When AT&T and Cingular merged in late 2004, the biggest problem the two wireless telecom giants faced was finding a way to prevent tens of millions of legacy customers from fleeing.
Former Cingular marketing executive Stephen Boulton-Wallace, now AT&T’s VP of customer lifecycle management, says both companies feared typical direct marketing efforts would prove inadequate, given the competitive landscape. Instead, executives at the new AT&T Mobility, the company’s wireless subsidiary, used an entirely different approach.
“Our very first custom magazine was dropped at the time of the merger,” Boulton-Wallace says. “The purpose then was to reassure customers that the merger was a good thing and to lay out the new services.”
Custom publishing’s popularity has increased dramatically in recent years, growing in just five years from a niche magazine business to a varied and mighty $55 billion industry today, according to Lori Rosen, executive director of the Custom Publishing Council (CPC). Although custom publishing is still evolving as a channel, it is rapidly becoming a favored tool for building and maintaining lasting customer relationships.
“It’s no longer sustainable to acquire customers at a pace faster than you lose them,” says Chris Schraft, president of Time Inc. Content Solutions, who leads the team working with Boulton-Wallace on AT&T Mobility’s custom publications.
Custom pubs play a crucial part
The first publication Time Inc. created for AT&T Mobility was distributed to 21 million households the day the merger was announced. Featuring descriptions of newly launched products and services, the piece — with different versions for each company — was designed to reassure customers that the merger would result in improved service and value.
When the numbers came in, AT&T Mobility was delighted. From the fourth quarter 2004 to the second quarter of 2005, total customer churn fell from 2.4% to 2.2% and customer attitudes about key brand attributes improved dramatically.
AT&T Mobility’s first foray into custom publishing was so successful that it’s become a crucial part of its marketing mix. But Boulton-Wallace says his use of the magazine has changed from a “big batch drop” to a more personalized, relevant way.
“We used to only target customers at the end of the lifecycle with traditional DM, to try to get them to renew,” he says. “[But] it wasn’t recognizing their value with us as a customer. The campaign triggered them to shop instead of renew.”
Today, AT&T Mobility combines customer lifecycle management techniques with the use of custom publishing as a direct marketing channel. Custom magazines, with different versions according to customer needs and segment, are distributed at times that coincide with periods of sensitivity within the lifecycle continuum.
The editorial content is lifestyle-centric and each magazine delivers AT&T brand messages via stories of interest. “We ran a cover story about our sponsorship of the US Olympics team, and we did an educational piece for parents about texting with teenagers,” recalls Boulton-Wallace.
To help support revenue growth, some magazines carry blow-in cards or wraps featuring relevant offers. These and other types of content are specifically designed to reduce churn risk and are chosen according to the nature of the products and services each customer already uses.
Lest anyone erroneously believe custom publishing is mere fluff, understand that the payoff is huge: Boulton-Wallace reports generating $6-$8 per customer against an average 67-cent investment. For the man responsible for AT&T’s customer retention, there is but one ultimate measure of success or failure. “When I took this on, our churn was 1.8%. It was 1.2% in fourth quarter last year — a record for the company,” he says.
Custom publishing is redefined
AT&T’s success illustrates why custom publishing is hot. “Markets are realizing more and more that [with custom publishing] they can control the message, and tailor it exactly to their audience,” says the CPC’s Rosen. “[But] they have to be high-quality, or they’ll lose their audience.”
Time Inc.’s Schraft, who has led Time Inc. Content Solutions to annual double digit growth over the past five years, says the biggest news in custom publishing may be its redefinition.
“We’re expanding the definition of what custom publishing looks and feels like,” he says. “Today, we’re offering multi-platform content – from custom magazines and welcome kits to magalogs, interactive Web sites, organic search campaigns and video.” Much of the growth, he explains, has come from blending traditional custom publishing with direct marketing tactics, “where you’re realizing all of the engagement value of content, with the ROI-driving tactics of traditional direct marketing.”
The most critical piece of custom publishing, he says, is relevancy. “Start by understanding the target customer in-depth,” he suggests.
Diana Pohly, president of The Pohly Company, whose custom publishing clients have included Whole Foods, Verizon, Coca-Cola and Continental Airlines, says the Internet has played a significant role in changing the fundamentals of building relationships with customers. “Content has value in people’s lives, and they’re open to receiving content from a wide variety of sources,” she says.
But she and other experts caution against viewing custom publishing as a short-term tactic. “Companies need to be clear on objectives and committed to consistent dialogue,” she explains. “Don’t jump in and jump out. It’s not what customer engagement is about,” Pohly says.
For AT&T Mobility and other companies who have discovered custom publishing, the ongoing dialogue the channel provides has strengthened relationships and kept customers from jumping to competitors.
“My belief, and much independent research support this, is that the emotional relationship — not the transactional one — is what creates customer loyalty and drives customer lifetime value,” says Boulton-Wallace.