Getting more from your subscription renewals

The surest route to increase circulation profitability is to improve your conversion and renewal rates. Many publishers believe that there is very little that can be done to affect renewal response, since they assume that readers renew based on editorial or some other factor unrelated to circulation strategy. There is some truth to this argument--especially in the sense that breakthrough results, such as a 20 or 30 percent lift in response that we sometimes see with a successful direct mail package, are unlikely in renewal promotion. Renewals is a game of inches in which a 3 or 4 percentage point gain in conversion response will have dramatic positive effects on the long-term profitability of any source. So it's always in a magazine's best interest to keep fine-tuning the creative, the offer, the timing and so forth to maximize renewal response.

Among the important factors affecting renewal response are three often overlooked tactics that represent fairly low-cost ways to get more impact from your renewal series: (1) mailing enough notices, (2) mailing early enough, and (3) mailing often enough. Here are ways to analyze and take action on these potential methods to increase renewal response.

How many efforts should I mail?

Efforts analysis, in which we calculate the revenue, expense and profit of each renewal notice in the series, is a valuable tool for determining the optimal number of efforts to mail. In renewal promotion, the basic idea is to continue to add marginal efforts until the net profit per sub produced by the last effort in the series is equal to the net per sub from your least profitable source (usually your lowest response direct mail list).

Let's look at an example: Soft-offer direct mail for our hypothetical Magazine X (see table on page 184) receives an average 3.0 percent gross response and 30 percent pay-up from its low-response lists, and a 2.5 percent response, on average, from the sixth effort of its renewal series. Should the publisher add (or reduce) a renewal effort?

These computations derive from straightforward efforts analysis and show that, whereas the publisher loses $33 per net subscription from marginal direct mail, he profits $3 per net subscription form his sixth effort in the renewal series. The $36 spread between these two figures is a rough approximation of the profit leverage the publisher has if he increases the number of renewal efforts and decreases his direct mail to those marginal lists. A seventh renewal effort, for example, is more than likely to produce a net per sub at either a slight profit or a marginal loss--still far better than the minus $33 from direct mail. In fact, this analysis suggests that the publisher should test a seventh and even an eighth renewal effort.

When should I start mailing?

Depending on the source, sometimes innediately. This is especially true with business from direct mail agents because you want the subscriber to renew with your offer before he has the opportunity to renew through the agent.

Most publishers wait too long. Four months prior to expire is the absolute latest, and many of our clients begin six months or seven months prior to the expiration of a subscription. The logic behind an early start is that reader response declines dramatically after expire. Those of you who track response by effort can verify this from your own data. One reason is that your strongest selling point--renew now to avoid expiration--is no longer available once a subscriber expires.

Yes, some readers will complain about receiving notices so early. Human nature being what it is, however, I know of no publisher who has been successful with a single-notice system mailed out one month prior to expire. Readers need to be reminded to renew--again and again. And you will maximize renewal response by getting as many notices as possible into readers' hands prior to expire.

Keep in mind that renewal promotion does not always mean a conventional effort with order form, BRE and so forth. Everything a publisher does to promote reader satisfaction and loyalty, from customer service procedures to a free gift sent to the reader before the start of renewal promotion (often called a cultivation effort), is part of the renewal process.

How frequently should I mail?

Greater frequency equals higher response. It conveys a sense of urgency. Even publishers who start mailing six months prior to expire but wait two months between efforts to process returns are cheating themselves out of response.

Start early and maintain a tight 30-day (or four-week) interval between efforts. One successful exception I sometimes see is to increase the interval only between the first and second efforts. Since most responses come from your first effort, there may be some savings from this approach because it avoids duplicate mailings. But remember, it's worth it only if it does not depress overall response.

Should you mail another effort?

                                Direct mail       Renewal:
                             (low-response list)  6th effort
Annual mail volume (000)             40              30
Gross response                      3.00%           2.50%
Cash with order                     0.00%         25.00%
Credit pay-up                      30.00%         70.00%
Net response                        0.90%          1.94%
Sub revenue per order             $18.00         $21.00
Promotion cost per M             $390.00        $310.00
Reply cost/gross order             $0.40          $0.40
Billing cost/credit order          $1.00          $1.00
Bad debt cost/bad pay order        $1.00          $1.00

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