CASE STUDYLRC PUBLISHING, INC.

Donald W. Eckrich This case was authored by: Donald

W. Eckrich, PhD of Ithaca College,
James A. Karrh James A. Karrh, PhD, of the
Deborah Snyder University of Alabama, and
Deborah Snyder, MBA of Walsh
f College.

This case was prepared as part of

the DePaul University Direct
Marketing Case Writer’s
Workshop. The workshops are
presented annually by DePaul’s,
Institute for Interactive and Direct
Mark Regan was no stranger to the newsletter business. He Marketing, Dr. J. Steven Kelly,
learned the business from his late father, a well-known pioneer in Director. To become involved in
the industry. Dressed in his typical “office wear” of a casual shirt, future Workshops, call
khaki shorts, and deck shoes, Mark looks every bit the young and 312.362.5913 or email
skelly@wppost.depaul.edu
aggressive publisher he has the reputation of being. Amid the
swirl of work during a typical weekday in his company’s Art Copyright © 1998, DePaul
District office, Mark continued to look for ways to grow the University, Institute for Interactive
business beyond what his father could have ever imagined. and Direct Marketing. This paper is
Mark’s plan to more than double revenues over the next five distributed for purposes of
instructional use only. No part of
years hinged on a serious and troublesome question— how to
this publication may be
“crack the code” on improving the renewal rates for each of the reproduced, stored in a retrieval
company’s publications. If Mark was going to lead LRC Publish- system, or transmitted in any form
ing to his $22 million sales objective within five years, he would or by any means— electronical,
have to start with more effective management of the renewal mechanical, photocopying,
process. Other issues were standing in the way as well. recording, or otherwise—without
the permission of DePaul
University’s Institute for Interactive
and Direct Marketing. Additional
BACKGROUND copies of this paper are available
LRC Publishing, headquartered in Chicago, Illinois, is an almost from The Institute at 312-362-5913.
$10 million (revenue) family business which grew from the late
Louis Regan’s first newsletter, The Regan Report. Begun in 1970 for
corporate communication executives, The Regan Report. targeted

Published by John Wiley & Sons, Inc. and

Direct Marketing Educational Foundation, Inc.
CCC 1094-9968/99/030077-06
f

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TABLE 1
LRC Publishing, Inc. Business Lines

Management Digest Communications

Newsletters (MDNs) Newsletters Technology Newsletters Other Businesses

The Management Report
$139/12 issues (1 yr.)
The Business
Communicator
$107/12 issues (1 yr.)
Motivation Journal
$119/12 issues (1 yr.)
Positive Advantage
$79/12 issues (1 yr.)
The Selling Edge
$119/12 issues (1 yr.)
The Regan Report Regan’s Interactive PR workshops and seminars
$287/52 issues (1 yr.) $279/12 issues (1 yr.)
Employee Web Management
Communication Journal Report
$199/6 issues (1 yr.) $299/12 issues (1 yr.)
Editor’s Guide Intranet Newsletter
$139/12 issues (1 yr.) $229/12 issues (1 yr.)
Annual Report
Newsletter
$329/12 issues (1 yr.)
The Draft
$139/12 issues (1 yr.)
Speechwriter’s Institute
$287/12 issues (1 yr.)
Media Relations Journal
$327/24 issues (1 yr.)

editors of employee publications and served as
an early type of informational bulletin board
through which editors could exchange ideas
and tips. Perhaps its most distinctive trait was a
front-page op-ed column authored by Regan,
considered by many to be a national guru in the
corporate communications industry.Although
Kiplinger had produced the first newsletter, The
Regan Report. quickly emerged as a leader
among newsletters for professionals. Published
weekly, it remains the company’s flagship pub-
lication.
In recent years, LRC has added several com-
munication-related products which now cover
four broad areas: communicationnewsletters;
management digest newsletters; conferences
and workshops; and books and manuals (see
Table 1). Of these four areas, management di-
gest newsletters is the largest, accounting for
over 50% of company revenues. Today, LRC
publishes 15 newsletters in addition to its other
products, as shown in Table 1. They also main-
tain a company website.
Following Louis Regan’s death eight years
ago, a business of 12 employees producing
three newsletters became Mark’s responsibility.
Other siblings were not interested in the busi-
ness and/or chose to sell their ownership inter-
est to Mark. Two years later, Dave Osborne—
while still in his twenties—was hired as
President. A year later, Greta Isner was hired to
lead marketing efforts at the age of 23. The
company currently employs about 50 people,
most in their twenties and thirties. At age 40,
Mark describes himself as “the second or third
oldest person around here.” Speaking to the
youthfulness of the staff, Greta remarked:
“It’s great. It’s exciting. The thing is, people
here don’t look down on younger people.
Mark hired me with no experience just because
I said, ‘I know I can do this … I don’t have the
experience but I’ll learn it, I’ll learn everything
I need to do.’ He took a chance.”
“MANAGEMENT DIGESTS” AND OTHER
NEWSLETTERS
Following his launch of The Regan Report in
1970, Louis Regan developed other newsletters
targeted toward professional communicators.
For example, where The Regan Report began as a

