Getting home delivery customers is relatively easy. Keeping them is much trickier.
The rate of churn is huge. John Bunyan, deputy audience development director at NCJ Media (publisher of the Newcastle Chronicle), believes the industry norm is to retain only 62-65% after seven weeks. By the end of a year, a newspaper might only retain half its home delivery customers.
The Liverpool Echo sees 250 home delivery customers leaving every week. That’s nearly 60% of the user base in a year, says Mike Packwood, the Echo’s direct sales manager. So the paper is running to stand still – recanvassing to win users it should have kept. "We’ve got 23,000 customers and half of those leave every year," he says. "Then we recanvass them and sign them up again, and end up spending money to do it. Liverpool isn't that big a place – so it’s just a continual merry-go-round."
Packwood would like to increase 80% retention after the initial five week period to 85%. He points out that increasing annual retentions from 50 to 75% would mean the paper only needed to add 150 customers a week through canvassing – not the current 250. That could enable the Echo to make significant savings.
Allister Shacklock, general newspaper sales manager at Aberdeen Journals, claims that 57-58% of new home delivery customers sourced through canvassing are retained after a year. But, he says, between 25 and 30% drop out after the initial six week offer period.
These lost customers are expensive. John Bunyan reckons that he is spending over £20 to get each home delivery customer. Costs are going up – the Telephone Preference Service has had an impact on how much canvassing can be done by telephone, and many of the big door-to-door canvassing groups are raising their prices. So retaining customers rather than canvassing new ones is a major business issue.
One of the major tactics for retaining home delivery customers is simply to keep them interested through regular communication. Allister Shacklock says he plans a regular drip feed of offers for loyal customers; a pound off for the first six weeks, a hotel brochure every three months, and a £50 voucher after a year.
All these offers are exclusive to home delivered customers, and that’s important. He says "it’s about making the customer feel special".
However, none of these three newspapers has a readers’ club, as such. Is this an idea which has passed its sell by date? In fact, many of the things they are doing are similar to what readers’ clubs deliver. By not labelling any initiatives as a readers’ club, it’s possible to maintain flexibility – and that appears to be something that is valued, as it enables newspapers to experiment with different offers and methods of customer retention.
Vouchers and gifts are a fairly traditional way of rewarding loyal customers and tying them into the scheme. But times are changing, and a number of newspapers are rethinking how they ought to encourage and reward loyalty. Experimentation is rife – and as John Bunyan claims, "We’re breaking with tradition in a number of ways" and rethinking customer retention strategies.
Towels and woks
Mike Packwood says the Liverpool Echo has made significant changes in the last two or three months. "Up till then, we were doing what everybody else does, giving out the High Street vouchers. But when the towels and woks ran out, so did the customers!" He believes that vouchers can actually be a motivation for customers to drop out - "I’ve got the voucher, now I can stop taking the paper." The Echo had already shifted from a single set of vouchers to regularly timed gifts through the first year, but this still hadn't really increased retention rates.
Now, the Echo is focusing on what extra media value can be added through the same delivery network. For instance, magazines and books published by the parent company are distributed through the same network, with discount offers. They are all of strong local interest, and targeted to the same community. So far, results have been good, he says. And instead of spending money on offers, the Echo is giving a discount on the cover price – not for an introductory period, but for good.
John Bunyan says the Newcastle Chronicle saw excellent results when it ditched the 15 week voucher. Instead, it now runs a quarterly booklet "not just for new customers, but for all customers". Retentions after 13 weeks have increased from the mid 50’s to 68% in 2007.
He believes getting rid of the voucher was crucial. "If people know they’re going to get the voucher," he says, "they’ll take delivery of the paper for the wrong reason." They are then much more likely to discontinue their subscription.
Many of the traditional reader offers may not have worked because they were not focused enough on the readership – or on the newspaper’s own brand. Mike Packwood reserves particular disdain for bought-in offers and readers’ clubs. He says that often, they are of limited relevance to core readers – for instance, one deal he was offered had money off hotels and restaurants, but none were within the central Liverpool area. "You need to keep it relevant and keep it believable," he says.
John Bunyan gives an intriguing example of this from a holiday competition that ran in the Chronicle. While the response to win holidays in Spain and Cyprus was huge, few readers entered the competition to go to Barbados. He believes that while many of his readers might have considered going to Spain on holiday, Barbados was out of their imaginative range – and just not relevant to them. Instead of offering another such promotion, he’s decided to do a post-Christmas ‘win your credit card bill’ competition – clearly relevant to the ordinary family!
The Liverpool Echo has dropped many of the traditional incentives, and is instead trying a six for four deal. This is aimed at young families – not a traditional readership – who often don't manage to read the newspaper every day in a full six day subscription. Ideally, Mike Packwood says, the paper would be able to deliver three and four day subscriptions, but at the moment, this is logistically impossible.
John Bunyan, too, believes newspapers need to start thinking about delivering three or four day subscriptions. Many customers drop off because they don't read the paper six days a week, and feel they are not getting value out of their subscription. He believes this accounts for 20 to 25% of home delivery customers who leave. Four day delivery is undeniably difficult – but if the Newcastle Chronicle is to raise retention rates, it may be vital.
The traditional method of payment has always been cash, collected by the delivery agent. Mike Packwood says, "We are now pretty much the only people who still knock on doors and collect money." Even in Liverpool, with historically a very cash based society, direct debit is beginning to make inroads – though he admits only four or five hundred out of 23,000 subscriptions are currently paying this way. But, he says, the Huddersfield Examiner has now got more than 50% of its customers on direct debit, and he is hoping to move the Echo this way. He’s currently planning incentives such as a price reduction for direct debit subscriptions made by phone.
