About five years ago, on a weekend, Derek May — then publisher of the St. Augustine Record in Florida,United States — was doing what many publishers were doing at the time: trying to figure out the steep decline in advertising revenue he was seeing in his unit's financials.
His question: What was the main cause of the decline? The recession was the driver, of course, but was it mainly hitting certain categories of advertising? Certain types of advertisers? Big advertisers? Small advertisers?
Thanks to his background in accounting systems, he was able to plunge into the Morris Publishing Group’s business data warehouse to sort it out. After a while, he realised none of the standard reports answered a key question: How many businesses were advertising in the most recent period compared to the previous period? So he pulled out the data and built a spreadsheet.
It hit him between the eyes: The total number of advertisers was down steeply. And as he compared periods further and further back, he found it had been going down for a long time. The loss of accounts was a big deal.
Wondering if this was just a fluke in St. Augustine — hit especially hard by the recession, like all of Florida — he dug into other Morris markets in Georgia, Texas, and elsewhere in the United States. He found the same pattern in every market.
He was on to something big.
So big that I think it’s accurate to call it the biggest single disruption hitting newspaper companies. Market by market – in the United States, at least – the list of active advertising customers has been shrinking for many years.
The recession didn’t cause the decline; it only accelerated it. Advertisers have been quietly opting out of pricey newspaper solutions for a long time, substituting other ways of reaching potential customers. Digital alternatives have given them many more choices in recent years.
The bottom line: Our industry’s customer base is shrinking, and we have to figure out how to reverse it.
Five years later, Derek is head of the company, Morris Publishing Group. And he’s made reversing the loss of accounts a top priority across the company for more than a year. There’s much still to do, but thanks to his passionate commitment, we’re showing encouraging signs of improvement.
I blogged about this initiative last year, here and here, as we developed our plans to mobilise for account growth. Now we have some good results to share, and some learning about what seems to be working. The chart below shows our progress:
In blue, the chart shows the pattern of reduction in the loss of accounts across the 11 Morris daily newspaper business units. Several of our business units have actually gone positive. The red line shows – not surprisingly – that the trend in revenue runs in close parallel, and that it went positive for March and April.
It’s hard to say exactly how much of this improvement is due to the economy and how much is due to our internal focus on growing the customer base. But we believe the steps we’ve taken, and continue to take, are a major cause of the trend.
Reversing the decline in active accounts requires two things: Retaining more existing accounts and winning more new accounts. We’re advancing on both goals with many specific initiatives — more than I can recount here. But they fall into three major categories:
1. Measure what matters, and share the metrics.
Possibly our most powerful change so far has been in the metrics. We set about separating the revenue and accounts we couldn’t control from those we could control. Here’s how it looks right now:
The good news is that local advertising — consisting of the businesses with whom we have direct relationships and some amount of influence — is the largest revenue category. And it contains many thousands of current non-customers. Our local staffs can actually sell to these businesses.
To reveal the trends in that category on a daily and monthly basis, Morris has developed a series of regular reports placing active accounts under a microscope.
A necessary first step was our adoption in 2012 of Sugar CRM, a powerful customer relationship management system. That gave us the ability to track sales activity. Then we began to track — every day — the number of new or lapsed accounts we closed.
Meanwhile, another important step was improving the suite of products we were taking to the market. We needed to be selling what businesses wanted to buy. Print editions and Web site banners are not nearly enough.
We made major strides in 2012 and 2013, adding a wide range of effective digital solutions to our arsenal, and it’s a continuing process. We now have far more and better offerings to take to non-advertisers.
The daily new-account report looks like this.
This report goes to each sales manager and sales rep every day, so each can see how his or her business unit (formerly “newspaper”) is doing compared to all others. AVO means “average value of order.”
Mark Lane, our corporate vice president of sales, is the primary driver of the account-growth initiative. He says the metrics might be the most wildly important part of it. “Once people could see the numbers, it started a lot of conversation,” he said. “People started looking at what was happening category by category and trying figure out what they could do about it.”
We also do a monthly report to the sales management teams, with weekly updates. It shows where each business unit stands versus the previous year in revenue and active accounts. It also shows each unit’s market share percentage for revenue and active accounts, calculated as best we can from several sources.
Here’s the roll-up report. We also produce breakouts for print + digital sales, and digital only.
A third report is more forward-looking, to help the business units focus on account retention. On the seventh day of each month, that report goes to publishers and vice presidents of sales, listing all accounts that have sales on the books for the current month versus all the accounts that ran the previous month.
This helps the sales teams do their best to reach and serve the accounts that haven’t posted any business yet.
