Authentic Marketing
Meredith Corp. uses a decentralized approach for profitable cross-selling
November 2007 By Kate DeBevois
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Looking at the big picture, marketing guru Philip Kotler says authentic marketing “is the art of identifying and understanding customer needs and creating solutions that deliver satisfaction to the customers, profits to the producers and benefits for the stakeholders.”
For Des Moines, Iowa-based publishing dynasty Meredith Corp., creating solutions to satisfy customer needs involves using a decentralized approach to leveraging the housefile. It strives to achieve authentic marketing by focusing on long-term ROI with an emphasis on customer care and the marketing motto, “You can’t control the mailbox.”
Staying true to the vision of founder Edwin Thomas Meredith, who developed the service journalism concept in 1902 when he launched Successful Farming magazine, the 105-year-old company bases its marketing philosophy on service to the consumer. Meredith Corp., which originated from the founder’s desire to create a publication serving the Iowa farming community, now has 26 publications based on the core categories of home, family, cooking and decorating. These products are sold on the newsstand and via direct channels such as direct mail, Web, e-mail, space ads and others.
The keys to this publishing company’s success are thinking like a consumer, treating the customer like a next-door neighbor and hiring forward-thinking corporate managers with an expertise in, and passion for, direct marketing. According to Vice President of Consumer Marketing David Ball, guidance by leaders who understand the ins and outs of direct marketing provides a distinct edge for Meredith Corp. and “sets the company apart from many others in the industry.”
You Can’t Control the Mailbox
Using a decentralized approach to leveraging the housefile is a long-term strategy Meredith employs to create lasting results instead of focusing on short-term returns. This means shared access of its corporate master database of 85 million names by all magazine groups, providing cross-sell and upsell opportunities as soon as new names and/or activity data come onto the file. The lack of a database access hierarchy creates continuity across promotional groups to best serve consumer interests. Meredith Corp.’s motto, “You can’t control the mailbox,” translates into working to promote products only to people who might want them based on analytics-driven insights, rather than a forced set of promotion rules. “Our goal is to enhance shareholder value by building our brands as profitably as possible, and the key to our success is understanding our customers and creating excellent products that meet their needs,” Ball explains. “Therefore, trying to enforce a hierarchy of access is counterproductive to our goals.”
Casey Showalter, director of database marketing, says the company’s centralized team of database marketing managers uses data management and analysis to provide statistical modeling expertise that guides cross-selling and upselling within and across groups. “This team works closely with individual magazine and book marketers [at Meredith Corp.] to help determine marketing strategy and execute the tactical components of individual campaigns,” he says. (It also builds statistical models to help outside clients target its customer database for their products and services.) Through this analysis, Meredith Corp. also balances the cost-benefit ratio of sending prospecting direct mail efforts while continuing to evolve with Web 2.0 marketing tactics.
Brad Clark, consumer marketing director for Meredith Corp.’s American Baby and Parents magazines, says, “As we serve readers with our products, we learn their interests. This helps us to limit our promotions to the products most relevant to their personal interests and avoid sending [less relevant] offers.”
It’s All in the Data
Meredith Corp. builds its housefile through information gleaned from customer transactions and invoice surveys. To develop a more robust housefile to power marketing efforts, the publisher sends new subscribers a survey attached to the invoice to determine their basic interests; it then follows up with a second survey when it sends the subscription renewal, Clark says. Over time, as do most direct marketers, Meredith Corp. builds a profile that evolves as the customer looks for new experiences and develops new information needs based on those experiences, he adds. Although it often takes time for a database to catch up with customers’ life changes, the profile it presents helps predict interests enough to more efficiently and effectively guide Meredith Corp.’s targeting efforts.
For example, American Baby subscribers generally order a free sub-scription from a magazine in their obstetrician’s office or from various online sites. As time goes on, these customers often need more information about parenting topics beyond the scope of American Baby’s coverage. Based on a subscriber’s expected due date—information collected during the sign-up process—Meredith Corp. then sends offers for its paid Parents magazine title. When a customer subscribes to Parents, she may receive another survey with her invoice and first issue. Based on analysis of all the collected survey information and transaction history related to this customer, she also might receive an offer for Better Homes and Gardens or Family Circle in the near future.
The surveys originated as a way to gather additional subscriber information, but then evolved into a bigger data tool for the publisher. According to Cheryl Dahlquist, director of database marketing services, “We wanted to collect information that would help us cross-sell subscriptions, so we asked our customers about their interests in core categories Meredith covers.”
Over time, as the company learned how to use the survey data it collected to send more relevant offers, it also learned what other information might enhance that process. “So then we started thinking, ‘Well, when do people get into the mode of creating and decorating?’ When they have a life event, they start cooking or decorating,” Dahlquist explains. As a result, some of the surveys were changed to include questions about subscribers’ plans for their homes; for example, “Are you going to move?” or “Are you going remodel over the next several months?” The surveys help determine the next best offer for a particular group based on areas of interest, she states.
