Should you make multi-year offers for new subs and/or renewals?

Is a multi-year offer a good idea? The choice is between, as I like to say, "Money now is always better than money later" and "Are you eating the seed corn of the future?"

Does it make a difference if you are considering renewals rather than offers to new subs?

For a new subscriber offer I cannot see any reason not to include a multi-year option. For one thing, it doesn't take anything to add a line or two on the order form.

If your price is $100, why not make an offer like two years for $170 and three years for $225?

The facts of newsletter publishing life are that each new subscriber does not represent $300 in revenue over three years.

For a "typical" business newsletter, the renewal pattern might be something like:

* First-year renewals -- 60 percent

* Second-year renewals -- 70 percent

* Third-year renewals -- 80 percent.

Your mileage may vary, but those numbers are usually in the ball park. And, in that case, a new subscriber, on average, will generate $202 in revenue in three years. Obviously, $225 now, if you can get it, is preferable.

Hidden benefit

A hidden benefit with the new subs who have signed up for two or three years is that after those years they may be more likely to have developed the cherished "reading habit" for your newsletter and so may renew for the "first time" at a rate higher than the projected 60 percent.

Consumer titles

Consumer titles, on the other hand, typically have to live with much lower first-time renewal rates than business-to-business newsletters--percentage rates in the 30s or even 20s.

For that reason, multi-year offers are much more common in this area because of the incentive to get as much as possible from first-time subscribers since evidence shows you aren't likely to have them that long.

Renewals

I think the pschodynamics, if that's a word, are a bit different with rewewals. When your renewal series begins most subscribers have already made a tentative renewal decision.

My old boss Bruce Levenson at United Communications Group would say, when he takes a new publication, "By the time I've seen two or three issues, I've usually already made up my mind whether this is one I'll likely renew."

It's like the Presidential election: All the bells and whistles of your renewal series are intended only to nudge an all-important 5 percent of undecideds into your "Yes" column.

Price increases

My own favorite strategy is to delay price increases for current subscribers by a year. If, on January 1, 2005, your price is going up from $227 to $242, allow current subs to renew at $227.

"Renew Now and Pay Less Than New Subscribers Pay" is a very powerful offer.

On the other hand, I don't see a lot of benefits in renewal discounts per se. Very few subscribers who won't renew at $227 are not going to come back at $197.

For those who will renew at $227, I'd suggest a multi-year option but at smaller discounts. Here you aren't talking about that 60 or 70 percent who renew, but a group of which 100 percent is renewing.

But you won't get a 100 percent of this year's renewers next year: businesses will hit hard times, your subscriber will leave the company, etc. It's probably worth your while to make an offer like "Save $40.00 (adding the .00 is said to make the figure look "bigger")--Two Years for $414." (See, that looks "smaller.)

Renewal pricing is definitely more an art than a science, especially for business newsletters that seldom have a large enough universe to test and compare results.

One last reminder about renewal offers: Make your best offer--say, a discount or a premium--early on in the series. By sweetening the pot later in the series you're counterproductively spoiling your subs into thinking they'll get a better deal if they hold out until expire.