FEATURE 

When does local not have to be local?

The time to stop and think is too often treated as a luxury, especially in busy circulation departments. Yet, every now and then, it is essential to pause and look afresh at the way you do things. Northcliffe asked Deloitte to assist them in a review of circulation operations in their North East region. Ian Jenkinson looks at what was achieved.

By Ian Jenkinson

Following the creation of Northcliffe’s North East region early in 2006, I was asked to lead a team of local circulation directors, who would work alongside a team of consultants from Deloitte, to review the effectiveness of our circulation functions across four evening newspapers, Hull Daily Mail, Grimsby Telegraph, Scunthorpe Telegraph and the Lincolnshire Echo.

It had been a while since we had taken a holistic view of how we ran circulation and we felt that we needed to question why and how we did what we did. The process gave us this opportunity, and allowed us to raise questions and ideas that previously may have been overlooked as we dealt with the everyday.

The review would challenge our effectiveness against the requirements of today’s market place, and look at the feasibility of using the critical mass of the region to centralise and specialise operations where appropriate, whilst maintaining local services.

We would look to position a more effective resource against those customers where we could maximise profitable circulation, and ensure there was no negative impact on the services we were able to offer our customers.

This critical mass allowed functions to be brought together to service the whole region. This would not only reduce the overall resource level across the area, but free up time for other staff to be able to focus more on their core roles.

Our aim was to move to full implementation for the start of October 2006, which we achieved.

First steps

Initially, we had three circulation directors heading up the four titles (with Grimsby and Scunthorpe already being managed from one centre). We knew that, for a clear direction and swift decision-making, we needed to create a new position of regional circulation director, supported by three new circulation managers. With the consultants from Deloitte, this was to be our review and implementation team.

Segmenting the customer base

In looking at circulation operational effectiveness, we would also segment the retail customer base into levels of sales volatility. This would allow us to focus on those retailers where we could make the biggest difference to sale. By measuring volatility of sale by outlet, by day, we would ensure our circulation representatives’ time was concentrated on retailers where there was an opportunity for extra sale rather than those where circulation remained stable.

Also, after a review some months earlier, we had questioned the value of field merchandisers. We felt that we could merge the two roles without affecting our customers, and also make cost savings.

Segmenting retailers in a different way also identified that 58% of the outlets supplied, sold fewer than 500 copies over the week. This represented only 13% of total circulation volumes, but with a disproportionate 23% of the retail waste figure. It was clear we were not supply managing effectively, so that was the next area of investigation.

Supply Management

We surmised that a targeted approach to supply management, handled by a single team based at the Hull Daily Mail and managing supplies for the whole region, would achieve reductions to waste levels and would realise significant cost savings over a full year.

Previously, we had been too reliant on box out copies to ensure availability across the retail estate. These were largely ineffective, and served only to increase waste and therefore cost.

In moving forward, we changed the way box outs were handled, firstly by withdrawing them as a supply ‘top up’ measure, and then by putting into place a revised matrix to determine copy placement by outlet type and by area. It would also be based on the outlets’ sales volatility, and therefore, on the casual only element of sale.

Canvassing

This was not just about understanding whether we could bring the four canvassing teams together, but also, what was the cost and benefit of canvassing against the revenues brought in through the extra copies sold. Stopping canvassing would generate significant savings, but at a cost.

The outcome was that we saw the activity as being crucial to our business, and to maintaining relationships with customers. Canvassing remains the most direct form of selling available to us, and encourages readers up the loyalty ladder. Without it, we would see an escalation of the erosion of our home delivery customer base.

Having decided to continue, we created two new teams out of the previous four (one at each centre). East Yorkshire (Hull) was allocated its own team, due to the size of the newspaper and wider geographical coverage, whilst the titles in Grimsby, Scunthorpe and Lincoln would get one team, based in Lincoln.

We’ve also modified our approach to identifying the areas which are more likely to commit to home delivery and, more importantly, where we will retain the order. These areas were identified by reviewing our existing customer base, together with the retention performance from each post code sector going back over a year. There were clear black spots (plenty of orders, but poor retention), and these are now excluded from the canvass plan. Whilst this will reduce the number of orders obtained over a year, the higher retention anticipated will mean that we expect no adverse effect on the home delivered sale.

Customer Service

With each centre having a high proportion of direct home delivery, we felt that we needed to improve our ongoing relationships with customers. There were a number of people in each centre with whom a customer may come into contact on a daily basis, but they also had a wide variety of responsibilities, so we felt there was not the desired level of focus.

In improving our service to customers, we would provide a single customer services call centre, which all customers from across the region could use as a ‘one stop shop’ for their home delivery enquiries. This would ensure consistency in how we responded to them and would ensure that we could train and improve on the necessary skills within the team.

The outcome is that customers are now contacted more regularly, including first night calls for new orders (which actually do happen on the first night), and customer complaints are now followed up the following day and the following week. Our relationship with customers will be further enhanced by anniversary calls being made to those who have completed a full year of home delivery.

This approach provides a better service all around, offered by a smaller team, but with more focus, responsibility and accountability.

Free Distribution

Our review of the region was not solely to look for increased efficiency supporting the paid-for titles, as we also saw an opportunity to improve our free newspaper distribution operation. This would maintain our high auditing standards, but also improve and centralise our processes for recruiting, retaining, and managing agents.

In addition, leaflets were previously being delivered and counted in three separate locations across the region, with resource being required at each centre. However, following the closure of the Hull press, space became available which allowed us to bring together all the region’s operations under one roof.

The ‘North East Region Leaflet Distribution Centre’ is now based in Hull, and came into full operation in November 2006, handling more than four million leaflets in its first week.

Promotions

Each centre had a promotions function, working towards a similar promotions agenda.

Promotions are generally synchronised with key sales periods throughout the year, with other ‘fill in’ promotions aimed at ensuring added value to readers on an ongoing basis, and to encourage repeat purchase from irregular readers.

However, we felt that traditional promotions are, unless very substantial, less reliable for drawing and retaining new readers.

In future, we would need to embrace online opportunities, develop our reader databases and undertake more targeted internal and external promotions aimed at readers’ lives and lifestyles. At this point, we decided that the promotions function would leave its traditional home with the circulation department, and move into a marketing department based in Hull.

This would provide working practice efficiencies, and new opportunities which would benefit both teams as a result of its increased size.

A new team was also created in Lincolnshire, with one of the outgoing circulation directors taking on a new role of promotions and marketing director for Lincolnshire. This team now co-ordinates promotions across the region.

Summary

We felt we no longer needed heavily staffed departments to serve our internal and external customers, but that smaller more efficient teams, making better use of existing technology and telephony, would produce even better results.

The customer has proved to be the winner, and the leaner circulation function in the North East is even more focused on obtaining and retaining customers, and continuing to provide the market for advertisers.

We had a number of newsagents in the region ring us up to comment on the improvements. One agent in Lincoln said, "We were never contacted as often as this before. This saves me the hassle of having to ring through to the office, thanks a lot."

And do we think this project was a success? Well, to date, we run with smaller more effective teams resulting in staffing cost savings, without any negative impact on customers. Waste levels at each centre have been reduced, availability has been sustained at the budgeted level, and the sales trends have improved. So yes!