How to SCALE a Fan Base

My nine year old daughter, Nadia, once had a "discussion" with her much older (then 26-year-old) brother Geoffrey. It's fascinating to observe the innocent dialog that often takes place between siblings so far apart in age. In this instance,?it was clear that Nadia wasn't buying whatever Geoffrey was saying and she responded to him with, "You're telling me the wrong truth." After our amusement passed, my wife, Zaki, and I concluded that Nadia did not agree with Geoffrey's facts because they didn't apply to what she was asking, and she didn't want to call her older brother a liar.?Instead, she let him know, politely, that what he was saying was wrong.?

Back in the mid-'90s, in addition to owning a jazz magazine launched ten years earlier, I founded a boutique jazz label in the?Verve Music Group, and during a marketing meeting at the record company, I posed a question to Chuck Mitchell who was then the head honcho at Verve. "Chuck, Do you know who your customers are?" Mitchell, a smart guy who loved to pontificate, looked at me as if to say, "Of course I do, dipshit." He then proceeded to wax on about customer demographics.??But my question wasn't intended to challenge Chuck's knowledge of Verve's target audience, but rather to engage him in a discussion about something that I had been testing for almost a decade in the magazine world. I was confident that I could apply that approach to Verve and essentially any music buyers in my new role as record company executive.?While it's true that the magazine business depends on knowing the tastes and desires of customers and establishing a relationship with them, I believed this was the cornerstone thinking behind all smart marketing. And while Chuck arrived at what seemed a logical answer, it did not address my question.?

What seems somewhat obvious today was rarely considered during the 1990s, as the longstanding practice of record label executives then was to invest in relationships, almost exclusively, with gatekeeper retailers which in turn attracted customers to their brick and mortar stores to buy music. In fact, most record labels were members of NARM (the National Association of Recording Merchandisers) an organization dedicated to nurturing alliances between record labels and retail outlets.?Few in the business back then fathomed that these stores--and customers--would one day vanish.

As owner of both a record label and a magazine, my pitch to Chuck was on one hand undeniably self-serving and on the other mutually beneficial, simple and straightforward. I suggested that the magazine print and ship business-reply cards (BRCs) to PolyGram's CD manufacturing plant to be inserted in all Verve releases. The BRCs (which would be source-coded so that it was clear into which CD any given card was inserted) would include a?no-obligation offer for the consumer to receive one free issue of JAZZIZ magazine and its companion CD. Verve's only responsibility was to insert the cards, the customers' only obligation was to fill them out and send them in. Once?the cards were received at the magazine offices, the customer information was entered into the JAZZIZ database, along with the source code.?

Because?the perceived value exchange was heavily weighted toward the consumer, the response rate was extremely high. From there, we shared our database with Verve, sent a free magazine and CD to each respondent, and followed shortly thereafter with a subscription offer.?

At the magazine's expense, JAZZIZ helped Verve build a customer database for each artist. We were granted this access to Verve's customers in exchange for paying for the design, printing, shipping and data entry of all the BRCs, and for servicing (manufacturing and mailing) the people who responded to the offer.?Naturally, other jazz labels joined in, and within a few years JAZZIZ had placed over a million cards in CDs and built the largest jazz-customer database in the world--and most important, a customer list of real paying customers.?Some labels decided to do it without JAZZIZ and tried their own BRC offers with abysmal results; realizing after the fact why our free-magazine offer worked (and theirs didn't).?

Quality magazines are different from other forms of media because we collect premium first-party data that consumers provide in exchange for something of value (like offering a special issue with great artwork and photography). We get names, home addresses and credit card numbers only because the customer wants what we have to offer, and we can't deliver the goods unless they provide this information.?We process the data we receive using an array of analytics; the results have real value for marketers and advertisers.?

Good magazines also employ great editors and experts who understand the industry-- sometimes more thoroughly than the manufacturers of products in that industry. That's why, for example, the idea for something as simple as a cup holder for a car was suggested by an editor of an automobile magazine and not an automobile manufacturer or why the music industry did not foresee the age of streaming while the music-tech?editors?wrote about it years ahead of the actual disruption.

The subscription model, or what some have referred to as the "subscription economy" has been around in the analog world for two centuries--from books to burglar arms--turning "pay-per-product"?customers?into subscribers. The same principals apply to each business:?price, acquire, bill, collect, nurture, account, measure, iterate and scale. While different businesses might rearrange the priority of these principals, eventually all of them have to be addressed. The digital distribution of content enjoys intuitive benefits here which is why products from Adobe to Microsoft to iPhones are now available by subscription.?

Like Verve and NARM in the ‘90s, today the right answers to the wrong questions (or the "wrong truth") can mislead marketers with irrational exuberance and unrealistic expectations that we see with instant connectivity offered by the duopoly of Facebook and Google and other forms of social and digital advertising. The right question should address the customer experience which is a relationship that takes place over time. As a subscription company, we're constantly listening, assessing, improving and trying to figure out how to pleasantly surprise our subscribers. As a magazine business, we must earn ongoing revenue from customers who count on the delivery of relevant content that resonates with them. That means understanding what those customers want and don't want and delivering the right message at the right time.??

Michael Fagien