Renewal premiums--are they worth the expense?
It occured to me that premium offers on renewals were much less common among newsletter marketers. I dug out results from a survey done some years ago, while I was at the newsletter association, and I found only one business newsletter in four that offered a renewal premium (25 percent). Among consumer titles, it was still only three out of five (60 percent).
It appears many more consumer publishers subscribe to the old bromide that you "have to renew them the way you sold them" since most were sold with heavy premium offers.
Of course, most business newsletter offers include premiums as well, but those publishers believe renewal premiums are just giving something away to people who were going to renew anyway.
I can see logic in both positions. Taking a year's subscription to a $37 consumer letter can be something of a whim, and incentives may be needed to get a renewal.
Ordering a $495 business title is more of a conscious decision and the value of the editorial content will decide the renewal.
But if you've decided to offer a renewal premium, two choices remain: what to offer and when to offer it.
One "expert opinion" holds that you should offer renewal premiums only at the beginning of the series, to encourage your most loyal readers to get their money to you ASAP.
Timing your renewal premiums
A study I did showed that, of those offering renewal premiums, the timing broke down like this:
* Offered only early in the series--10 percent. Frank Lessiter of Lessiter Publications in Wisconsin offers special reports (at a bargain "subscriber price"), hoping to sell to the most loyal subs, but then he drops that offer to concentrate strictly on getting the renewal as the series moves along.
* Offered all through the series--70 percent.
* Offered only late in the series--20 percent.
The last group of publishers violates another bromide of conventional wisdom: Never improve the offer as the series goes along because you don't want to encourage them to see if the offer gets better. This practice also spoils longtime subscribers who know they'll get a better offer later on in the series.
Further, it wars against your goal to get them to renew early, not late.
Just about 100 percent of newsletter renewal premiums are editorial. Feel free to send me examples of others (firstname.lastname@example.org), but none come to mind at the moment.
I've heard it suggested that a series of small special reports make an ideal renewal premium; changing the title with each piece in the series, looking for the one that rings the bell with the subscriber.
A good idea, but difficult for most publishers to implement since it's difficult to find good editorial materials to offer as a renewal premium that your subscribers haven't already seen.
Another Rule of Thumb: A special report that didn't sell well when offered to subscribers will not be effective as a premium either for new orders or for renewals.
I've always agreed that offering "extra issues" was not the strongest new subscriber premium (offering prospects more of what they are not entirely sure they want--issues of your newsletter), but I do think it could be an effective renewal premium, especially early on ("Renew now and you get three FREE issues").
Conclusion: Adding a renewal premium doesn't cost much and should certainly be worth a test.
Allie Ash, publisher of Personal Finance and Louis Rukeyser's Wall Street, has observed that if you have a sum of money available and your choice of expenditures, there is nothing you can do to shore up your business' bottom line that begins to equal adding five percent to your overall renewal rate.
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|Title Annotation:||DM Notebook|
|Publication:||The Newsletter on Newsletters|
|Date:||Mar 31, 2004|
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