Lesson 3

How to Measure Success

Key Objective:

Lesson 3 is to help publishers and editors develop simple monitoring tools that serve as “leading indicators” and allow them to either adjust strategy or forge ahead more confidently.

In a time of limited resources a strategy allows you to prioritize the various tactics and initiatives you are considering implementing.  Since no path is straight-forward, you will most likely need to make mid-course corrections when you encounter roadblocks as you implement the new strategy.  So you will need to put in place a system of measurements that allows everyone in your news organization to know whether progress is being made and how they, individually, can contribute to the change.

As the book, Saving Community Journalism: The Path to Profitability, points out, the Internet has destroyed the traditional business models of newspapers in three ways.  It has attacked first the cost side, and then quickly siphoned off the readers and advertisers that provide the revenue that supports your news operation. In order to survive and thrive, newspapers need to re-invent their cost structure, even as they transition with their readers and advertisers to a multi-platform, digital future.

This means that in order to survive and thrive, community newspapers must employ three strategies simultaneously. As a publisher, you need to reduce costs associated with producing and distributing the physical paper so you can invest the savings in building loyal readership across multiple platforms (print, web, mobile, in-person events).  This, then, allows your newspaper to aggressively pursue new sources of advertising revenue across the various platforms.

Building loyal readership is the critical link between reducing costs and aggressively pursuing new advertising revenue.  As long as your newspaper remains tethered to the print edition, which accounts for the majority of costs and produces the vast majority of revenue, you cannot re-invent and renew the business model.

Since publishers must keep three plates spinning at all times, they need a system of monitoring progress that allows them to:Lesson-Three_Monitoring-Progress_405x190This lessons explains three simple monitoring systems that can be put in place at even the smallest news organizations and can greatly inform your decision making.  Call them “leading indicators” since they offer you advance warning on issues that might be brewing just below the surface and will affect your bottom line in future quarters.

How Do You Track Customer Loyalty and Changing Media Preferences?

Advertisers follow readers, so it is critical that newspapers must first train their sights on understanding their readers and what makes them loyal. In the 1990s, after studying the customers of a variety of industries, management consultant Frederick Reichheld observed that the loyalty of a company’s current customers was directly related to its future profitability.  That’s because loyal customers buy more and pay more.  But more importantly, they sell more.  They become a free “marketing department,” recommending a product to their friends, colleagues, and family members. This loyalty effect had tremendous impact on the bottom line in the age of social media because your customers can take your newspaper’s marketing effort viral.

To gauge the loyalty of readers in the newspapers we have worked with, we’ve used a simple measurement tool, designed by Reichheld.  In a Harvard Business Review article, he argued that the most effective way to gauge loyalty was to ask one questions:  On a scale of one to ten, with ten being highest, would you recommend this newspaper to a friend or colleague?  To account for grade inflation, only customers who responded with a “nine” or “ten” were counted as loyal. Those who responded with a “seven” or “eight” are classified as “fence-sitters,” who could be converted, but might also defect to a competitor.

By understanding why certain customers are loyal, you can craft strategies and procedures for retaining the loyalty of current customers and appealing to new prospects.  That’s why we recommend incorporating this question into a brief online survey of 10 to 15 questions that query readers about their changing media habits, their engagement with content, or their consumer purchase patterns.   This survey gives you a baseline for tracking loyalty over time, and understanding how changes you make in content or in distribution of the paper affect loyalty.  To keep current, you should administer the survey every six months to a year.   To achieve a high response, the survey should have no more than 15 questions, and readers should know that it will take only a couple of minutes to complete.

To see an example of an online reader survey, click here.

In addition to conducting periodic online surveys, you should also have a system for monitoring the loyalty, habits and preferences of customers who read only the print edition. This can be done with annual one-on-one, in-person interviews of a dozen or so readers conducted at your newspaper offices. To select readers, you call every hundredth person on the subscriber list and invite them to come to the newspaper for a half-hour interview. In return for their time, readers can be offered a coupon, worth $10 or $15, that can be redeemed at a local merchant.

The interview can be conducted by an editor or by an outsider.  What is important is that the interviewer asks each participant the same questions. These one-on-one interviews are especially insightful in determining what features in the print edition must be preserved (to prevent alienating loyal readers) and what can be moved online, thus saving the expense of printing it on paper.

For an example of a one-on-one questionnaire, click here.