Allister Shacklock already has 50% of his customers on direct debit – and says that the majority of new orders received are on this payment method. "The retention on payment by direct debit is much, much higher," he says. Payment is easier, and since it’s automatic, it is less in the front of the customer’s mind as it is with a cash order.
John Bunyan aims to move the Newcastle Chronicle further down this route too. He believes direct debits are increasing naturally as households get used to paying most of their bills this way - "so why don't we bite the bullet and go cashless?" That will help the retention rate – but it also helps operationally, since if there’s no cash involved, the paper can use children on its deliveries.
However, marketing communications, money off vouchers, and direct debit only go so far towards keeping home delivery customers happy. Operational issues are equally important.
John Bunyan says that accurate deliveries in the first few weeks are crucial – and that needs hard work on the part of the newspaper. Monitoring those deliveries is also important. That’s one reason the Newcastle Chronicle stopped using agents in favour of managing its own delivery network. "We didn't want to have yet another link in a rather complicated chain – and a very expensive one at that."
Mike Packwood points out that cash collection too needs to be tightly managed. If the paper doesn't collect for a couple of weeks, the debt has built up to an amount the customer may find difficult to pay out of ready cash. "Then we stop them because we didn't go and collect the money," he says. "That’s us damaging ourselves."
At the same time, he points out that when payments move to direct debit, the newspaper is asking customers for a higher level of trust – customers don't have the weekly cash hand-over as an opportunity to complain about the service. So it’s even more crucial that deliveries are correctly made, and deliveries monitored. The logistics are challenging, too – he points out that 23,000 home delivery customers for the Liverpool Echo is more than many regional papers’ whole circulation.
Allister Shacklock has set up a customer care team which works in the evenings to cover issues such as holiday cancellations. Traditionally, the Christmas, Easter and summer holidays see high customer churn rates, as households cancel delivery while they are on holiday and then don't rejoin afterwards. By managing this process more smartly, Shacklock hopes to retain a higher proportion of customers. But he admits that it is a major task.
He also ensures spot surveys are made to check on quality of service – including the timing of deliveries. Where readers have cancelled because of poor service, he believes they can often be won back – they are offered a new delivery person, and their deliveries are monitored for the first month to ensure they’re getting the right service.
Beware the quick fix
Some newspapers have used canvassing in the past tactically, to try to add circulation quickly to meet a year end target. But John Bunyan warns this has an impact on retention rates. Bringing in too much business for the delivery network to handle competently can backfire. "If you can't deliver it, you will make your existing customers, as well as your new ones, unhappy – and they’ll vote with their feet."
Although different newspapers are adopting different methods to increase retention, there seems to be a general feeling across the industry that traditional ways of managing home delivery are insufficient. That’s particularly the case with information about customers. Mike Packwood says most newspapers collect very little data about their home delivery customers – and that leads to waste. "We don't know who they are and why they went, and then we go knocking on their door again a year later. We need to do better than that."
Getting to know your customers
The Liverpool Echo is now investing time and money to find out who its home delivery customers are – from their age and income down to which football teams they support – and in particular, when customers end a subscription, why they’ve stopped. (And here’s another advantage of direct debit – the customer has to call the newspaper to stop the direct debit, rather than simply telling the delivery boy.)
Allister Shacklock says that he’s set up reader panels, which help the newspaper keep track of what its readers think. The panels ask readers to comment specifically on particular articles or adverts, rather than assessing general responses. "We know the people who respond are six day readers - they’re not dipping in and out," he says. Such panels are useful to a newspaper generally, but because they’re focused primarily on regular rather than casual readers, they’re even more useful for finding out how home delivery customers are likely to respond.
John Bunyan is doing things a slightly different way, with a telephone panel offering prizes of £1,000. He says running five of these a week can get 12-15,000 entries. "It’s expensive and time-consuming, but you need to put that resource in," he says. The newspaper industry has too often run on hunches rather than solid information. "It’s nice to have a hunch, but it’s better to know for sure!"
One thing that’s obvious is that while home delivery may have started at many papers as a tactical move, to replace newsagents withdrawing from home delivery services, it is now being managed strategically. Mike Packwood, for instance, is keen to target younger readers using home delivery; he says, "It’s the over 45s who are traditional Echo readers – and they just don't replace themselves."
Home delivery also needs to be tied in to the brand, advises John Bunyan. The offers and promotions for home delivery customers should reflect the title’s branding. "All your reader offers should be one and the same really with your editorial and brand image," he says. Good communication between the home delivery managers and the editorial side is needed to ensure that this works.
There’s no doubt that on many papers, the focus is now moving from canvassing to retention. In fact, to some extent, the desire for increased retention may make high levels of initial business unattractive. Allister Shacklock points out that one reason direct debit customers have higher loyalty is that it’s more difficult to sign them up in the first place. Canvassing will therefore produce fewer subscribers – but they will stay longer.
There’s a solid business case for focusing on retention, after all. Mike Packwood says, "If we’ve got to spend forty or fifty quid because we’re canvassing them twice a year, let’s invest that in keeping them instead." The emphasis is on long term communication with customers, and finding convincing value to deliver over their subscription period, rather than on initial offers and rewards.
John Bunyan believes that traditional voucher schemes are a net that catches a large number of "offer junkies" alongside higher quality customers. By not offering a voucher, and focusing on the long term rather than on short term offers, the Chronicle can get fewer but better customers joining. "We want to go for quality rather than quantity, and the result should be a higher retention rate," he explains.
In June 2019, we published The InPublishing Guide to Retention Strategies for Publishers, written by Julian Thorne.