Direct Dial

Folio: The Magazine for Magazine Management, Nov 1, 1998 by Ellen Cavalli

Through it's not without risk using telemarketing earlier in the renewal cycle can pay big dividends.

FOR DECADES, circulators have been using telemarketing to convert those readers who ignore direct mail, pass up premiums and seem perfectly willing to let their subscriptions lapse. It's a tried-and-true formula that generally yields at least some favorable response from a stubborn target group. (Eighty percent of respondents to a survey by "Capell's Circulation Report" confirmed using telemarketing for renewals.)

Lately, however, a number of publications--large and small--have begun to view telemarketing not so much as a last-ditch effort, but as a fundamental part of their resubscription efforts. There's good reason for this. Anecdotal evidence suggests that direct mail is yielding less of late, and circulation experts speculate that consumers are saturated with too many offers. The magazine industry "sends out so much direct mail that we create unresponsive consumers--in that they wait to get another notice," says Brian Beaudry, circulation director at Wenner Media in New York City. "We've created an immune consumer, so we need to look at other ways of reaching them."

Indeed, Prevention circulation director Jim Woods believes direct mail has conditioned some readers to ignore even the most urgent offers. "The alert you put on your direct mail pieces really doesn't mean that this is the last issue," he explains." Consumers know that you're going to keep sending them mail to get them to renew, and if they don't, that they'll get a phone call."

All this is leading a number of magazines--large and small--to rely more heavily on telemarketing in renewal efforts. The 700,000 paid-circulation Yankee, for instance, uses outbound telemarketers to contact readers a full four months before their subscriptions expire. Targeted are those subscribers who previously said yes to what circulation vice president Jim Timko calls "lower converting sources," such as inbound telemarketing and broadcast advertising. "We get a substantially higher response from these calls than with the preceding or following direct mail efforts," says Timko. "I can't say exactly how much higher, but definitely more than a few percentage points."

Getting aggressive

With 665,000 of Yankee's 700,000 circulation deriving from subscriptions, maintaining its subscriber base is essential for the Dublin, New Hampshire-based monthly, which has been relying on telemarketing for the past 15 years. It's hardly surprising, then, that Timko aggressively pursues any renewal methods. Yankee's typical drive begins with direct mail to about 40,000 names six months prior to expiration. Timko says this effort generally yields a "high response." During the next two to four months, Yankee sends out another direct mail piece, usually with lesser results.

Two months prior to expiration, telemarketers then call the remaining names--those who first subscribed through direct mail, and whoever hasn't renewed following the first phone call and subsequent direct mailing. This round is generally more successful than direct mail.

The last effort before expiration is, unconventionally, direct mail, but the two post-expiration efforts are by phone. "Again, telemarketing has substantially better responses than direct mail, even at this stage," says Timko. Though telemarketing costs more per order than direct mail, "it's less expensive than direct mail when you figure in renewal rates," says Timko. "Direct marketing brings in lower renewals, while telemarketing has higher renewals that justify the added costs" of the commission-based telemarketing price structure.

Timko adds that phone-sold renewals average 2.5 years, compared to the 15-month duration of direct-mail-solicited renewals.

On the Money

"Telemarketing is the wild-card in renewals," says Phil Whitney, vice president, consumer marketing, for Money, Time Inc.'s 1.9 million-circulation personal-finance title. He should know. Whitney has experimented with telemarketing at various stages in the renewal series, and is now convinced that it can be an effective tool early in the renewal effort.

Money is subscription dependent, with 1.7 million current subscribers. Of the 1.4 million readers contacted to renew each year, direct mail and coverwraps are the biggest sellers, with telemarketing accounting for about 5 percent of total renewals. But Whitney is quick to point out that numbers can be deceptive. "The big thing with telemarketing is not how many responses you get, but how much the revenue is. Telemarketing has its own economy.

Typically, Money begins its renewals series six months before expiration with two direct mail pieces; both of these offer free issues as a premium. Whitney says the combined response rates for these first two drops is between 10 and 25 percent.

It is in the third month prior to expiration that Time Inc.'s in-house telemarketing department steps in. Staff contact those customers--roughly 200,000, says Whitney--who initially subscribed to the magazine from either inbound or outbound telemarketing offers. All others continue receiving direct mail pieces. Whitney says the response rate from both efforts is about the same, between 2 and 3 percent. However, telephone renewals tend to be of longer duration--two to three years--than the one-year subscriptions typically netted by direct mail.