Dealing With Churn p. 15

By: John Consoli Regaining lost newspaper subscribers is no longer
just a problem for the circulation department sp.

IF A 100,000-circulation newspaper can reduce its churn from 50% to 40%, it can save $300,000 annually, said Leon Levitt, vice president/circulation and marketing for the Newspaper Association of America (NAA).
Churn is that percentage of a newspaper's subscriber base which must be replaced on an annual basis to maintain the same level of home delivery.
Speaking at an early-morning workshop during this week's NAA convention in New Orleans, Levitt told publishers that "circulation today is more than a distribution department; it is also a marketing department."
The circulation department will never be a profit center at a newspaper, Levitt said, but it is an important part of a newspaper's overall strategic plan ? and that plan includes finding ways to better service the customer.
According to Levitt, the biggest reason why people stop reading newspapers is lack of time, and it is very hard for a circulation department to do something about that.
It is the responsibility of the editorial department to create a newspaper that people want to find time to read, and the marketing department must sell people on the availability of that product, he said.
Levitt noted the amount of churn rises with the size of the newspaper.
An NAA survey of newspapers representative of assorted circulation categories found that newspapers with circulation of under 25,000 had a 29.7% median churn rate. Newspapers in the 25,000-50,000 category had a median churn rate of 42.4%. The rate rose to 59.2% for newspapers in the 50,000-100,000 category, and to 70.6% for newspapers with a circulation of 100,000-200,000.
For newspapers in the 200,000- to 400,000-circulation category, median churn rate was 66.3%, and for newspapers with more than 400,000 circulation, the rate was 68%.
"In smaller markets, newspapers tend to be more indispensable to people," Levitt said, noting there are fewer competitive media in those markets.
Levitt told the publishers that an average newspaper must replace 60% of churn every year. He added that the average newspaper must spend $26 to sign up each new subscriber.
And there are different types of churn, Levitt noted ? namely, core churn and marginal churn. A core-churn subscriber is one who receives the newspaper for more than 12 months before he or she stops taking it; a marginal-churn person is one who has subscribed for less than six months prior to cancelling the paper.
Thirteen percent of all churn is core churn, while 200%, stressed Levitt, is marginal. Levitt said there are four keys to managing churn.
First, he said, the newspaper product must meet readers' needs. "Without this, there is really not much the circulation department can do to get subscribers," he said.
Newspapers also need to offer "spectacular" customer service, he added.
Thirdly, newspapers must practice smart consumer marketing. This, he said, means newspapers must find a way to sell value rather than price.
Newspapers are already priced so low, Levitt noted, that we "are one of the few industries that sells a product for less than it costs to produce it. We need to get the customer to buy, based on value, not price."
Finally, newspapers need to reduce the amount of discounts offered to lure back subscribers, he stated.
One of the most important steps in managing churn, Levitt said, is creating a "functional" circulation department.
"While subscriber patterns have changed, there has been little or no change in the circulation department structure" at most papers, he observed.
He said fresh thinkers must be brought in to attempt to meet the needs of potential new customers.
One newspaper defined or identified 21 levels or types of subscribers and then developed a plan to meet the needs of those in each segment, he pointed out.
One concept growing in popularity, Levitt told NAA attendees, is having new subscribers pay via bank drafts. This way, the subscriber does not have to bother resubscribing every few months, since the transaction takes place automatically. Levitt reported that Toronto Globe and Mail telemarketers are successfully utilizing this method.