According to Ball, “Our data services analysts help each group using the database to understand what is working, or if there are new enhancements to the database.” Lessons learned from one promotion “clearly spill over into the thinking and planning for other promotions,” he says.
About 30 percent of subscribers fill out the billing survey, says Dahlquist. If a subscriber does not respond to the initial survey, she continues, most of the time she still pays the bill for the magazine and, thus, receives the survey again with her renewal notice. If the customer does not respond to the survey at all, the company still may promote to her with direct mail or e-mail cross-sell offers.
According to Ball, responding to the survey serves the customer’s best interests, as this basic information allows the company to deliver product messages in a more targeted manner and cut mail volumes. “Sharing information across our products is the best way to [build brands and enhance shareholder value],” he explains. “We don’t want to ‘spam’ people, either offline or online,” he explains.
While most magazine promotions are spread out over time, it is possible for a subscriber to get two promotions within one week. However, that rarely occurs, he affirms.
Profiling for Profitability
As Meredith Corp. develops subscriber profiles, each magazine group works with the data analysis team to create models based on this insight and past profitability data. The models allow the groups to prospect efficiently from the corporate housefile. Each group tests its models, analyzes which of them worked well and uses that data to determine which offers or combination of offers to send.
Showalter says Meredith Corp. uses a combination of decision trees, linear and logistic regression, and other data-mining techniques to segment customers on the database. “Historically for magazines, we have optimized the models based on net response, but we are now building models to maximize profitability. With profitability models, we take into account not only response and payment information, but also whether the customer responded to an upsell or cross-sell offer at the time of payment, as well as cost factors such as how many efforts it took to collect payment,” he explains.
According to Ball, the company often begins with best-customer models or decision-tree models after it has a mailed a sample to use for regression analysis. He says, “Ultimately, we prefer to complete regression analyses for any programs that have sufficient universes.”
Analysts then apply lessons learned from one publication group to another. For example, elements of a promotion that worked for one cookbook or decorating magazine will probably work well for a similar product in another group. Ball asserts, “The data services group is a corporate asset available to everyone. Learning from one profit center is shared with all of the analysts so we can leverage learning as quickly as possible.”
Contact Strategy and Cross-promotions: A Departmental Decision
If a customer has characteristics and data points that place her in various models for several titles, Meredith Corp. allows her to be promoted for multiple titles “as quickly as possible,” according to Ball. Timing is important, because when a consumer is in a buying frame of mind she is more likely to purchase more products, he says. While each magazine has its own selection parameters for prospecting, models based on prior success and the experience of the data analysis group assist decisionmaking for the entire group of magazines.
For example, if the company makes more money selling product B than product C when cross-selling to buyers of product A, it will sell product B even if product C is in some way aligned with product A, Ball explains. Otherwise, Meredith Corp. allows promotions to occur naturally as the different titles use analysis to identify potential prospects according to their own best-customer profile.
A Focus on Long-term Investments
As any investor knows, choosing stable mutual funds over riskier sector funds that may provide higher, short-term returns does not always achieve long-term goals. And neither does the reverse. Maximizing a portfolio requires continual balancing of both options to meet goals, which is the same theory behind Meredith Corp.’s direct marketing practices. Instead of creating a hierarchy for when magazine groups may prospect from the housefile, the company gives each group the discretion to promote according to a profitability model developed from insight gained by looking at what’s been the most successful across the groups.
Meredith Corp. looks beyond quarter-to-quarter results and focuses instead on investing capital in projects that achieve the best lasting returns. Ball says, “What sets this company apart is our willingness to put money where we will get the best returns over many years, the willingness to invest for the long term and not focus on short-term solutions.”
In addition to focusing on long-term investments, hiring direct marketing experts and sharing lessons learned across promotional groups, Clark says staying true to the original founder’s vision by following comprehensive customer service goals helps retain customers and enhance cross-selling opportunities. Consumers gravitate toward companies that make day-to-day living easier, and Clark says Meredith Corp. distinguishes itself by addressing problems immediately and working to ensure customers are satisfied, not just placated. He explains, “I have personally talked to people who have been surprised and pleased that a manager would call them over something as simple as a magazine problem. Clearly, a philosophy of ‘treating people right’ enhances our database immeasurably. That philosophy is our culture.”
Working to create solutions that serve customer needs and staying in touch with those needs through surveys and phone calls, Meredith Corp. maintains the original founder’s vision while keeping pace with current trends in the marketplace. Looking forward, Ball plans to continue integrating and leveraging the company’s core business assets across multiple platforms while anticipating customer expectations.
Clark sums it up, “If we serve her [the reader] well as a person, we will earn the right to continue the conversation through a variety of media products. In the end, our database will have value only as we succeed in serving [the reader].”
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