How to make more money from your Direct Debit subscribers

Can you make more
money from your
Direct Debit subscribers?
Cheryl Brown
Subscription Solutions

Introductions

I am going to present a case study of the work I have
done at Time Out.
I have been working with Time Out since 2010 helping
them manage and grow their subscriber base.
At the time, Time Out had just over 30,000 subscribers.

Time Out and Direct Debits

I started working with Time Out by doing a complete review of their
subscription activity for the previous 3 years
Renewals – CWO & DD
Acquisitions – all sources
As part of my initial 3-year review I discovered the following in
regards to their Direct Debits:
90% of the subscriber file was on Direct Debit.
Average cycle renewal rate was 93%.
A large number of customers were paying a low rate.
A large number of customers had been paying the same rate for over
5 years.
There were 77 different Direct Debit price points.
However, 7 prices contained 73% of the Direct Debit volumes.

Direct Debits – Price and Term

There are 7 issue prices that contain 73% of all the Direct Debit
subscribers.
4 issues for £6.50 – 1032 subscribers
51 issues for £50 – 1381 subscribers
They all had different cycle renewal rates which lead to varying
annual renewal rates.

Understanding Annual renewal rates

Renewal rates for Direct Debits are always quoted on a
per cycle basis.
A 4-issue Direct Debit renewal rate of 98% is not the true picture.
Once it’s annualised it’s actually just 80%!
Key to managing a profitable Direct Debit file is to limit
the number of times you debit customers account.
Annual Direct Debits are always the preferred term but
can be seen as the most expensive for a weekly.
Over 74% of Time Out Direct Debits were on a 4 and
12/13 issue cycles allowing subscribers several times to
cancel a year!

Direct Debit – Renewal Rates by
term/price

• Revenue per
copy ranged
from £0.59
to £1.88!
• Annual
Renewal
rates ranged
from 54% -
90%!

My Role at Time Out

To help Time Out stabilise and grow their subscriber base,
which represented 60% of total circulation.
Devise a marketing plan to acquire new subscribers and
ensure renewal rates were maintained/improved.
But, Time Out had issues
Lack of solid acquisition routes
Lack of budget
Declining subscriptions volume
Static newsstand sales
Renewals were never the issue but I happened to mention in
my presentation of the yearly marketing plan the following …

Plan after 6 months!

“A price increase of £0.45 on one group of the 4
issue Direct Debit subscribers will generate
another £32,000 in revenue in first year.”
and
“There is a potential of adding at least £40,000
to the bottom line by increasing Direct Debit
pricing across the groups by £0.45p.”

A Captive Audience!!

With the Finance Director and
Publisher in the room they were
sold on the plan to increase
Direct Debit prices and generate
£40,000!

How I got started?

1. Analysis
I had reviewed many reports as part of my annual plan
Renewal by Direct Debit term and price.
How long has subscribers been on that price.
Renewal rates by price and term.
Reviewed all current acquisition pricing to create a
benchmark.
Basically, I was building a picture of the subscribers who I
had only known for a few weeks.

Dovetail Reporting

I didn’t do this alone.
Worked closely with Account Management to
identify the correct reports.
“Automatic Payment Analysis” report was key.
(Mass system)
Dovetail had to ensure the correct number of
contracts were included to pick up the correct
subscribers to make sure they were not stepped
up too soon.
1 year would be 1 contract for an annual subscriber, but 12
contracts for 4 issue subscriber.

Automatic Payment Analysis Report
Current Payments Analysis
Client: TOUT TIME OUT MAGAZINE
Publication: TIM TIME OUT MAGAZINE
UK subs only
All payment types
Subscribers who have renewed excluded

