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Renewals 101 – avoiding basic mistakes

October 11, 2011
Tommy Cooper Image

"just like that!" - when it works, there's a magic to effective renewals series for publishers

For owners of subscription-based products, e-news services, newsletters, magazines and even those of annual products (e.g. yearbooks or membership organisations), renewals is a key feature in their financial management. Yet it is surprising just how often the core communication of “renewing” is botched. This can result in significantly lower renewals from previously loyal subscribers and, of course, means that much more money has to be spent acquiring new customers at much greater expense.

First, here are some common problems I have encountered in my years in the publishing industry:

  1. A reluctance to communicate a renewal for fear that the subscriber may remember the publication and decide not to subscribe (alas, yes, I have encountered this on more than one occasion believe it or not…)
  2. Computer-generated renewal letters which only allow a certain number of text characters (e.g. 150) for marketers to communicate renewals
  3. Corporate cynicism (similar to the first item in this list) whereby the renewals letter(s) are seen merely as a function and not as a marketing exercise
  4. A failure to define in core documents exactly what is being renewed
  5. Staff ignorance and structural issues acting as a barrier to customer service
  6. Finally, and most ridiculous if it weren’t actually true, no renewals letter or invoice at all (and, again believe it or not, I have very recent experience of this from a high value publisher who shall remain nameless)

Let no one tell you otherwise, renewals is a marketing issue. It is consultative. It is about reassurance. It is about ensuring that revenue streams are predictable and manageable. Which is why companies which don’t practice a structured renewals programme will suffer.

Here’s a simple 101 for publishers and others who need to maximise the performance of their renewals activity for the sanity of their business. The points below are in no particular order:

  • Make renewing the easiest thing a customer can do.
  • Renewals income is the lifeblood for publishers with subscriptions or annual products – maximum profit for minimum sales and marketing expense.
  • Renewals channel should reflect customer’s delivery mechanism. For example, a paper renewals series would seem a singular extravagance for a product delivered entirely electronically. It would also be unlikely to work.
  • As with all marketing initiatives, nothing stands still. Be prepared to measure and test.
  • A renewals series of whatever length should not be deemed the sole renewal activity; it is proven that subsequent mailings to lapsed subscribers often leverage significantly high responses and ROI levels than mailings to pure prospects. Subscribers do not die when they lapse.
  • Always invest in renewals activity. To expect customers to renew “just because” is complacency of the worst order.
  • Always state what the price is, and what the customer gets for the money and for how long. If there are other options (e.g. subscribe for two years and save 20%); state those options also.
  • Always give the customer a chance to change their records if information is out of date. Accurate data has a revenue potential far beyond the fact of being accurate.
  • Know the costs of acquiring a new customer (cost per customer and ROI). Renewals activity should equate to a tenth of that or less.
  • Know what you can afford to spend on a renewal series (based on the above). It clearly is not acceptable for renewals to cost the same as new customer acquisition – especially if (as in the case of high value publications) acquisition ROI could be 100% or lower.
  • Renewals is marketing – renewals messaging must reflect the values promised when the customer first subscribed and the values delivered by the product in service. In other words, value promised is value delivered. Value delivered against a promise results in loyalty.
  • Renewals messaging must be written by skilled marketing professionals. The renewals message is not some stale editorial piece about how wonderful you are and nor is it an over-hyped sales message. It must carry inherent truth to be effective – truth based on product delivery. It is surprising how few sales or editorial people understand the concept of conveying value. It is equally surprising how few marketing people can write effectively. Tesco’s famous/notorious strapline “every little helps” is not an example of inherent truth. A skilled copywriter is essential.
  • If a computer system does not permit messages beyond certain character numbers, change it or write an accompanying renewals message. A weak message implies contempt for the customer – especially as the shorter the potential message, the more brutal it appears. Brutality is the enemy of persuasion.
  • Always ensure that anyone who can be contacted as a result of a renewals initiative is informed about the product, what it does, how much it costs, how to access the customer’s records. If a customer has a question and arrives at an unhelpful human being, all illusion is lost: a brand dies in a few unhelpful words.
  • In the case of some online automated renewals systems, some customers cancel when they receive a receipt for their payment. This is to be expected. To help keep costs down, an earlier announcement of the intention to renew should be sent to subscribers. Cancellation which occurs before financial processing is cheaper to manage.
  • Always anlayse renewal behaviour so you can amend renewal strategy accordingly. When during a renewal series do customer most renew? Will a phone call or email improve response at a set period? How many letters/emails should be in your renewals cycle? All these should be monitored on a consistent basis to maximise renewals series effectiveness, reduce costs and increase ROI and – of course – renewal rates.
  • Finally, a question I am often asked: should you incentivise renewals? My gut feeling on this is “no” – or rather, not without more information on what is happening to a given product. Any variation on pricing should be related to a customer making a conditional response. So, if the customer wants to renew for 2 years instead of 1, a saving can be offered. If renewal rates are underperforming against target, this is rarely to do with price – it will concern value. If a customer is not receiving value in excess of the price paid for that value, then reduced renewal rates are inevitable.

I hope this information is useful. A robust renewal strategy is by far one of the most significant marketing activities a publisher can undertake and yet, surprisingly, it is often the most neglected. I hope I have been able to show that by more efficient focus on the process, some of the key stresses of revenue peaks and troughs can be avoided.


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