Turning a Business Model Upside Down - 2
A number of stories in the Sunday newspapers made my few nape hairs stick straight up—the Wall Street crash and the election to name two.
But the worst was the story of Google shutting down e-mail service and leaving consumers and businesspeople to twist in the wind for hours, days and weeks with no recourse. It won't publish a phone number to a live person for help.
This is a case of IT people making marketing decisions, which can wreck a business.
It nearly happened to me when I was running book clubs at Meredith. I found rampant incompetence, made the necessary changes and saved the book clubs.
And then I got out.
In the prior issue, I described how I made vast changes in the business model of Meredith's (Better Homes and Gardens) biggest book club, Family Book Service. These included:
- Axing 200,000 nonbuying book club members who came in on a sweepstakes promotion. Not sending 15 promotions a year to these 200,000 deadbeats resulted in an immediate saving of $7.50 per cycle per member, or $1.5 million a year.
- Dramatically reducing the print order of main selections from 265,000 to a realistic 75,000 books per cycle that resulted in me not owning 2.8 million unsold books at the end of each year.
- Instituting several programs to sell off these millions of unsold books to club members and book remainder companies at hugely reduced prices.
- In another change to the business model, I turned the book club into a wheel—a faux continuity series whereby the same main selection was offered to all new members in each of their first eight cycles. These were the best-selling books from past cycles, thus guaranteeing maximum acceptance and sales at the outset, as well as getting a handle on print orders.
The Negative Option System
The negative option book club concept was invented by Harry Scherman and the great copywriter Maxwell Sackheim, who launched Book-of-the-Month in 1926. The typical offer: "Choose any 4 books for 25¢ each (retail value up to $44.20) with membership in Book-of-the-Month."