When choosing a North Star goal, news publishers often choose a financial target, for example, US$25 million in online subscription revenue by 2023. Academic research suggests this might be a mistake, as financial targets alone don’t motivate employees.
An INMA member in Africa asked me: “What is a better North Star goal? A financial target or something else? Should a goal relate to the reader revenue business alone or to advertising, too?”
The North Star framework has been popularised among news publishers by the Financial Times and its consulting arm, FT Strategies, as a management tool to align resources and accelerate growth.
It builds upon 70 years of ideas, from Peter Drucker’s management by objectives to objectives and key results promoted by Intel’s Andrew Grove and S.M.A.R.T. criteria proposed by George Doran. In general, these business thinkers observed teams worked best when focused on outcomes rather than outputs of their work.
Many news subscription leaders work with North Star goals. For example, in 2015 The New York Times announced to markets a goal to reach US$800 million in annual digital revenue by 2020, which it achieved in 2019. Then, it set a new goal — 10 million subscribers by 2025 (it has 7.5 million already).
Logic behind North Star goals: “Past trends, although important, should not set the path for the future,” wrote FT Strategies in Towards Your North Star, a report summarising learnings from 2020 GNI Subscriptions Lab, in which it partnered with INMA. “The North Star goal should challenge the organisation so it can support its long-term priorities — whether financing high-quality journalism, maintaining a loyal reader’s footprint, or becoming the most influential voice in the market.”
The 2020 Lab’s participants defined ambitious, bold, memorable, yet achievable goals. For example:
- France’s La Croix wished to “transform into a sustainable digital business with 100,000 subscribers by June 2023.”
- Dennik N wished to “become the most influential news organisation in Slovakia, with 100,000 paying subscribers, by 2023.”
- Gazeta Wyborcza aimed at “100 million Polish zlotys of subscriptions revenue in 2023.”
- Germany’s Rheinische Post aspired to “€3 million revenue from 50,000 online subscribers by 2023.”
The publishers translated these goals into strategies and action plans to achieve the desired outcomes. They have been measuring progress with North Star metrics, often based on engagement of readers, which correlated with subscriptions and therefore served as a proxy to revenue.
Problems with financial targets: “A growing body of evidence tells us that overemphasising financial targets erodes morale and undermines long-term strategy,” wrote Lisa Earle McLeod and Elizabeth Lotardo, authors of Selling with Noble Purpose, in a recent Harvard Business Review article.
They warned: “Leaders who spend most of their time discussing financial targets are more likely to create transactional organisations. To jump-start emotional engagement among your employees, keep focus on building belief in the larger purpose of the work.”
“Indeed, people need to relate to the North Star and see a clear connection to the purpose and the mission of the company,” explained Lou Gautier, principal at FT Strategies.
In her experience, a financial target is often interpreted as a condition of sustainability and ability to deliver a journalistic mission.
Many news publishers choose a number of subscribers as the North Star goal, rather than a financial target, as they think such goals mobilise newsrooms and other non-commercial teams more easily.
“Journalists understand that paid relationships with readers guarantee both impact of their work on a society and safety of their jobs,” she observed. “And a number of subscribers, at a given average revenue per user, is a proxy to a financial target, too.”
Connecting subscriptions to advertising: “Single financial target for the company may help clarify the status of subscriptions relative to other revenue streams,” said Gautier.
Starting from a company-wide North Star goal, the strategists may plan backwards — and define how the success looks like for reader and for advertising business lines — and then identify opportunities in both. “The purpose of the North Star framework is to give employees a vision and align them around shared goals. Creating an engaged reader supports both business models,” she clarified.
The Financial Times itself used to follow the North Star of one million paying subscribers, which it achieved in 2019, and its North Star metric used to be a composite engagement score called RFV (standing for Recency and Frequency of visits and Volume of articles read).
Today the FT is aiming at a North Star of 1.5 million paying subscribers and 500,000 engaged readers (measured as active on a site in the last 90 days). Its North Star metric got updated, too: It switched from RFV to LTV — standing for lifetime value of a customer, or her total worth over the whole period of subscribing.
The reason for the metric’s change is that RFV, although a good predictor for the length of a lifetime, did not help negotiate trade-offs between value of B2C and B2B subscriptions. It’s a key issue for the FT, as according to Gautier more than 50% of subscriptions revenue of the newspaper comes from B2B customers, such as companies who sign up groups of employees.
She added: “Lifetime value can be a more holistic metric for the business, and it could help negotiate trade-offs between subscription and advertising revenue, too. The challenge is that it’s a complex metric and requires a sophistication in analytics.”
Every week, members reach out to INMA and me to help them find relevant research, case studies, or best practices in reader revenue. What’s your question? E-mail me at: email@example.com.
This newsletter is a public face of a revenue and media subscriptions initiative by INMA, outlined here.