2. Focus where we can make a difference.
Quite intentionally, the reports above don’t include major national and regional accounts. Historically, these have provided a huge amount of newspaper revenue, and they have always absorbed a lot of time and attention of newspaper sales staffs.
But these accounts are largely beyond a local newspaper unit’s control, because unilateral decisions are made at the advertisers’ corporate headquarters.
Spending in this category has been shrinking steadily across the entire newspaper industry, and the trend is sure to continue. In the first quarter of 2014, at Morris, these accounts constituted only 15% of our revenue (see first chart).
In 2012, we committed to lifting responsibility for these accounts off our local sales staffs by creating a corporate team to handle them. Advertisers had been requesting this for years, and it consolidated what selling and negotiating power we have into one place.
We also created a central tele-sales and lead-generation team, making calls into our markets on prospects identified from various commercial data sources. And we’ve developed central teams to deploy and optimise the digital sales made by our sales teams, lifting those duties off the business units.
The account-growth reports above also exclude revenue from obituaries and legal ads, which are beyond the control of the sales staffs.
These steps are freeing our local sales management and reps to focus on improving the results shown in the reports above.
3. Organise for retention and growth.
Our biggest change is still in progress. At a sales summit meeting last July, our publishers, vice presidents of sales and corporate team had agreed that our traditional sales structure was a big part of the reason for our declining account base.
A key indicator was that we typically were serving less than 10% of the potential advertisers in our markets, while managing to make calls on only a small number of the non-customers every year.
Like most newspaper companies, we were expecting sales reps to provide excellent service to their existing accounts, while also making lots of calls on new accounts. The latter wasn’t happening because — like most newspaper companies — we had essentially sized our sales staffs to handle the business we had. It’s a simple truth: If you’re not calling on the prospects, you can’t make the sales.
And the traditional structure puts the two parts of the sales challenge in conflict with each other: retaining existing accounts through excellent service versus winning new accounts through fast-paced sales.
Meanwhile, in our digital-only startup company, Main Street Digital, we had created a completely different structure. There, the sales team was 100% focused on selling. When they closed a sale, the account passed immediately to a separate team of customer service managers to fulfill the order and maintain close ongoing contact.
With that structure, we are seeing retention rates around 98% — far higher than in our core sales operations.
So we resolved to move toward that structure in our core sales teams, as well. It’s a model that seems to be well-suited for our mid-sized metro markets (Augusta, Savannah, Amarillo, Lubbock, and Topeka).
For our larger metro in Jacksonville, and for our smaller community papers, it has to be scaled up or down appropriately. Right now, some of our markets are further along in transition than others, creating “hunter” sales positions and “farmer” account-retention positions.
Some specifics: Recently, Mark Lane asked the business units that are doing best at reversing the loss of accounts to describe what’s working.
In Topeka, Vice President of Sales Bob Barth said it was a focus on both sides of the challenge — retention and new sales. They’re paying close attention to all advertising running in the market, both print and digital, and calling on all the advertisers they see in other media.
At the same time, their two new-business reps are doing extensive prospecting in nearby communities and landing new accounts.
In Savannah, Director of Sales Chris Corey reported an increased focus on presenting better programs to locally controlled accounts, success with a nurses’ expo event, good results from working a “political contacts” database for election advertising, and a program incentivising sales reps to meet and make presentations to local business people.
In St. Augustine, Director of Sales David Robbins cited a new monthly newsletter to active and lapsed advertisers that has resulted in several upsells and reactivations, an increase in management time spent cold-calling with reps, a new programme focused on their weekly entertainment section, and getting up to full strength on the sales force, including training.
In Jacksonville, Vice President of Sales Lana Champion offered a long list, including:
- A new compensation plan for core reps, with a focus on account growth.
- A new digital sales manager and two new reps.
- A new business manager and two reps.
- Revised sales performance standards for core and key accounts.
- Close analysis of why customers dropped out over a nine-month period, resulting in 219 reactivated accounts.
- A new sales activity report showing sales meetings, opportunities, and wins.
- A huge internal focus on new business.
In conclusion, reversing the long-term loss of the customer base is a big deal, and it’s a lot of work. However, the alternative is continuing to shrink toward oblivion, and that’s simply unacceptable.
At the heart our effort is a commitment to serve thousands more customers than we do today, and to serve our existing customers better. The leadership team at Morris is dedicated to taking the best possible solutions to the market, creating sales structures that can get the job done, and communicating our progress through powerful metrics.
There’s plenty more to do at Morris, but based on what we’re seeing so far, we believe we’re on our way.