Keep that New Year’s resolution to lose those extra pounds (in your subscriber acquisition budget)

By Jim Fleigner

Happy New Year.

The year 2015 represents a fresh, empty canvas full of possibilities, both personally and professionally.

As you might remember, on December 21st, we published a blog post that proposed that most circulation executives would benefit from acknowleging that their subscriber acquisition budgets are “overweight,” i.e., too much money is being spent for not enough payback. (Editor’s note: If you haven’t read the post yet, we recommend you do so now.)

And, just like the person who adopts a New Year’s resolution to lose 10 extra pounds, circulation executives should consider adopting their own resolution to drop the unnecessary weight from their acquisition budget.

But now that we are a few weeks into the new year, we want to share with you what will likely happen if you do not keep that resolution.

In that prior blog post, I summarised four other blog posts from 2014, each of which addressed a common complaint or concern about weight loss in the acquisition budget, before turning to the importance of making the commitment to adopt change rather than maintaining the status quo.

Because while “business as usual” can be a fine weight loss strategy if those plans generate incremental value (or you have incredible family genes), our consistent experience is that every newspaper that pursues a status quo strategy in today’s environment is incurring costs far greater than it realises.

Much like plaque buildup around the heart of the overweight patient who wants to lose 10 pounds but instead suffers a heart attack, these costs can be hard to see. But they are real and quantifiable, and they represent death to your business if left unchecked.

Until the “costs of the status quo” are recognised and explicitly measured, it is unlikely that many newspapers will implement strategies in 2015 that have any realistic chance of restoring health to subscriber acquisition.

Much like the overweight man clutching his glazed doughnut at the doctor’s office, your immediate reaction might be to respond, “Dr. Impact, how do you know that maintaining the status quo has a cost? I don’t see any costs!”

To help visualise that cost, consider the following depiction of a proposed “weight loss” capital investment, indexed to a US$1,000 investment with the corresponding projected return over a five-year period. In this example, the US$1,000 upfront investment yields a cumulative US$30,000 over five years, which is worth US$19,000 on a net present value basis.

This chart shows a fairly typical payback on an investment in subscriber acquisition weight loss, as the annual return in acquisition optimisation is typically worth 10 to 50 times the annual investment.

Dr. Impact shares this chart and communicates to the patient the bad news and the good news. The bad news is that losing weight requires an upfront sacrifice (highlighted in red). But the good news is that the long-term payoff is significantly greater and can be long-lasting (highlighted in green). This is just as true in subscriber acquisition as it is in personal weight loss.

Yet in 2015, Dr. Impact will not always be standing right next to the patient (i.e., the circulation executive tasked with developing subscriber acquisition strategy for 2015), and as a result many executives examine this payback and decide instead to pursue a status quo approach.

Why? Because the US$30,000 in future cash flow (with a net present value of about US$19,000) is an opportunity cost they cannot yet see since they have not yet captured it, whereas the US$1,000 is a hard, quantifiable expense in next year’s budget.

Thus, they opt to “save” (i.e., avoid spending) the US$1,000 (now highlighted in green) and ignore the existence of the US$19,000 opportunity cost (now highlighted in red), as depicted in the chart below.

But if we accept that the US$19,000 net present value payoff in the original investment is real (and our experience with newspaper clients validate beyond a shadow of doubt that it is real), we can invert this investment proposal and portray it in a way that is mathematically identical to the Status Quo Option described above.

Rather than displayed as an opportunity cost, this time it is portrayed as an investment – one that you would never make. The numbers are identical: You deliberately choose to pass on the chance to save US$19,000 in order to avoid spending US$1,000. Said differently, you implicitly invest (i.e., avoid saving) US$19,000 to generate (i.e., avoid investing) US$1,000.

No executive in their right mind would put forth to their boss a capital investment proposal that looks like this.

For the person looking to shed 10 pounds, it would be akin to submitting a proposed diet comprised of 4,000 daily calories, no exercise, and a forecasted increase in weight of five pounds. In other words, it is a plan that has no chance whatsoever of meeting any weight loss goal. Yet this is exactly what most people do when they make the choice to maintain the status quo, and it is also what most newspapers are doing every day.

Thus, if it is agreed that it is desirable to avoid the Status Quo investment proposal, the only rational choice is to make the changes that are necessary to implement a conscious, planned, and deliberate effort in subscriber acquisition optimisation.

And just like the doughnut-clutching, pizza-eating man who laments that he simply doesn’t know how to lose 10 pounds, failure is not an option unless an unplanned trip to the emergency room is one of your New Year resolutions.

If you want to see marked, quantifiable improvements in your circulation department’s bottom line, then stop making excuses associated with avoiding change. Otherwise, avoidance of change is tacit adoption of the Status Quo option, which is akin to scrapping the weight loss plan before the calendar is turned to February.

Losing weight in your acquisition budget is not easy. Like losing the extra 10 pounds, it requires setting an aggressive yet achievable goal, implementing the right tactics and habits every week, and weighing yourself regularly (daily for personal weight loss, monthly for subscriber acquisition weight loss).

As someone in fantastic physical shape once told me when I asked her how she could resist eating her favourite foods: “There is not a food on the planet that tastes as good as the feeling of being healthy.”

The same holds true in subscriber acquisition, so stay strong and keep that resolution to lose the weight.

About Jim Fleigner

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