Years on No issues 1 issues 2 issues 3 issues 4 issues 5 issues
Pending Pending current Number remainin remainin remainin remainin remainin remainin
Payment Type Zone Issues Price Issues Price price of Subs g g g g g g
Direct debit UK 3 3.99 0 0 9 1 0 1 0 0 0
Direct debit UK 4 3.13 0 0 5 1 0 0 0 1 0
Direct debit UK 4 3.13 0 0 6 7 2 2 2 1 0
Direct debit UK 4 5 0 0 2 1 1 0 0 0 0
Direct debit UK 4 5 0 0 4 66 42 11 7 6 0
Direct debit UK 4 5 0 0 5 173 74 19 45 34 0
Direct debit UK 4 5.75 0 0 4 2 0 0 1 1 0
Direct debit UK 4 5.75 0 0 5 2 0 1 0 1 0
Direct debit UK 4 5.75 0 0 6 28 7 6 9 6 0
Direct debit UK 4 5.75 0 0 7 24 5 12 4 3 0
Direct debit UK 4 5.75 0 0 8 175 1 45 43 47 39 0
Direct debit UK 4 5.75 0 0 9 53 16 11 11 15 0
Direct debit UK 4 5.99 0 0 1 1 0 0 0 1 0
Direct debit UK 4 5.99 0 0 4 2 0 1 1 0 0
Direct debit UK 4 5.99 0 0 5 38 7 11 13 7 0
Direct debit UK 4 5.99 0 0 6 205 62 38 57 48 0
Direct debit UK 4 5.99 0 0 7 54 24 12 9 9 0
Direct debit UK 4 6 0 0 1 2 0 1 1 0 0
Direct debit UK 4 6 0 0 2 1 0 1 0 0 0


Years on

Payment Type Zone Issues Price
Pending Pending current Number
Issues Price price of Subs
• Key points
Direct debit UK 3 3.99 0 0 9 1 • Issues
Direct debit
Direct debit
UK
UK
4
4
3.13
3.13
0
0
0
0
5
6
1
7
• Price
Direct debit UK 4 5 0 0 2 1 • Years on Current Price
Direct debit
Direct debit
UK
UK
4
4
5
5
0
0
0
0
4
5
66
173
• Number of subscribers
Direct debit UK 4 5.75 0 0 4 2
Direct debit UK 4 6 0 0 1 2

– cont..

Number of No issues 1 issues 2 issues 3 issues 4 issues 5 issues 6 issues 7 issues
Subs
1
remaining remaining remaining remaining remaining remaining remaining remaining
0 1 0 0 0 0 0
• Key points
3 1 0 1 1 0 0 0 • Issues remaining
31 4 12 6 9 0 0 0
721 175 179 186 180 1 0 0
137 27 34 34 42 0 0 0
12 1 2 5 4 0 0 0
9 2 3 2 2 0 0 0
379 110 94 104 71 0 0 0
2518 611 460 717 724 2 1 0
2253 564 685 527 474 1 0 1
771 240 235 153 143 0 0 0
74 22 15 17 20 0 0 0
190 31 68 45 44 2 0 0
440 120 112 95 113 0 0 0
1 0 1 0 0 0 0 0
1 0 0 0 1 0 0 0
1 1 0 0 0 0 0 0
33 5 2 8 13 5 0 0
334 95 39 56 68 45 31 0

Using the Automatic Payment report

Group subscribers by issues to determine opportunity
Looked for people who had been on the same price for more
than 3 years.
Determine the optimum price point for each term.
Kept terms the same as the cycle renewal rates were
good.
Look at the universe to see how many people could
be stepped up.

Looking at term 4 issues for £7.50

Years on
Pending Pending current Number No issues 1 issues 2 issues 3 issues 4 issues
Issues Price Issues Price price of Subs remaining remaining remaining remaining remaining Of the 6634
subscribers, 6246 had
4 7 0 0 1 2 0 0 2 0
been subscribing for 3
4 7 0 0 2 1 0 1 0 0 years or more – 94%!
4 7 0 0 3 3 1 0 1 1
4 7 0 0 4 31 4 12 6 9
4 7 0 0 5 721 175 179 186 180
4 7 0 0 6 137 27 34 34 42
4 7.5 0 0 0 12 1 2 5 4
4 7.5 0 0 1 9 2 3 2 2
4 7.5 0 0 2 379 110 94 104 71
4 7.5 0 0 3 2518 611 460 717 724
4 7.5 0 0 4 2253 564 685 527 474
4 7.5 0 0 5 771 240 235 153 143
4 7.5 0 0 6 74 22 15 17 20
4 7.5 0 0 7 190 31 68 45 44
4 7.5 0 0 8 440 120 112 95 113

How I got started?