After you’ve gathered baseline information about your readers, you’ll want to interview your current, former and prospective advertisers.  At least once a year, you will also want to conduct one-on-one interviews with a dozen or so advertisers.  Group your advertisers into three categories:  long-time customers, high-priority prospects who had never advertised, and those who have left or significantly decreased their spending with the paper. Then call each of the advertisers on the list and arranged a time to interview them at their businesses, working from an identical list of 20 questions.

These interviews, which can be conducted by either the publisher or the advertising director, should not be confused with sales calls.  Rather, they are informational meetings, aimed at helping you better understand the competitive landscape. Who is selling against you?  What are they promising your advertisers? How are your advertisers’ needs changing? How are their media expenditures changing? How do they judge success?  How can you respond to meet the challenge?

In many of the surveys we conducted in both rural and urban communities, we found that local advertisers were often confused by all the noise in the market.  Like newspapers publishers, these business owners are adjusting to a new retail and consumer marketplace. They are being told that they need to move online now.  Yet they are not sure how they should allocate their marketing dollars, or even how to judge success.  They say that they still trust their newspaper sales representatives and want to remain loyal to the local paper.  But they also expect the local paper to be providing them with more marketing support during this time of immense confusion.  This annual survey of advertisers allows the advertising director to better craft programs, rates and special content to retain high-priority clients, while also attracting new ones.

For an example of advertiser interviews, click here.

By tracking the loyalty of readers and their engagement with the content either on a semi-annual or annual basis, editors can more easily determine whether they were successfully “building vibrant community online, as well as in print.”  By tracking the loyalty of advertisers, publishers and ad directors can determine whether the paper is “following the money” and aggressively “pursuing new revenue.”  And by tracking the changing media habits of its readers and advertisers, publishers and editors can more wisely manage the transition between print and digital by “following their customers” – instead of getting out ahead of them, or falling too far behind.  This insight could help them more efficiently “shed legacy costs” associated with the print edition.

Click here for an exercise on creating a community profile.

How Do We Keep Pace with Changes in the Marketplace, Affecting Cost and Revenue?


Your newspaper needs to be keeping pace with the changing media preferences of your readers and advertisers. This means transitioning from a newspaper that is primarily dependent on the print edition for advertising revenue and readers to one that exists on many platforms.  How do you manage the financial transition to a multi-platform future? If you move too quickly you risk prematurely killing the cash cow – the print edition.  Move too slowly, and you risk obsolescence as your customers adopt new ways of receiving information.

By doing routine loyalty surveys of your readers and advertisers, you can stay in touch with how quickly their habits are changing and compare these results to the national averages tracked by the Pew Research Center annually.  In our market surveys, we found that even in rural areas, where broadband and wireless are less prevalent, media consumption habits are lagging only slightly behind the national average. So that is one significant reference point.

But we also know that adoption of a new technology often reaches what is known as a “tipping point.”  Adoption by consumers can build slowly at first and then reaches critical mass, when a significant portion of the population owns the device and has incorporated its use into daily life.  In recent years, we have reached that tipping point with the smart phone and are approaching it with the tablet. That means you need to be planning for a tipping point, when the way your readers access information about your community shifts dramatically in a short period of time.

In his book, Creative Destruction: Why Companies That Are Built to Last Underperform the Market, longtime management consultant Richard Foster lays out a timeline and a yearly goal of reducing costs associated with a legacy product – such as the print newspaper – while increasing the revenues associated with new products, such as digital editions. In order to survive during periods of creative destruction, such as we are witnessing now with newspapers, he says, industries must strive for “transformative change” of their business models. This involves making significant adjustments to both the cost and revenue sides of the equation that keep “pace with the market.”

His proxy for “the market” is the S&P (Standard & Poor’s) 500, composed of the world’s 500 largest companies in terms of market value, which is calculated by multiplying the price of an individual share of stock by the number of outstanding shares.  Over the latter half of the 20th century, the average time a company was listed on the S&P 500 dropped from fifty years to sixteen, resulting in an average annual turnover of six percent. Foster says that this suggests that “the market” is turning over – or changing – at a rate of six percent annually.  So to “keep pace with the market,” he advocates that publishers strive to transform their newspaper’s business model at the same rate.

Put another way, this means that to keep pace with the market around them – and to preclude obsolescence at the hands of competitors – newspapers need to have in place a strategy that aims for an average annual six percent decrease in costs, coupled with a matching increase in new revenue. While a six percent annual change may not sound like much, over five years it adds up to a 30 percent change in cost and revenues, the sort of transformative change that Foster believes you will need.  In the book Saving Community Journalism, we recommend taking the long view.  Instead of planning and budgeting for a six percent annual change in costs and revenues, we suggest creating your financial plan by jumping ahead five years and working backward.  This will force you to think about transforming your business model, instead of simply pursuing incremental change each year.