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 LRC PUBLISHING, INC.
newsletter for editors of employee publications
and blossomed into a strategic source for direc-
tors of corporate communications, Editor’s Guide
was added as a how-to guide for editors. Annual
Report Newsletter was later developed for editors
of corporate annual reports.
Under Mark’s leadership, a different growth
strategy was adopted. Building on the concept
of a “management digest newsletter” (MDN),
LRC introduced a new generation of newslet-
ters by launching three new titles within one
year. MDNs offer condensed versions of more
substantive articles that have appeared else-
where in the management literature (re-publi-
cations). In addition to the highlights of those
articles, a digest would also include motiva-
tional prescriptions and general managerial ad-
vice. The first MDN launched by Regan was The
Business Communicator (BC). Next was Manage-
ment Report (MR), which remains LRC’s most
successful digest newsletter with 20,000 sub-
scribers. MDNs are published monthly.
The Speaker’s File, also introduced the same
year, was changed in format and name to be-
come Motivation Journal (MJ). The content and
look were slightly altered and re-positioned to
stimulate sales; this strategy was very successful.
Two other new digest newsletters were intro-
duced the next year: The Selling Edge (SE) and
Positive Advantage (PA).
The annual subscription prices for these di-
gest publications range between $79 and $139,
about half the cost of Regan’s other newsletters
(see Table 1 for a complete list of LRC publica-
tion titles and subscription prices). In most
cases, the subscriber does not pay for the news-
letter herself—rather, an employer foots the
bill, with the expectation that the reader will
find items in the newsletter that will help her do
her job better.
Utilizing what Mark describes as a “cereal-box
approach,” the entire set of MDNs is essentially
duplications of one another. As is the case in
the cereal aisle in the grocery store, the brands
of each manufacturer (e.g. Brand X toasted oats
versus Brand Y toasted oats), including package
configurations and sizes, are roughly the same.
See Table 2 for LRC’s brief descriptions of each
digest newsletter. Mark acknowledges:
JOURNAL OF INTERACTIVE MARKETING
“You can look at them, and you probably imag-
ine differences, but for the most part they are
all the same thing with different titles…our
marketing strategy puzzles a lot of my col-
leagues because it’s the first time anyone in the
newsletter industry has done it.”
However, despite the overlap in content
among the MDNs, the readership profiles of
these newsletters can differ substantially. While
conducting “publication audits” of different di-
gests (telephone interviews of subscribers),
Greta was surprised. In comparing the effective-
ness of different rented mailing lists in generat-
ing new subscribers, and noting the employ-
ment titles on subscriber lists, Greta found that
the MDN subscriber lists were often dramati-
cally distinctive. Subscribers to MR, for instance,
tended to be corporate CEOs and vice-presi-
dents. BC, on the other hand, attracted more
supervisors, middle managers, and salespeople.
In her continuing search for new lists of poten-
tial subscribers, Greta selects from among 250
lists, each containing 5,000 to 50,000 names.
Lists can be “rented” (bought) for use in direct
mail campaigns. Greta bases her decision con-
cerning which lists to buy on how well the
names of each list match the profile of existing
subscribers. She has also used lists of current
subscribers to modify some of the editorial con-
tent of each MDN. In her words:
“Since different (MDN) titles seem to draw
different subscribers, we have started re-struc-
turing the newsletters to those audiences. The
Business Communicator attracts more salespeo-
ple than the other (digests). In response, I
have started purchasing more lists which in-
clude people with sales titles, and I have put
more sales articles into The Business Communi-
cator.”
COMPETITION
Regan has few direct competitors, and Mark is
comfortable with the company’s overall posi-
tion. The largest competitor was Universal Pub-
lications, Inc., which publishes Communication
Briefs. With a base of 60,000 subscribers, Com-
munication Briefs is the most successful commu-
nication newsletter in the industry. Universal is
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TABLE 2
LRC Management Digest Newsletters: Content Profiles

