Dave Ventresca, President, Maghound Enterprises, sees a major problem in the magazine industry. Consumers are being conditioned by the flexibility of new media services, such as TiVo, iTunes, Netflix and satellite radio, he says. But magazine publishers remain wedded to a fixed-term subscription model.

In response, Ventresca and his team created Maghound. The online subscription membership service owned by Time Inc. lets consumers sign up for 3 to 15 titles per month for a fixed rate. And they can cancel and change their magazine selections at any time.

However, launching a new type of online service creates new challenges, which is why the team unveiled a beta version of Maghound in September.

“Our rationale for the beta mode is that we want to learn about membership behavior before we spend a whole lot of time and dollars to drive traffic to the site,” says Ventresca.

In fact, the beta launch is the latest step in three years of development. During that time, Ventresca’s team has used several techniques to understand consumer preferences and design the service to meet those needs.

Eight major steps they took to plan and launch a new subscription service:

Step #1. Convene focus groups to assess concept

Although Ventresca’s team saw an opportunity for a new subscription model, they didn’t want to begin the project without external research.

They assembled focus groups to get the public’s take on the concept. The focus group moderators didn’t offer details on price points or features. They simply gauged interest in the basics of the theoretical service, such as:
o Choosing from a large group of magazines
o Switching titles on demand
o Receiving titles without a year-long subscription

Step #2. Use online survey to test prices/service features

The team received positive reaction from focus groups, so they stepped up their R&D efforts. They solicited feedback on potential features and subscription terms.

About 500 consumers participated in an online survey that assessed specific variables. For example, they asked survey respondents to rate how attractive the service would be at various price points or at different levels of monthly magazine shipments.

One significant result of the survey: the concept tested equally well among men and women. That led the team to create a gender-neutral color palette and copywriting approach for the beta website.

Step #3. Test live prototype with closed group

The team created a live prototype website to see how consumers reacted to the service in a real online environment. The test site offered the basic features and functionality of the current system

The test:
- An audience of known magazine consumers was selected from the Time Inc. database and a rented list.

- An email and direct mail invitation was sent to the group; it invited them to test the service. Approximately 2,000 visitors came to the site.

- Response rate, website traffic, and visitor flow through the site was tracked.

Step #4. Build back-end systems and finalize publisher deals

The team moved forward with the service at the beginning of 2008. They spent several months working with the IT department to:
o Finish the front-end Web design
o Build the back-end database and reporting systems

They also signed deals with publishers outside of Time Inc. to include their magazine titles in the membership service.

Step #5. Conduct usability interviews with consumers

Before the beta launch, the team wanted to gauge consumer reaction to small site changes that had been made during the final development stage.

They invited consumers in their target demographic to participate in live, one-on-one usability tests.

- Subjects were invited to a session with a moderator during which they would interact with the Maghound website on a PC.

- The moderator observed subjects navigating through the site and completing an order.

- The subjects gave feedback on their impressions of the service itself, and the usability of the website.

Those interviews helped the team fine-tune elements of the site (i.e., change some elements of the magazine product detail pages and re-order parts of the checkout process). “It wasn’t major plastic surgery; it was just applying a little bit of makeup here and there.”

Step #6. Hold private launch to test-drive system

The service was ready for a beta test by summer. But the team wanted to test the site’s functionality with a small group, and receive final feedback from people not involved with the project day to day.

They signed up 100 coworkers, friends and family members to join the service and provide feedback on the experience.

Step #7. Launch service in beta to analyze consumer behavior

The team launched Maghound beta in September. The goal was to begin signing up members and fulfilling orders while gradually rolling out enhancements to the service in future versions of the site.

Enhancements will be based on observation and testing of key elements of consumer behavior and site operations, including:

Site visitor flow and engagement metrics
o Page views per visit
o Time spent on site
o Click path after landing on homepage
o Location and rate of site abandonment

Subscriber activity benchmarks
o Conversion rate
o Number of site visits before conversion
o Service-tier upgrade rate
o Cancellation rate
o Inclusion of premium titles that require an additional fee above the monthly subscription rate
o Frequency of title changes within customer accounts

Order processing and fulfillment issues
o Credit card billing procedures
o Shipping the correct magazines

Step #8. Conduct limited marketing tests during beta period

The public beta period is an important time to find and correct any operational issues. So, the team didn’t invest in a large-scale marketing effort upon launch. Instead, they conducted limited tests of marketing channels to assess their options.

Marketing tests:
o Paid search
o Banner advertisements
o Two email campaigns

News reports about the launch and links from blogs have been the primary source of traffic during the beta period. In the first week after launch, the team sold memberships in all 50 states -- without marketing campaigns.

Ventresca has seen visitors coming from a news report or a blog typically spend more time on the site and convert at a higher rate than visitors coming from search ads, email blasts or banner ads. (He would not provide details on conversion rates.) He suspects the boost in engagement and conversion rate is the result of a news report or blog post providing an overview of the service and an explanation of the business model.

“One thing we’ve learned is that, once consumers understand the concept, they like it a lot, but you can’t just explain this in a sentence,” says Ventresca. “Consumers view the service through the lens of what they know. And, if they’re just glancing at the site, they might think it’s another multi-title newsstand, not a membership service.”

Useful links related to this article

Creative Samples from Maghound’s Marketing Tests
http://www.marketingsherpa.com/cs/maghound/study.html

Maghound uses Omniture for its site analytics
http://www.omniture.com

Time Inc.
http://www.timeinc.com/home/

Maghound
http://www.maghound.com