Decreasing your direct-mail costs: tips to increase circulation profitability - magazine subscriptions

Folio: The Magazine for Magazine Management, Annual, 1994 by Lynn Carlson

Ad sales are off, postage is up -- and suddenly circulation is "in." With circulation profitability becoming increasingly important to many publishers, now is the time to make your direct mail more cost-efficient, and to maximize other circulation sources. Some suggestions:

Test less expensive versions of your direct-mail package. If you want to lower direct-mail printing and production costs, consider testing a double postcard against your regular package. This can be especially effective if you are using a free-issue offer, since the magazine sells itself -- meaning you don't need much editorial sell-copy on the postcard. For the same reason, a double postcard works well if your magazine is well known or if the people on your mailing lists already have a good idea of what your magazine is about.

Another way to decrease the cost of your direct-mail package is to use your order form as the reply vehicle. By bulking up the stock (it must be at least 7 points thickness, such as 75# hi-bulk, to meet postal regulations) and printing the business reply card information on the reverse side, you'll save two ways: You'll avoid the cost of printing a return envelope, and you'll save 10 cents in business reply postage on every response.

Get creative with the premium. Another idea to help make direct mail more cost effective and to encourage pay-up is to offer a premium in your billing efforts. This might encourage samplers -- who had been ready to use their option to cancel -- to subscribe after all.

Decrease renewal price to increase response. A radical step to lower your dependence on direct mail is to decrease your renewal price -- which should increase response. It might be difficult to convince your publisher that this is a good idea, since most have a preconceived idea of the dollar amount a subscriber should pay for the magazine. But the truth is that although you might lose some revenue with lower pricing, the direct-mail savings can be substantial and more than offset any lost revenue. And if you set your renewal pricing just "right," you may even boost renewals so high that you make more money than before.

How do you determine what renewal pricing might be more enticing? Take a look at where you are currently renewing your subscribers. Asking for a big increase from the original order (for example, bringing subscribers on for 12 months at $9.97 and then renewing them at 12 for $15), is not a good idea. Consider renewing them at the same rate/term as their original order, and then asking them for a few dollars more in subsequent years. This is particularly important for agent-sold orders, since you want to convert them with your renewal rather than sending them back to the stamp sheet companies for better pricing.

Extend the term. Testing a longer term (18 to 24 issues) will enable you to eliminate some mail campaigns or grow your rate base at a comparable direct-mail expense every fiscal year. This idea also allows lists to "rest" between mailings so that fall-off from list fatigue decreases.

Another way to work with the term is to offer multiple-year subscriptions on all renewal efforts and insert cards. A particularly attractive offer is three years for two times your one-year basic price. You can then promote this offer to your subscribers as "like getting an additional year free."

Add one or more renewal efforts. When analyzing the profitability of this technique, look at the additional gross response, pay-up, expense and revenue from the added effort only, not across the entire series. Although you may lose money on these additional renewals, they will probably still cost less than a direct-mail order. And if you need them to maintain your rate base, you might as well get them as inexpensively as you possibly can.

Put an additional insert card in the magazine. Use the same kind of formula as above to determine your incremental response, expense and revenue. Depending on the card stock and size of the additional insert, you may need to factor in additional second-class postage, since the additional card will make your magazine heavier.

Include step-up offers (term extensions) on billing efforts to increase a subscriber's term up front. But make sure these offers are enticing -- not simply a longer term at the original dollar-per-copy offer. For example, if the original offer was 12 issues for $12 (or $1 per copy), the step-up offer might be 18 issues for $16 (89 cents per copy). Although this will reduce your earned income on subscriptions, it will improve up-front cashflow and save money as well, since you won't need to promote these subscriptions for renewal for an additional six months.

Test a wrap with subscription cards on newsstand copies. But be careful: Newsstand wraps work when they add to insert response, not when they steal response from blow-in or bind-in cards. Also watch to make sure the wraps don't depress newsstand sales.

Lynn Carlson is vice president, circulation director, Harper's Magazine.