Activation fees: What newspapers can learn from the services industry

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If your newspaper is not charging activation fees for new subscription accounts, you could be missing out on a significant potential revenue source. Activation fees are commonplace in the service industry and, in recent years, also have been getting the attention of newspapers.

Matt Lindsay of Mather Economics will address the Key Executives Mega-Conference on Tuesday, Feb. 24, during an afternoon Quick Bite session.  He will be joined by John Schlander, digital general manager of the Tampa Bay Times.  Their topic will be: "Solving the Big Data ROI Challenge: Getting the Right Data for the Right Price."

Learn more about the Mega-Conference

What are typical activation fees?
Activation fees are charged to new subscribers and existing subscribers restarting from a previously entered permanent stop. A typical activation fee model calls for an additional $3 to $5 fee for all new starts. While some newspapers may choose to charge the activation fee to customers who sign up for Easy Pay, the decision varies from paper to paper. Activation fees don't apply to customers who resume service from a temporary stop, otherwise known as a vacation resume.

Activation fees are non-refundable and debited to the subscriber's account upfront. If a customer neglects to include the activation fee in the payment received from their first bill, the fee is still debited against the account, leading to a reduction in the paid-through date. 

For live orders, call center agents and direct salespersons add the fee to the taxed total amount they collect when an order is closed. When a representative wraps up a sales close, they say "the total for XX weeks including tax, delivery and fees is $XX. How would you like to pay for that?"

What if customers inquire about the fee?
If customers inquire about the fee, which it seems they seldom do, then be prepared to offer a simple explanation that the fee is instituted to help offset the expenses related to account and delivery set-up and entry work experienced by newspapers for new and returning customers.

You do need to make sure you communicate the fee upfront by adding language to your print and online order forms, or Easy Pay authorization forms once you make the decision to implement this program.

What are newspaper circulation executives saying?
Jake Gervin, regional director of retention and engagement for McClatchy's Carolina properties, said McClatchy's Myrtle Beach publication implemented a $3 set-up fee for all new customers not on auto renewing payment plans in December 2013 and increased the fee to $4.99 in December of 2014. "The implementation was very simple and I have heard very little negative response from our subscribers. This has proven to be one of the easiest and most seamless ways to generate revenue," he said.

At the Cape Cod Times and New Bedford Standard Times, Circulation Director Rob Sypek implemented a $4.95 activation fee in the summer of 2014. "The revenue impact from this has been substantial and the pushback or concern from customers has been minimal. This was virtually seamless to implement and one of the easiest new revenue initiatives that we've tackled," he said.

Summary
In summary, adding a non-refundable acquisition fee to new or returning subscribers is one of the simplest and least painful revenue initiatives we have seen undertaken in the last couple of years. Anticipated revenue opportunities are based on, and can be modeled from, your start transactions and most newspapers should be able to generate thousands of dollars in additional revenue each month with little to no pushback from customers.  

Chris Christian brings 25 years of experience to Mather Economics. As a vice president, he leads new business development efforts and focuses on expanding Mather Economics' product and services portfolios to both anticipate and meet client needs.

Prior to joining Mather Economics, he was vice president of audience and marketing for The Kansas City Star and, over a 10-year period, led efforts to grow the reach of all print and digital products for the paper, while overseeing market research, negotiating advertising promotional agreements and steering company marketing initiatives. He also worked as the director of sales and marketing for Research and Marketing Solutions, a provider of inbound/outbound teleservices.

Over the span of his career, Christian has held corporate and market leadership positions with Dow Jones, Gannett, Knight-Ridder and McClatchy.

He is known as an industry thought leader and groundbreaker on numerous revenue and marketing initiatives and has made organizational committee and board contributions to the Newspaper Association of America, International News Media Association, Alliance for Audited Media and Major Metro. 

He can be reached at chris@mathereconomics.com or (816) 853-1513.

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