Management Report
The Business Communicator
Motivation Journal
Positive Advantage
The Selling Edge
An insider’s fast track to better management, this monthly publication is full of
strategies managers can put to use immediately. Topics covered every month
include: tactics for managing meetings; techniques for boosting morale;
strategies on hiring, promoting, and firing; planning your work week;
conducting salary negotiations; getting the most out of your customer service
staff; and more.
Each issue is jam-packed with tips for managers, marketers, salespeople, public
relations professionals, meeting planners, advertisers, publication editors, and
more. In short, if you communicate on the job, this newsletter has the
information you need to do a better job.
A monthly publication for anyone charged with keeping a workforce enthused
and productive. Each issue features tips and strategies on motivation as it
relates to performance appraisals, meetings, project management, office
policies, technology, presentations, and more. There is also a special section
every month filled with quotes, anecdotes, humor, and business statistics.
This monthly newsletter is designed to improve performance through value-
centered management. Each issue gives you ideas on hiring and motivating top
employees, dealing with work/family issues, giving back to your community,
and becoming a more respected, ethical manager.
Each issue is jam-packed with ideas that enable you to hire, supervise, or be a top
performer. You’ll discover how to develop strategic sales coaching, build a high-
performance sales team, boost morale and productivity, and manage your time
more effectively. Plus, you’ll get information on the latest trends including
database and relationship marketing, telecommuting and the virtual office, sales
force automation, and new technology.

owned by a French company, and Mark believes
that over 15,000 Communication Briefs subscrib-
ers are from outside the U.S.
One recent competitive tactic has caused
Mark some concern. Universal has twice used its
superior cash resources to purchase smaller,
competing newsletters. From LRC’s standpoint,
the principal threat comes from the elimination
of very responsive and productive subscriber
lists. Where LRC had previously and successfully
rented the mailing lists of these smaller news-
letters, that capability was being taken away by
Universal’s acquisitions of what Greta calls “every
little digest newsletter out there.” A recent exam-
ple was Universal’s purchase of Strategic Advantage,
a long-running newsletter with about 9,000 sub-
scribers. On the other hand, Mark was confident
that neither Universal nor any other company
could actually buy up all sources of productive
lists. He was sure that “big, mammoth lists” will
always be available from sources like Harvard Busi-
ness Review, the American Management Associa-
tion, and Kiplinger, to name only a few.
CONVERTING MDN SUBSCRIBERS
Mark’s confidence in his “cereal-box” ap-
proach was generally supported in his conver-
sations with competitors during various trade
association meetings. It seemed widely ac-
cepted that first-year conversion rates (i.e.,
renewal rates) of MDN subscribers nation-
wide were often as low as LRC’s, ranging from
32% to 40%. In light of this, Mark felt com-
fortable that he must compete with a strategy
of largely undifferentiated newsletters. If 60%
or more of each MDN’s first-year subscribers
were going to “jump ship, and hop from one
newsletter to another to another to another,”
as Mark put it, then an appropriate plan was
simply “to clone several newsletters with only
tiny positioning differ-ences.” Regan’s hope

