Phil Binkow, CEO Financial Operations Networks, doesn't come from publishing. He had no idea of how to start a business information company.
But, after he sold his electronic payment processing business to a large public company a few years ago, he was consumed with the entrepreneurial itch to launch something new. And, his old team of techies and customer service pros wanted to share the ride.
Binkow's first company had served accounts payable departments for large Fortune 1000 companies. He'd noticed for years that "informationally all of AP was underserved. IOMA put out a really good monthly newsletter, and there was an association, but there was not a really good online place to go and find a whole lot of information about AP if you were running a department."
So, right out of the gate he had two best practices in favor of his new venture:
1. Serve a marketplace you already know well
2. Never launch where you are "the only" information source for an entire niche, because if an existing niche isn't slightly taken it's usually for a good reason. (Plus, there's no one to swap marketing promos with.)
Now he just had to figure out how to create online content AP professionals would happily pay for, and how to market it to them.CAMPAIGN
Binkow and his team used five more classic best practices in creating and launching the subscription offering...
Best practice #1. Survey potential subscribers
Binkow's team didn't make the all-too-common mistake of assuming that because they'd already served the field for 15 years (albeit in another capacity) that they knew what AP pros really wanted from a subscription site. Instead, they conducted thorough telephone research effort in June 2002.
"We called 268 companies and asked who ran AP, and then we asked each controller or CFO or VP Finance a whole list of questions. It took 15-30 minutes depending on who we were talking to."
Questions included riffs on, "Where do you get information now? What kind of information tools do you need? What types of information are the most important to you? If a site with this information was available to you, how much would you pay for it?"
Binkow says, "For the most part, people were very gracious even though we didn't have anything to show them -- no site prototype. It was all conceptual."
"10% said ,'You've got to be kidding, we never buy information, we can get everything free on the Web.' 18% were very enthusiastic, 'this is unbelievable!' 72% were in the middle. We decided to go ahead based on the strength of the 18%."
Best practice #2. Amass a large amount of content prior to launch
Now they had to create the content. Binkow figured that he had a better chance of training a great editor on the industry rather than training an industry expert to be a great editor. So, he headhunted a VP content from an unrelated trade publication for the construction industry.
Then he handed over the very fat pile of transcribed phone surveys, and gave his VP content six full months to create a wealth of site content matching prospective subscribers' expressed wishes.
Why not just start offering subscriptions right away and let site content accrue over time? "We wanted enough critical mass that it would be a solution that's worth the total subscription price from day one. People have to feel, 'These tools are unbelievable.' It has to solve a problem they're working on that day."
But, since you never know what problem someone might be working on, you have to provide a wide enough range of content that every prospect will find content worth paying for instantly when they visit the site. Online subscribers are not willing to accept a "someday" value promise and wait for future issues.
The content ran the gamut from in-depth articles to online calculators, glossaries, expert Q&A offers, standards, member forums, news briefs, and benchmarking documents. In other words, it was a mixture of: - a reference guide - an interactive tool - a classic trade journal
Best practice #3. Design the site entry as a tantalizing barricade
The problem with creating a value-laden subscription site is that unless you show off the value, people don't want to subscribe. On the other hand if you let visitors click more than a single page deep into your site, the conversion rates plummet because prospects figure they can get "something for free" so why pay at all?
Binkow's team carefully designed a content-heavy home page featuring four columns of tantalizingly-useful looking links. But, except for a site map (critical for SEO), and About Us information, every single click on the home page landed visitors on a barrier.
It was blatantly obvious that you had to pay to get to any of the good stuff.
Best practice #4. Test online and offline marketing tactics
Binkow's team added a site demo, and seven-day free trial offer, as well as email and telephone contact info to the home page to increase nibbles. (See link below to sample of trial email series.)
Then, they tested a variety of outbound marketing tactics such as search marketing and telemarketing using an in-house sales team.
The price was set at the classic $495-level (the amount at which many corporate execs used to be able to buy things without getting a bosses' sign-off prior to the recession).
As the first accounts came up for renewal at the end of the year, the team tested raising the price to $595 just to see what would happen. (Link to sample of renewal notice below.) They didn't consider doing auto-renews because it's an iffy practice with price points over $100-200, and in this hyper-aware AP marketplace.
Best practice #5. Seek ongoing input from an advisory board
Binkow knew no matter how great your marketing team is, subscription renewals depend almost entirely on the strength of the content. Although his content and service teams were speaking with subscribers daily, Binkow didn't want to take the slightest risk of his content going off-course.
(Note: This is an especial problem with expert editorial teams who've been covering a field so intensively that their knowledge and boredom-level for basic information doesn't match subscribers' anymore.)
Therefore, he lined up an advisory board of six AP professionals, including leaders from Gap Inc, HP, and Johnson & Johnson.
Unlike marketers who often use advisory boards as window dressing, Binkow expected his to work hard for him. He contacted most on at least a monthly basis for individual touch-base phone calls, and all on a quarterly basis for group conference calls.
"My goal is to continue to make this the most relevant site for AP. It's incumbent upon us to assure the continuity of value for years to come. If that's not there then no matter what premiums you offer, someday down the road you're going to be a dead duck. I believe that all the way down to my toes."
Within 18 months from launch date, The Accounts Payable Network amassed 2,200 paid subscribers with a healthy renewal rate.
So far the outbound marketing tactic that's been the most successful is aggressive telemarketing, but Binkow admits this isn't remotely easy. He had a steep learning curve in terms of what sorts of telemarketers were best to hire, how to compensate them, and the best ways to acquire and approach prospect leads.
Did raising the price over the $500 barrier make a difference? Binkow says, "We didn't notice any change in conversions at all. None. It did not matter." (This probably means the service was under-priced initially, and may still be.)
The team have partnered with print competitor IOMA to launch a certification program which helps raise the profitability of subscription accounts further. Both sides contributed content and credibility, and both market the program to their own lists. (Proof of why you should try to be best friends and compatriots with other publishers in your niche.)
Next, Binkow plans to apply what he's learned to launching further subscription sites for the expanded niche. "I've never been so excited about ramping up things before. We're all very excited here." Useful links related to this article:
Creative samples of trial and renewal notes http://www.marketingsherpa.com/apn/ad.html
How-to Report: Telemarketing for Subscription Newsletter Publishers (Note - there is a fee for this item) http://sherpastore.com/store/page.cfm/2143
The Accounts Payable Network http://www.theaccountspayablenetwork.com
Financial Operations Networks (Parent company of sub site) http://www.financialoperationsnetworks.com