Building Profits through Relationships at the Age

The history of management is littered with three-letter acronyms (TLAs). For a while we practised TQM (Total Quality Management) and ‘delighted’ our customers. I once asked John Humble, the inventor of MBO (Management by Objectives), what he thought was its greatest achievement. "At one time it kept 1,000 consultants employed" was his pragmatic response.

It was therefore of particular interest to meet Belinda Lush, director of CRM at the Age in Melbourne. I was anxious to learn what CRM (Customer Relationship Management) was in the context of this respected Australian newspaper. I was aware that, for many, CRM is a posh term for direct marketing while for IBM, who introduced the idea back in the late 90’s, it was to describe ‘do-it-yourself’ customer servicing.

In the context of Fairfax newspapers, however, Belinda defines CRM as ‘Customer Relationship Marketing’ and describes it as:

"A whole-of-business, customer centric strategy, using technology and processes to attract, retain and build loyalty in profitable customers to deliver sustainable competitive advantage."

Did this definition not seem a little academic and theoretical, a concern given the UK newspaper industry’s tendency to build large and expensive databases without a clear view of how a payback was to be achieved? Belinda was quick to refute the thought, describing a strategy that is highly focused, tightly measured and carefully funded. Investments in database technology, for example, had not been made to deliver state-of-the-art functionality but to permit a clearly defined set of activities that had a positive effect on the bottom line. "Our focus is not on creating all-singing systems but on creating profits from our customer relationships", says Belinda. "Rather than spend money upfront on software, our preference is firstly to prove the financial viability of the concept - if it works then we will consider investment." Continues Belinda, "currently we have funding to investigate the commercial potential of a consumer data warehouse that will provide a single customer view across all Fairfax business units including business magazines, digital and the newspapers. This same process was recently followed to secure a replacement for our elderly and suboptimal subscription system – we just don’t invest millions of dollars into ‘you-beauty’ systems for their own sake."

"The Age generates most of its revenue from advertisers", says Belinda, "and my fundamental task is to deliver the right kind of readers for advertisers, by building relationships with both, and using technology to track their behaviour and predict their needs." This will involve identifying and targeting a number of niche markets - like those interested in sport, or students, and developing long term relationships with them."

Subs strategy

Subscription is therefore a key strategy because it delivers the desired audiences and helps keeps readers in the fold. "Many newspapers put all their effort into acquisition", says Belinda "but ignore retention. As a result, they go through a cycle of losing their readers and reacquiring them, which is very expensive and also damaging to the relationship." The Age currently offers some 80 different subscription combinations of service and term, each with a different price, to its various prospect niches, the terms reflecting the importance of that niche to advertisers. This is all centrally organised by the Age but distributed through newsagents. The strong growth in subscription over the past five years (over 80% increase in active subscribers) means that subscription is now responsible for some 60% of the Monday-Friday sale and 45% of the weekend’s.

Belinda uses a variety of techniques to attract new readers into trial and subscription. For example, the Age uses its daily sports tabloid to attract new readers. "It doesn’t generate big circulation revenue but it draws a big (and valuable) readership which can ultimately be translated into advertising revenue." Belinda, therefore, directly approaches the main Aussie Rules football clubs to develop news partnerships and to offer specific sports subscription packages to individual club members (‘Friday through Monday’).

Youth Marketing Programme

Belinda has also put much effort into her comprehensive Youth Marketing Programme which is all database driven. A main element of her strategy is to communicate with individual teachers of students from upper primary to 18 year old school leavers. "Teachers are the gateway to students", says Belinda, "and we have database records of all teachers and librarians in Victoria linked with their specific activity and function. The Age supports these teachers with a wide range of curriculum aids and content. "As a result, we have effective relationships with 90% of Victorian schools."

The main method of communication to teachers is through the post, although email communication is also used. There is a teacher website with free access to the Age’s archive if the school takes ten or more papers.

Belinda then uses these links to identify and support individual students in the 15-17 year old Victorian Certificate of Education (VCE) age group, encouraging them independently to subscribe to the paper for a Aus$10 annual fee (about £4). The main communication channel to this group is email, although the Age is "very cautious" in their communications with this market, preferring to talk through the teacher gatekeepers.

Reaching students

The third ‘tertiary’ group targeted by Belinda is first year university students, who are encouraged during the first week of their university career to sign up for a discounted subscription using a ‘card’. Students get their copy of the newspaper during the week by producing the card in the campus bookshop, but on Saturday have the paper delivered to their accommodation address. "Our aim with our subscription programme is to help students with their university studies during the week and to meet their lifestyle needs during the weekend." To do this, Belinda’s youth marketing team regularly emails reminders and incentives to buy the Age during the week. They target communication to the needs of the audience, promoting the traditional broadsheet values of trust and reliability without appearing conservative and stuffy. Diversity and fearlessness are two values that are strongly featured in the Age’s youth marketing communications. "For youth targeted promotions, the Age endeavours to align our brands with those of our affiliates which include Apple ipod, Sony Music as well as cinemas and movies."

Students in the tertiary programme have their own promotionally driven website, which is also a portal to a range of linked websites and through which subscriptions can be organised. The website is also a medium for news gathering from students, and for holding forums - such as that on careers and on educational topics. Students have also been encouraged to create their own newspapers which have been published twice a year.

The schools / student programme is so successful that it has become a recognised route for communication with students, with various public and private entities addressing issues of the environment, literacy, drugs, obesity, health and fitness and youth suicide as well as lighter more entertaining topics including sport, music and arts.

How has Belinda worked with their digital media? "Five years ago, digital was seen as competition - I was warned then that online threatened to undermine print subscriptions and could result in subscription decline. Today we have fully accepted the simple idea that we have to meet our customers needs. If that means that many of our younger readers will be online with us during the week but will have delivered newspapers through subscription at weekends, that’s fine with us."

Impact on advertising strategy

Belinda’s CRM programmes also help to maximise advertising yields. "We store each advertiser as an individual into our Admark system (which handles ad booking and generates bills) and send the data into our data warehouse. We can see, therefore, how each advertiser is working with us and the pattern of his spend - and keep track with the key managers in our advertising client companies." The Age has invested in an analytical tool called Faststats and, using this, investigated the retention of employment advertisers. "We found we were doing pretty well with the big advertisers, but found we had a 30% churn with the smaller advertisers who were traditionally felt not to have a need to advertise regularly. When we followed them up, we found that in fact up to 75% of them were being seduced by online and local newspaper offers both from within the Fairfax group and from other companies." As a result of this discovery, the Age instituted a proactive sales campaign to this group ("we used to wait for them to pick up the phone") and has begun to review their employment advertising offering across Fairfax to develop a more integrated and more successful approach.

So, what are the challenges to come? "So far our CRM initiatives have been focused on enhancing our newspaper product - for us, the next frontier is building systems and processes to integrate all our activities and to serve our customers on the basis of each one’s individual needs, however they may experience us and through whatever channel they prefer." To do this, Belinda acknowledges that each channel needs to work on maximising its profitability. The biggest challenge of all "is to attract more revenue from digital - to offer new added value that gets advertisers to pay more for online." Currently, the majority of advertising revenue comes from the newspapers. "In tomorrow’s world", says Belinda, "it’s not going to be about which media someone consumes, it’s going to be about how we can leverage our relationship with the individual consumer. It’s back to our definition of CRM - our revenues in future will be a function of the quality of that relationship and that is why CRM is so critically important to the media businesses of the future."