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TABLE 3
Renewal Letter Mailing Schedule
First-year Subscriber
6 months prior to expiration date: discount
offer of $20 off
2 months prior to expiration date: reminder
card
1 month prior to expiration date: money-
back guarantee card
at expiration date: benefit reminder letter—
act now
1 month post-expiration: expiration notice
card—act now
2 months post-expiration: expiration letter—
must renew now
3 months post-expiration: expiration notice
and money-back guarantee
6 months post-expiration: “last chance”
notice
was that, when the majority of readers
jumped, the odds would favor a jump to one
of his many MDNs rather than to one of his
competitors’. In essence, the industry of
MDNs seemed to be moving toward a future
of roughly equivalent offerings.
Mark was thus convinced LRC should re-fo-
cus—away from the “front end” (a term which
refers to the initial revenues and costs for a
newsletter’s new subscribers) and more toward
the MDN’s lifetime revenue stream. He com-
mented on one possible strategy:
“If we notice, for example, that Motivational
Journal…in three or four years is no longer
making money on the front end—it’s breaking
even dollar-for-dollar—we could essentially
slam on the marketing brakes, no longer pro-
mote it, and it would be immensely profitable
for two years. Slowly, of course, because we
hadn’t been building our subscriber base, it
would start to come down…the contribution
would come down, down, down, and then we
would sell it, or take all the subscribers to an-
other digest, or fold it into another digest.”
Since large lists of potential new subscribers
have been easily available at reasonable costs,
the “churning” of subscribers had become the
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Second-year and Later Renewal
9 months prior to expiration date: extend your subscription
offer and get a free copy of another newsletter
6 months prior to expiration date: same offer as above plus $20
off
2 months prior to expiration date: renew now and get a free
book
1 month prior to expiration date: reminder plus free book and
money-back guarantee
at expiration date: letter from president—last issue, renew now
1 month post-expiration: renew-now card plus free book offer
3 months post-expiration: expiration notice plus free book offer
6 months post-expiration: letter from president, “last chance,”
benefit reminder, free book offer
norm at LRC. The greatest proportion of mar-
keting resources had been directed at the recur-
ring task of capturing new subscribers. Little
effort and few resources had been directed at
retention strategies that would target existing
subscribers.
The most recent strategies for encouraging
subscribers to renew were limited to a series of
personalized letters sent to the subscribers as re-
newal time approached. These letters pointed out
the benefits of the newsletter and included an
“offer” or special deal for renewal. For first-year
subscribers, LRC sent eight letters over the course
of sixteen months, beginning with one with nine
months remaining on the subscription and con-
tinuing (for those who did not renew) to a final
notice aproximately six months after the subscrip-
tion expired. SeeTable 3 for LRC’s renewal letter
mailing schedule for first- and second-year re-
newals.
As was stated above, only about 35% of first-
year subscribers renew for a second year. How-
ever, the renewal rate improved among those
who had subscribed longer; the rate for second-
year subscribers averaged 50% and the rate was
65% for third-year subscribers and beyond.
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THE PROBLEM(S)
Considering that Mark had successfully led LRC
from $1.7 million in revenues five years ago to
almost $10 million last year, the “cereal-box
approach” to his MDN business has received
very favorable internal reviews. The newsletter
business is much different from many other
industries in the ways new products are devel-
oped—and, as Mark puts it, his strategy of
launching newsletters on “gut instinct” often
sets LRC apart from other newsletter publish-
ers. Many newsletter publishers do not bother
to develop an entire newsletter for an initial
trial. Instead, they often “dry test” a potential
newsletter idea by sending out a sample article
which may appear in such a newsletter, and
then gauge the future launch decision based
upon the sample audience’s general response
to the article. Mark believes that LRC knows its
markets well enough that dry testing is unnec-
essary:
“We know the newsletter industry. It’s really a
raise-the-flag-up-the-flagpole type of industry.
We know that something is hot and then we’ll
essentially commit $20,000 to $25,000 on the
launch, and that’s our test. If it works, it works.
If it doesn’t, we shut it down.”
Despite LRC’s track record in meeting mar-
ket needs and its rapid revenue growth, Mark
remains worried about the stubbornly high
rate of subscriber attrition. The revenue gen-
erated from new subscriptions is partially off-
set by the high costs of generating those new
subscriptions. As innovative and aggressive as
he has been for the past five years, Mark
wonders how realistic his goal of more than
doubling revenue really is. He also wonders if
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LRC will soon reach a point of saturation in
the MDN market. After all, the product is not
a necessity, and subscribers seem incredibly
fickle about their choice of newsletters in the
first place. Mark also wonders how it is that
Universal’s leading newsletter has over 60,000
subscribers, while his leading newsletter has
only about one-third of that total.
Mark knows he has built his business on a
proud family legacy, but that he has done so
through an approach much different from his
father’s. In order to continue to grow over the
next several years, Mark is sure he will need to,
as he puts it, “crack some kind of code” on
improving his MDN renewal rates. He has been
impressed with Greta’s use of direct marketing
techniques, especially in the way she carefully
tests the effectiveness of different lists of poten-
tial subscribers. Greta has also begun to use
different kinds of tests—involving everything
from the market’s response to offers (including
price and premium tests), to package format
testing (involving different types of content and
design), the use of free sample issues, and dif-
ferent subscription lengths. The goal is to find
the most appealing combination of content and
offer for each newsletter, recognizing that each
one reaches a different target market. Research
is an area Mark might look to expand, though
he is wary of large-scale, expensive research
when he feels he understands LRC’s market-
place so well already.
In light of all these decisions, Mark has called
a meeting with Greta to discuss LRC’s market-
ing and editorial strategies and to consider al-
ternatives for meeting his goal of increasing
revenues.
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