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Jan 12, 2004
Case Study

How to Convert Free Newsletter Readers into Pricey Paid Content Buyers -- Step by Step

SUMMARY: How can you get readers of a free weekly Tips e-newsletter to convert to buying a related $100-200 subscription offering? Element K Journals discovered it takes several steps -- first get free readers to buy low-cost items and then sell them up the value chain. Here's how they do it:
CHALLENGE

"When I came here three years ago, the journals had an eTips newsletter in place," explains Element K Senior VP Marketing Doreen Bieryla. "It was weekly, it was free, and it cut across about 35 different paid subscription titles.

"My first question was, 'How do you make any money off of this?'"

The answer was they really didn't. "They tried to maybe sell some sponsorships, but with the economic decline those things weren't selling very well."

Bieryla was undeterred. She believed there must be a way to use non-paid email newsletters as a marketing tool for paid content products. "I wanted to maximize and leverage our wonderful brand name and make money off of them."

She tested running house ads for journal subs; but it wasn't a big win. "Our average journal is over $100 per year. The attempt to jump people from free weeklies to that was too much to overcome."

Her audience ranged from high-end IT professionals to graphic designers, to average businesspeople. Some had budget authority to purchase business information without asking first, but many didn't. The only thing all had in common was a desire to learn to use common software for their jobs better.

CAMPAIGN

Bieryla wondered, what if the content sales process needs to be gradual?

What if email readers need an initial low-cost stepping stone to get them into a buying relationship with a company? "Taking people from nothing to $9.95 is not such a big leap."

But it's not a terribly profitable leap - perhaps not even worth all the work of promoting the newsletters, managing the list, handling editorial, creating low-ball ancillary products to sell, marketing, fulfillment, customer service, etc.

However, Bieryla thought, what if you treat the low-ball products as a loss-leader? A way to get prospects engaged in a buying relationship with you, that can evolve over time to more profitable products? "You could take them from $10 to $25 to $100."

She also knew that even if the price is identical, it's a lot easier for a prospect to make a buying decision for a one-off (such as a report they get in its entirely immediately) than an ongoing subscription which implies a longer-term commitment. So she decided to focus tests on low-cost one-offs.

-> Creating one-offs

Luckily Element K publishes fairly evergreen how-to content instead of news. Plus, the dozens of journals had been publishing for years, so they had lots of archived material.

The marketing team talked to editors and customer service reps, trying to find out what sorts of information they had frequent requests for. Then they invented a series of printed "tip sheets", CDs, PDFs, and booklets.

Everything was created by topic to make it more appealing to buyers. Element K's team would never create an archives CD called "Articles From 2002", but you might find one on "Useful Shortcuts for Word users."

-> Pricing one-offs

Email has a much shorter shelf life than traditional print mail. So, if people were going to click to buy, they'd probably only do it when they were glancing at an issue for the first (and probably last) time in their in-box.

There's very little "setting it aside to read again later."

So, Bieryla decided pricing had to be keep it low enough to inspire quick impulse buys … but high enough to break even. Her team often split lists to send two differently priced offers out the first time a one-off was promoted to see what worked best.

They also jacked the "official price" on the online store a bit higher than promoted offers, so newsletter readers always felt they were getting a special discount they should grab now.

Plus, shipping charges were kept as low as possible - sometimes even non-existent. "Some people use shipping as a way to make money. If you watch eBay, sometimes you can buy for $4 and then shipping is $4.50. People purchasing online are getting pretty savvy about these games. So, we tried very hard to adjust shipping to a price close enough to actual.

"I want to cover our actual costs and we tack on a small amount, 25-50 cents for the just-in-cases."

Plus, whenever a product had enough margin, the team promoted free shipping as an added purchase inducement.


-> Marketing through ezines

Bieryla is a big believer in relevancy. If an email newsletter is intensely relevant to the reader, they're more likely to open and then perhaps click to purchase something.

So, her team began launching a series of niche Tips newsletters ranging in topic from 'Oracle Tips' to 'Adobe PageMaker Tips'. To grow the brand and make content development easier, the format and style of all the newsletters were virtually identical. Only the topic changed.

Although initially only an email address was required, Bieryla added a second-page to the sign-up process requiring street address, phone and fax, title and industry-type, and company size.

She felt prospects would be willing to jump through these additional hoops because "the value of the information in the tips is so high." (The sign-up form has links to enticing sample issues.)

The extra information helped Element K make more money with the name - including postal mail campaigns, list rentals, and corporate site license sales leads. Bieryla says, "I have no problem weeding out the tire kickers. It costs me money just to provide the service. If a person isn't willing to give key information to allow me to market further, it's ok with me if we lose the sign-up."

The sign-up form also included two separate additional permission check-boxes which were pre-checked, but very obvious and easy to un-check prior to signing up. The first was to receive occasional promotional blasts from Element K, the second was to get promotions from third-party partners.

The marketing team were extremely careful not to over-use these lists for fear that frequency would abruptly reduce results.

The regular Tips newsletters, all mailed on Mondays and Tuesdays, contained promotional ads for the specific related topics. Offers were as targeted as possible - nothing broad would ever be sent across all lists. (Link to sample Tips newsletter below.)

In addition, the marketing team sent a dedicated promotional blast mailings on Fridays generally three times a month. Again the offers were carefully matched to the list's interest.

They carefully scrutinized third party offers to make sure the fit was right, and requested that renters only buying a targeted selection that matched their offer. This meant the average name rarely got third party offers, which kept responses higher and names happier with Element K.

-> Upselling/cross-selling efforts

Despite the lowered margin, Bieryla strongly preferred to develop and sell printed one-offs because then the fulfillment team could slip brochures, topical mini-catalogs and flyers for other offers into the package.

"It's not different from LL Bean, if you buy something from them, they throw a catalog into the box."

This fall the marketing team engaged in a blizzard of new cross- selling tests, including:

- Inserting a printed journal issue, relevant to the one-off purchased, with a paid sub form.

- Auto-responding to all new email sign-ups with an online store discount coupon.

- Offering kits of multiple-titles on a similar topic for a significant discount over buying each one-off separately.



RESULTS

The email program has been so successful in converting readers to buyers, and these buyers to bigger buyers, that Element K has expanded from one newsletter to 41. (In fact they now have more Tips newsletters than they have print sub titles.)

Bieryla says her stepping-stone buying theory paid off. "The fact that they've already bought from us once, no matter how we touch them a second time we'll get a better response than a name you use from any other list. It's tried and true - your own customers are your best customers."

More results:

- Fulfillment package flyers have helped average order net profit ratios double and triple. Bieryla thinks of package inserts as the killer app. She says inserting a sample paid sub product issue in the package actually gets a higher response rate than if you mailed the exact same buyers an offer separately.

- Response rates tend to halve when a price hits the $40-50 hump. But, Element K has had success at the $55-mark with kits made up of a whole bunch of lower-priced items grouped at a significant discount.

- Tips readers often sign up for more than one newsletter, but they don't mind that all newsletters are delivered at about the same time on the same day, because newsletters are clearly differentiated in topic, quick-to-read, and useful.

- Tips readers appreciate clockwork regularity. "If for some reason an issue doesn’t get deployed on the regular day, our customer service department gets flooded with emails."

Bieryla notes, "Where we're heading is integrated marketing. It's really maximizing all channels available and just being creative with trying to reach people in a variety of ways."

Useful links related to this article:

Sample Tips newsletter with one-off offer:
http://www.marketingsherpa.com/ek/ad.html


Element K's newsletter sign-up form with the list of offers:
http://www.elementkjournals.com/tips.asp
See Also:

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