SmartBargains employs array of retention efforts
I'm not a smart guy, but I know a lot of smart people. So when I write these articles for DM News, my research often consists of e-mailing some folks in my address book who have knowledge about the topic worth sharing - and asking them for a contribution. This week, I'm sharing renewal strategies and tactics. I began by asking Doug Hill, marketing director at KCI, a publisher of financial newsletters, to tell me about his best renewal mailing.
"It's a renewal we call, 'Oops, we goofed,'" Mr. Hill said. "Back when I was personal finance product manager, we were increasing the price. But before we did so, we were allowing subscribers to renew at the current pricing.
"In one of the efforts - there were two efforts initially, but it worked so well we extended it to six - I said, 'This offer is good until February 30.' Yeah, I know. It was a real oversight. But we got lots of mail about it. So I rolled out another effort with the 'Oops' headline. It killed," he said.
Years ago, I wrote a blanket renewal, sometimes called an advance renewal, for an investment newsletter. The newsletter was switching from eight to 12 pages, but the publisher was not raising the price. I focused on that in my headline, which read something like: "We are increasing from 8 to 12 pages, which means our printing costs will go up 50 percent ... but we won't charge you even one dime more!" I don't have the numbers anymore, but the publisher told me it was an extremely successful mailing.
I shy away from merchandise premiums for renewals. But some publishers report good results with them. Bill Dugan, general manager of Pohly & Company, told me, "One of the best renewal promotions I've ever done was a blanket renewal offer offering an executive pen and letter opener set - very profitable and easy to implement."
Sometimes a lift in renewal rates can come not from a bribe or discount, but from the messaging. Copywriter Herschell Gordon Lewis said, "My most successful strategy is ridiculing the idea that the subscriber won't renew, coupled with a timely, specific reminder of what outsiders will miss."
Another way to lift response to a renewal series is to use more than one medium.
"When sending out your renewal letters, use more than one avenue to reach your subscribers," said Craig Simpson of Simpson Direct. "Send an e-mail, postcard and, if you really want to bump your renewal rates, give the subscriber a call."
According to Mr. Simpson, an auto-billing system is the most effective way to generate renewals. This means that when you initially sell the subscription, you let the subscriber know that they'll automatically be renewed. For example: "The cost for a quarterly subscription is $X per quarter and will be conveniently billed to your credit card each quarter. You may cancel at any time for a prorated refund." This type of auto-billing offer generates an 80 percent to 93 percent renewal rate, he said.
For advance renewals, place the renewal effort within the issue envelope, consultant Jeff Greenberg said.
"Advance renewals more than double your regular renewal efforts," he said. "It also brings in tomorrow's cash today and dramatically increases renewal rates. Don't worry about having renewal expires out a few years; these subscribers are more likely to renew again before anyone else."
Circulation consultant Paul Goldberg said that another key for renewals is not to make the offer more generous as the renewal series proceeds.
"Always give your renewal prospects the best offer on your first effort," he said. "For example, offer two extra issues or a premium for renewing on the first effort.
"If you have e-mail addresses, an e-mail blast before the first effort is usually very effective," Mr. Goldberg said. "If you are using telephone, I find it more effective in the middle of the renewal series rather than at the end, where most publishers use it at a reduced rate."
Also, be careful about stepping up rates too quickly from introductory prices on conversions, he said. A two- or three-step route to full price is more desirable.
Copywriter Mike Pavlish agreed that the offer should never be more generous in the later renewals. His letters typically state, "This is the lowest price you will ever be offered - guaranteed - so make it easy and respond now while it's in front of you!"
"If you don't push this, many people will wait, thinking they will be offered a lower price later," he said.
Later efforts should even become less desirable i.e., discounts are lessened and some bonuses are removed.
"I like to make several efforts a 'last chance' to get something," said Marlene Jensen, CEO of Pricing Strategy Associates. "For example, 'Last chance to get this bonus,' 'Your subscription expires next issue' or 'Last chance at this low rate.'
"I find raising the price - actually, it's reducing the discount - works great to pull in laggards, especially those that hold onto the notice just to see if I really do raise it, then quickly send it in when they see the higher price," she said. "And I still get a number of subscribers later, with the higher price apparently no problem."