2. Created “What if analysis?”
What if…
I increased the price by £0.45 and maintained renewal
rate.
I increased the price by £0.45 and renewal rate
dropped by 2% or 5% or 10%.
rate.
rate.

Why do “What if’s”?

To determine where the opportunities were to
increase the price.
To calculate your risk.
To know your breakeven point.
To reassure the Publisher/Finance Director!

How I got started?

3. Put a test in place
The initial plan was to mail a 10% cross section of the file.
The plan was to bring the very low prices more in line with the
current acquisition pricing.
The test contained
Several price increases across different price points and terms.
Some groups had an even higher price to see if it would
adversely affect the renewal rate.
First mailing would be just under 3,000 customers informing
them of their price increase 4 weeks prior to their next Direct
Debit payment being taken.

How I got started?

4. Marketing communication plan to
subscribers
The Direct Debit rules are you need to notify
subscribers of any change to term or price.
We did this in the form of a carrier sheet that was
delivered with their copy.

The carrier sheet

The tone of the letter was very soft as it was from the editor
discussing what was in the current issue and what was coming
soon in future issues.
The carrier sheets were personalised to the subscriber
informing them of their individual “price increase”.
We were careful in the wording and didn’t actually mention the
words “price increase” instead opting to say “your next scheduled
payment will be….”
Using the Automatic Payment Analysis report I created a
pricing matrix for Dovetail to follow.
If the price is £XX.XX then move it to this price £YY.YY.
With so many price points to start this was the best way!

Timing is key!

Timing the carrier sheet was key.
As Time Out is a weekly we had to select a week that
had enough subscribers to justify the costs of the
promotion.
Needed to ensure we had a minimum of 1,000
subscribers to maintain postal discounts.
Extra costs incurred in the production of the
personalised letter.

Results to the test

96% overall renewal rate to the higher price
4 issues subscribers renewed at 97%
12/13 issue subscribers renewed at 93%
51 issue subscribers renewed at 86%
Additional overall Direct Debit revenue on the issue =
£2,331
Additional overall annual Direct Debit revenue from
this group = £16,033!

Next Steps – Roll out

During the initial group I had various price tests
to see how far we could push the price – an
additional £0.45, £0.75 or £1.
In most cases the higher prices yielded the same
renewal rate as the lower prices so for the next
mailings I rolled out with higher prices.
Don’t forget Time Out is a weekly so an extra
£0.45 on a monthly subscription works out to
£5.40 per year!

Results to the next week

97% overall renewal rate from the Direct Debit subscribers
The issue delivered a revenue increase of £3,710.
This group delivered an annual revenue increase of
£20,243!

….and the next week

97% overall renewal rate from the Direct Debit subscriber
The issue delivered a revenue increase of £3,220.33.
£17,416.51!

….and the final week

97% overall renewal rate from the direct debit subscribers
The issue delivered a revenue increase of £3,165.36
£17,446.30!

Total Results

Increased the price for 13,358 subscribers.
Generated an additional £12,400 in revenue to the 4 issues
that were mailed which had an immediate impact on the
income for those issues.
Generated an additional £71,138 in annual revenue.
Subscriber revenue yields jumped £1.53 per copy to £1.62.
Renewal rates were maintained across all groups.
Remember this is one magazine with a subscriber base of
30,000!

Next Steps

To capture as much of the balance of the file
Used the same text as carrier sheet but Dovetail set up
and mailed letters on a weekly basis.
Had less opportunity to test for prices but rolled out
with the main one.
Results were the same – renewal rates were maintained
as prices were increased.
Had to keep on top of the analysis and reviewed
parameters monthly to ensure costs didn’t outweigh
benefits.

Things to remember

Do your own numbers.
Ensure you factor in the additional costs to the promotion.
Make sure the increase is worth it but don’t be too
aggressive.
Make sure you pick your long term subscribers who will be
the most loyal.
Having monthly and quarterly Direct Debits were key to
Time Out’s revenue increase.
Timing the communication is important
Time Out was a weekly so could only do carriers on weeks
that had the largest volume which was limiting.

Thank you for listening!

Cheryl Brown
Subscription Solutions
Tel: 07808 182 701
www.subscriptionsolutions.co.uk

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