The Frill Is Gone

Poor renewal mail. Long the ugly stepchild of magazine circulation, it now faces competition from alternative channels and ongoing reluctance by publishers to invest in creative or testing.

The groups most disheartened by recent trends in renewal mail may be lettershops and paper and pulp suppliers. They can only lose business to initiatives like automatic renewal and e-mail. They are also hurt by toned-down efforts like the “professional courtesy” package (used mostly in prospecting, but also being tested in renewals), which relies on a minimalist approach to copy and design.

This is happening at a time when several new business channels are suffering. On the newsstand side, consolidation among wholesalers has led to fewer magazines getting precious display space. And publishers have seen the effectiveness of sweepstakes plummet. One magazine with a circulation of 500,000 saw the number of subscriptions generated from a sweeps agent drop from 77,000 in 1998 to 1,800 in 1999.

“Many publications have hit their new sales peak – they’ve mailed every list, and newsstand [sales] and [Publishers Clearing House] are going to hell,” says Sandy Clarke, a Darien, CT-based circulation consultant.

Some publishers have responded by generating non-sweeps prospecting packages with designs that evoke sweepstakes mailings, according to Clarke. Perhaps this energy should be put into renewals.

“Magazine marketers spend disproportionate time on new sales,” Clarke believes.

This situation exists even though 70% of the consumer magazine industry sustains a $15 loss on every new order, notes circulation analyst Dan Capell’s CircTrack 2000, an annual roundup of circulation trends. Capell does not track exact figures for renewal mailings, although he asserts that “renewals are all profit.”

CircTrack 2000 reports that just over 44% of consumer magazine subscribers renew after their initial term. This figure jumps to almost 66% after the second renewal letter.

Consumer magazine renewal series feature a total of 7.9 mailings per cycle, according to CircTrack data. Nearly a third of the publishers surveyed added mailings in the past year, compared with 8% that said they discontinued at least one.

Rather than look at the number of mail campaigns, magazines might do well to examine the effectiveness of the ones they’re using. But this would buck an attitude among publishers that magazines don’t need to test their renewal series or expend much effort on them at all.

Clarke says response rates should decline by 40% between the first and second mailings, and another 40% between the second and third tries. Any drop-off greater than that, he feels, indicates a weak attempt.

Part of the problem is that circulation managers tend to view their renewal efforts as a fully integrated series. Instead, they should isolate a weak link within the series, strengthen it through testing, then move on to the next weak link, according to veteran copywriter Henry Cowen of the Cowen Group, Laurel Hollow, NY.

That’s if they test renewal mailings at all. “Most effort within a circulation department is given toward new business,” says Cowen. “They get a renewal series and they use it forever.”

Most consultants agree that early efforts in a renewal series – especially those well in advance of a subscription’s expiration – should highlight long-term subscriptions. Reversing the order of terms offered, so a three-year offer is highlighted on the response card, is a structure Clarke feels is vastly underused.

“I look at – and am amazed at – how low some of the average terms are,” says Clarke.

He is not alone in his criticism of response card design and other elements in the average mailing piece.

“Direct mail today is of very poor quality,” says Cowen. “Pieces are controlled by accountants.”

Cowen feels this is due to myopia on the part of publishers, who don’t realize the need to resell the magazine to subscribers. As a result, few publishers invest in varying messages to their existing readers.

“Number six envelope, reply card, simple letter or no letter, six mailings, pre- and post-expire, all the same,” he says. “After awhile it is deja vu.”

Even worse, the reply forms are not created to sell magazines, but are designed to facilitate order entry for the fulfillment house. “Order forms that sell look important,” says Cowen, who advocates making them look like certificates.

Unfortunately, publishers get hung up on the cost per thousand efforts mailed rather than the cost for every order generated, consultants say.

Not that direct mail is the only medium that can be used – although it’s expensive, telemarketing can be more effective than the fifth, sixth and seventh mailings in a renewal series. And CircTrack 2000 indicates that 80% of all publishers use the telephone in their renewal campaigns.

Furthermore, telereps can be trained to offer longer terms if they get a very enthusiastic “yes” from their target. Conversely, a rep can start out offering a long-term deal and switch to less expensive offers based on the subscriber’s reaction, effectively mirroring the tactic Clarke advocates of offering longer-term deals early in the renewal series.

As more publishers use the telephone earlier in their renewal cycles, subsequent mailings go out in lower quantities. Publishers are also starting to investigate e-mail as a renewal tool. Lettershops and fulfillment houses that want to continue playing in the circulation arena will need to take actions that reflect this trend.

“Pull in your belts or make an investment in Internet distribution companies,” advises Clarke. “The message should be: `We want to help you get your stuff out.'”

If renewal mail quantities are to increase, lettershops and paper distributors may have to take the lead in pushing design tests and other efforts, such as enhanced gift renewal mailings. Gifts, says Clarke, should make up between 5% and 15% of a total circulation file. At best, their renewal rates are comparable with auto-renewal – and every solicitation carries at least one subscription, and potentially as many as three.

Auto-renewal itself may present the biggest challenge to renewal mail. Regarding paper, “Auto-renewal will abolish the renewal series the way you know it,” says David Rosen, Boardroom Inc.’s marketing manager for customer development.

Auto-renewal includes both auto-billing, in which subscribers agree to continuous service charged to their credit cards, and systems under which subscribers are alerted that their subscriptions are about to be automatically renewed and are then sent bills.

Auto-renew programs take time to realize results, but when they do they can be staggering. Clarke estimates that three years into an auto-renew test, the difference in renewal subscription rates over paper efforts can be as high as 25%. At 7.9 efforts per renewal series, notes CircTrack 2000, that’s a lot of efforts not being mailed.