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Pricing Strategy

Sweeping Changes

o Customer Service

o Retention

o Acquisition

o Customer Communications

Future Changes & Initiatives

3

Definition of OPTIMIZATION

: an act, process, or methodology of making

something (as a design, system, or decision) as fully

perfect, functional, or effective as possible;

specifically : the mathematical procedures (as finding

the maximum of a function) involved in this

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Provide the optimal marketing ROI by determining the best offers for the

individual customers with the best channel capacities and contact

strategies

Allows for planning and prioritizing marketing campaigns to get the

best results.

Maximizes the value of customer interactions

Improves the value of multi-channel communications and

preference management initiatives (by applying suppressions and

constraints)

Allows for the application of marketing intelligence across channels

Innovative segmentation and selection techniques help achieve

greater productivity and profitability from lists

Subscription Pricing

- company contribution

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Timeline:

2005-2006: Broad segmentation, mass approach

2008: MBP – Market Based Pricing Model (Mather Economics)

True Optimization – applies economic methodologies, principles

Effective at maximizing volume and revenue (hh based)

2009-2010: Maximize revenue with „planned‟ volume loss –

aggressive pricing, Test/Control Groups

2011: our new “BAU” – MBP retention-model (from 2008)

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2005-2010 YOY home delivery revenue

-0.3% -1.5% -0.1% +4.3%

+22.8%

2005 2006 2007 2008 2009 2010

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Average revenue per subscriber

$173 $177 $180 $183 $201

$293 $327

2005 2006 2007 2008 2009 2010 2011

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HD Volumes 2010-2011

Annual Averages: Sunday - 2011: 211K 2010: 230K -9%

Daily - 2011: 120K 2010: 135K -12%

Sunday Illustration

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Test vs. Control measurements prior to aggressive roll-out

2K avg # of accts

20% TEST Group

4300 avg # of accts

33% TEST Group

1 Week, 100% Test

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Renewal „market based pricing‟ initiative

8-9% net

differential

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Most and Least loyal subscriber segments clearly identified

„Loyal‟ = Tenured, Full Delivery, EZPay, MORI Segments EEN, MS, VE

„Churners‟ = Least tenured, fewer delivery days, MORI Segments WGG, LNB, NAN

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

78%

(Avg)

%

R

E

T

E

N

T

I

O

N

Customer Service

– More Important Than Ever

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Goal – become an industry leader in servicing audience

Customer First

Transitioned Domestic –

Extended hours (9 PM weekdays, Noon weekends)

IVR – first prompt: „to speak to a live agent, press Zero‟

Customer service hours prevalant

Online account management tool

Strive for „Perfect Service‟ in the Field

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Campaign:

Acknowledge

Service Issues

Test effectiveness of

email communication,

segmenting „Core‟

and „Churn‟, Test vs.

Control Groups

Shows slight overall ‘lift’

among AT RISK group

Retention

– Strategies Implemented

With Pricing Initiatives

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CUSTOMER SERVICE

Retention-based pricing/save offers:

-Multi-level stop saving rates

- 10% term discount

- 20% EZPay discount

- Introductory rates

- Service downgrade

- Digital replica

- Shorter term options on bill statements

- Multiple EZPay premiums

- Customized online landing page enrollment

- “Only in The Dispatch”

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2008 2009 2010 2011

Weekly stops 1,979 2,449 2,598 1,846

Daily Churn 58% 77% 101% 80%

Sunday Churn 37% 48% 60% 45%

Average customer value

2008 2009 2010

$183 $201 $293

Stops / Churn STOP THE

STOPS!

MBP reinstituted February 2011

Retention continues to improve with each subsequent pricing action

# Times

Priced # Accounts # Active

%

Retention

1 4,639 3,728 80.4%

2 30,789 28,666 93.1%

3 10,413 9,761 93.7%

4 133 126 94.7%

Total 45,974 42,281 92.0%

2011 Market-Based Pricing Retention

New Starts

Loyals

Investigating a more conservative approach for pricing New Starts –

how can we optimize pricing our new acquisitions?

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“At Expire” Campaign: goal to capture payment, renew

Test vs. Control – shows ‘lift’, effectiveness

Campaign segment is comprised solely of less tenured subscribers acquired

through a pressure start channel

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Market-Based Subscription Pricing

„At Expire‟ Notifications

End Of Grace and Post-Stop Programs

Multi-Layered Campaigns

Loyalty, Rewards

Customer Communication (Engagement)

Value Statements

Stop Save / EZPay Offers & Programs

Email Harvesting

Retention Initiatives & Tactics

Acquisition

– Balancing Volume With

Revenue

- Changing philosophies

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Initial impact: Late 2009, Early 2010

OVERALL: -24%

Began to really PUSH Flat Monthly EZPay Billing …

EZPay sales grew by 500+ per week to over 60% of our new starts

2010-2011 results:

-18% average decline vs 2009

Annualized revenue from acquisition: +33%

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BRANDING playing

a much larger role

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Integrated, segmented, multi-channel direct marketing campaigns

Able to measure a single

channel in a multi-channel

marketing effort

Withheld a percentage of DM ,

in a controlled environment

Top Portion: Direct channels

Below Portion: Indirect

Account for response rates in

both groups; the difference is

the campaign “lift”

The „lift‟ is the amount we can

statistically tie back to the

inclusion of the test

component of a multi-channel

effort – in this case a Direct

Mail piece. All channels in the Test group show a „lift‟ versus the Control

The DM piece attributed to a .42% overall campaign response „lift‟

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Acquisition Initiatives & Tactics

Optimize Acquisition Pricing and Sales Efforts in other areas

o Upgrade Optimization Program

o Win-Back Programs

o Door-to-Door, Direct Mail, Email, Telemarketing

Acquire strategically, while improving Retention o Layered Approach

o Handheld Device / technology

o Targeted door-to-door

Monthly rates and billing (no vacation credits?)

Expanded New Mover Program

Partner with branding for convergence campaigns (WIIFY)

Now … THIS is Optimization!

“Upgrade

Optimization

Program”

(Mather Economics)

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Layered Approach

Tracking conversions by channel, free/paid

Measuring incremental revenue & units

Long-term (retention) strategy

The Future

– committed to a growing,

evolving business

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Future Initiatives

Digital Integration (Digital replica, Hybrids, Tablets)

Growing AUDIENCE - committed to a customer

relationship based on selling subscriptions,

not just newspaper subscriptions

Future Initiatives

Strategic, financially sound, data-driven decisions

Segmented, layered approached within circulation marketing verticals

Incorporate Customer Lifetime Value

1:1 customer interaction (CRM)

Social Media opportunities

Mobile strategies

„Added value‟ product testing

Loyalty, Rewards – find something truly „sticky!‟

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Only through true optimization can we, as marketers, gain critical

knowledge about factors that influence the success – or failure – of

marketing campaigns … to learn, re-learn … apply to subsequent

campaigns.

Remain committed to OPTIMIZATION & TESTING