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MBA 565: Meredith Corporation Audio Transcript

Narrator: Take a walk to your mailbox, and chances are you’ll have at least one, and maybe even a few offers waiting for you. From credit cards to magazine subscriptions, there’s no shortage of opportunities to buy products, or to sign up for new services. But, do all of those direct mail pieces translate into any new sales? The answer may exist within a company’s ability to successfully segment customers, and develop offers positioned to meet the needs of those customers.

Cheryl Dahlquist: We collect a lot of information about how they buy from us. So, which magazine titles they like to buy, which subscriptions, what kinds of offers? Do they like incentive offers? Is there a particular creative execution that attracted them?

Narrator: Trying to figure out the right offer, for the right customer, at the right time, is complicated. It’s a task publishing giant Meredith Corporation has been doing successfully for years. From Better Homes and Gardens, to more than two hundred special interest titles a year, Meredith is in the business of marketing to women.

David Ball: The focus of all of the magazine editors is to come up with inspirational stories that women around America can read, and use to come up with their own style.

Narrator: Meredith has nearly eight million paid readers for Better Homes and Gardens each month. The magazine’s popularity prompted Meredith to create a few spinoffs like Country Home and Traditional Home.

David Ball: Because Meredith has this portfolio that grew out of Better Homes and Gardens, the database is great for promoting there, as well as the way we’ve acquired magazines, to make a fairly holistic portfolio. That gives us a huge advantage for promoting the magazines internally.

Narrator: Today there are hundreds of titles, endless choices: magazines for farming, fitness, and families. And because there are many more options for consumers, companies like Meredith need to be that much more precise in their marketing. That’s where Meredith’s massive database comes in. Meredith’s database is the largest of any U.S. media company, containing more than eighty-five million names, reaching eight out of ten home owners. And as you can imagine, with all of that information, the database plays a major role in Meredith’s subscription and renewal efforts. How do they get to know customers? Through extensive research and surveys, asking customers everything about editorial interests, to where they are in their life stage.

Cheryl Dahlquist: Today we have to know a lot more, and that’s why we spend a lot of time on trying to understand, what are their interests and passions? And, trying to get them to tell us what’s happening with them.

Narrator: Meredith takes those eighty-five million names, and breaks them down into thousands of data points. So by the time you get that offer in the mailbox, odds are much better that you’ll respond.

David Ball: I don’t want to be sending out a million pieces of direct mail if I could send out a hundred thousand pieces of direct mail, only to the people who really want a product.

Narrator: What types of data does Meredith collect? They start with very basic information, like gender, age, and income. Then they drill down to more specifics: Are you a home owner? Do you have children? What are your interests? Hobbies? What is your past subscription activity? Are you close to retirement age? All of this data helps Meredith to make a more appropriate offer, to target customers more precisely, and to position its publications more strongly, and ultimately give customers products they’ll want to buy. The company has, on average, about seven hundred data points per person. But, the amount of data doesn’t necessarily dictate a good target.

Cheryl Dahlquist: We’re doing more and more around attitudinal information, we’re doing more around understanding and collecting as much as we can what life events are going on. Are you having a baby? Are your kids about to go to school? Are your oldest kids about to graduate? Are you thinking about retiring? As much as we can, we’d like to know that information, because we feel like those are the things that influence really what’s happening with someone.

Narrator: Because of its successful data-mining and analytics, Meredith has been able to launch new products, positioned to respond to customers’ needs throughout various life stages.

David Ball: We had American Baby at the very early stages of a woman going into the home owning and child rearing years. We filled in with Parents and Family Circle. American Baby is prenatal, Parents is postnatal, Family Circle is teens and tweens, and so now we’re able to take someone who subscribes to American Baby, and really graduate them into our other products.

Narrator: Each time the company launches a new title, there is ongoing communication with consumers. They’re constantly trying to learn what makes someone want to buy.

Cheryl Dahlquist: It’s really a discipline around the research first, and then development of our product, and then ongoing communication where we’re collecting information, and hopefully using that to get them back some valuable, good content.

Narrator: The company’s sophisticated data management allows them to target the right person, with the right product, at the time they will be most likely to buy. They also segment customers through what they call Passion Points; a proprietary scoring system that tells them about the level of a customer’s interest in, for example, cooking.

Cheryl Dahlquist: What we’re trying to do is understand that you’ve got an interest in cooking and how deep your interest is compared to everybody else on the base. And we’ve developed, through our statistical group, the ability to say, when somebody reaches a certain score, that’s when they’re really hot to trot in cooking, and they’re ready to respond to just about all the offers that come their way around the cooking category.

Narrator: The Passion Point research is used to create new information about potential customers. The goal is to transform that information into new insights. So, how does Meredith market its products?

David Ball: In the magazine we have insert cards that people can use to subscribe. We also do direct mail campaigns where we will take both our own names, as well as lists we rent from the outside and mail direct mail to people. We also have gift promotions to current subscribers that are very successful.

Narrator: They also have online offers. The Internet is expanding their reach dramatically by putting content online, where they have a whole new group of people coming to their websites. Meredith has twenty predictive analytic models, each one designed to rank the order of a person’s interests. They’re able to ask consumers how likely they are to subscribe to various magazines, and then in real time they make changes to their promotions.

Kelly Tagtow: All twenty models are scored each week, and each week they’re ranked from high to low, and the one that ranks the highest is the product promoted that week.

Narrator: Meredith has also developed many partnerships along the way, working with other companies to promote their magazines, both online and offline.

David Ball: For instance, in Parents magazine in particular, we partnered with a company called Growing Family, which is the company that, when you have a baby, you’re in the hospital and someone comes and offers to take pictures of the baby. If you choose to buy the pictures, included in that is a subscription to Parents magazine.

Narrator: But what about the smaller niche magazines like Country Gardens, for example? How does Meredith come up with a large enough database to develop subscriptions for them? They start with the subscribers of their larger magazines, and then put the names up against their database and try to find a big enough pocket of people to start soliciting to.

David Ball: So we’ll do a cross section based on the analysis we’ve done, do a mailing, see who subscribes, then keep refining the models we use to find these tighter pockets of people.

Narrator: And that’s how they end up creating magazines like Garden, Deck & Landscape, Country Gardens, Scrapbooking magazines, and American Patchwork & Quilting. For some of their larger magazines like Better Homes and Gardens, Meredith creates different versions for different demographic regions, modifying the copy to better reflect the specific target market.

David Ball: We do regional editions, we do demographic editions. We have our Better by Design edition of Better Homes and Gardens that goes to a million of the higher income people there, and so we will do extra editorial content in those magazines that we feel is more appropriate for people who are probably spending more money on their homes.

Narrator: They also segment pricing, varying the cost of the subscription, based upon the source they offer.

David Ball: So, if you’re getting a direct mail piece, the price will be different than if you’re buying it through an insert card, or if you’re getting it through a gift subscription. And then our renewals are priced differently than our acquisition pieces.

Narrator: As technology allows companies like Meredith to collect more and more information, the challenge is keeping all of that data straight.

Cheryl Dahlquist: One of the challenges in managing a database, especially of our size is: how much information do you really need, and what’s it going to cost you to maintain that information? How valuable are all those data points? And we are constantly going through a process of trying to understand the value and analyzing what we should do next.

Narrator: Though it may seem like an uphill battle to sift through your daily mail, Meredith says segmenting customers the right way will really give consumers what they want.

David Ball: We’re really trying to deliver the opportunity to buy products that we believe will help people, and that they’ll enjoy in the most economical way.

Narrator: For the Pearson Video Library, I’m Pat Lore.

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