The actual pace of change in your market may be faster or slower than the six percent turnover that is occurring in the S&P 500.  However, by taking the long view, and coming up with a five-year goal to decrease costs by 30 percent and increase revenue by a similar amount, you have a way to track your progress on the financial side, while also making adjustments year-to-year so that you can keep in sync with significant and unforeseen tipping points in your customers’ habits and preferences.

How Do We Identify Processes and Procedures That Must be Changed?

What sort of changes to your cost structure will you need to make to reduce expenses by a third over the next five years?  How will you need to transform your sales organization to achieve a similar growth in revenue from new sources and platforms?  As you probe for answers to these questions, you will undoubtedly conclude that there is no way to merely tweak the current business model.  Instead, you need to come up with a blueprint for rethinking and reengineering many of the procedures and processes you currently have in place.

In Lesson One (Reaffirming the Vital Mission of a Community Newspaper), we talked about the importance of identifying the key groups who have a stake in your survival.  The three most important stakeholders are your customers, your shareholders and your employees.  Each one of these groups is essential to your success.  Without employees, there is no product to sell to your customers, and without customers there is no profit for the shareholders.

So the best way to identify the processes and procedures that must change is to begin with this question:  If we succeed in transforming ourselves, how will we look to our customers, our shareholders and our employees in five years?

If you succeed, in five years:

  • Your customers (both advertisers and readers) will view you as a newspaper that they can access on multiple platforms (print, digital and mobile). Their loyalty will have increased because they view your newspaper will be the most credible and comprehensive source of news and information that they care about.
  • Your shareholders will have confidence that you are well on your way to transforming your business model and delivering on a plan to simultaneously decrease costs and increase revenue at an average annual rate of six percent a year.
  • Your employees will understand why you must pursue a three-pronged strategy –simultaneously shedding legacy costs associated with the print-only era while building vibrant communities of readers on multiple platforms and, then, aggressively pursuing new types of advertising revenue.  They will own the strategy

You have tools that can track the loyalty of your customers, and establish financial benchmarks for transforming your newspaper.  These statistics and goals should be shared widely with all employees on a routine basis, since these serve as an organizational report card.  In addition, each employee needs to understand how they contribute to and are individually responsible for your paper’s success in growing loyalty of customers and transforming the business model. You will want to ask every employee to answer these two questionsIf we are to succeed, at what processes and procedures must this organization excel?  How must I learn and improve?

In Lesson Two (Developing a Vision and Strategy), we discussed the three processes involved in producing a newspaper – creating, aggregating and distributing content. As you rethink the business model, you will want to examine every process and procedure in every department involved in producing your paper to make sure you are creating actual value for the customer and for the shareholder. There are numerous ways to accomplish these goals and many tactics you can employ. In Section Two, Digging Deeper, you’ll find examples of how other community newspapers revamped processes and procedures to shed legacy costs, built community across many platforms and pursue new revenue.

Why do so many businesses fail to successfully implement transformative change? “One problem is that strategies – the unique and sustainable ways by which organizations create value – are changing, but the tools for measuring strategies have not kept pace,” says Robert Kaplan in The Strategy-Focused Organization.  In this lesson, we’ve introduced three new ways to measure your success and know if you are creating value for your primary stakeholders.

Click here for an exercise on establishing metrics to measure success. 

Key Insights:

To survive creative destruction of their business models, community newspapers must employ a three-pronged strategy to:

Shed legacy costs associated with producing and distributing the physical paper;

Build loyal readership and vibrant community cross multiple platforms (including print, web, mobile and in-person events);

Aggressively pursue new sources of advertising revenue.

Publishers need to establish monitoring systems that track leading indicators (changes in customer loyalty and media habits that will affect the bottom line adversely) and measure progress against cost and revenue benchmarks.  

Tracking customer loyalty is especially important during times of disruption in the market place.  In the digital age, it is relatively easy to gain timely and reliable data on your customers.

To keep pace with the changes in the market, newspapers should strive to reduce costs and increase revenues by six percent annually. This means coming up with a five-year business plan that increases revenues from other sources by thirty percent, and decreases costs associated with the legacy print edition by a similar amount.

The best way to identify the processes and procedures that must change is to ask this question:  If we succeed in transforming ourselves, how will we look to our customers, our shareholders and our employees?