively long customer lifetimes.
* Creative acquisition techniques.
* Experience of sophisticated online applications.
* Established advertiser relationships offering a wide range of potential partners for more creative joint ventures.
* The potential to leverage more revenue from subscribers.
* Over-emphasis on the individual brand to the detriment of the common processes and disciplines which run behind all brands.
* Over-emphasis on the "reading experience" to the detriment of the overall "customer experience".
* Common lack of interest in "back end" processes such as customer service and fulfilment.
* Current low revenues per subscriber.
* Lack of scale in terms of customer file sizes.
* Online eroding the paid subscription model.
* Subscription pricing structures which tend to penalise loyalty rather than reward it.
* Subscription pricing strategies which create an image of the subscription as purely a discount channel.
* Lack of broader-based marketing skills within the organisation.
* Common lack of consistent and strategic focus of senior management.
|Beyond the Subscription: Tracking the Customer Journey is available, free of charge to PPA members, from Emma Turner at the PPA.