The problem with some newspapers

Yesterday, the front page of the Los Angeles Times featured the start of a four-part series on a quarter-century marriage between a well-regarded lawyer and an Aryan Brotherhood inmate (link).  Today, I read that newspaper advertising revenue has seen a stunning drop of 18% in Q3 compared to the same period in 2007 (link).  So how are these two things related and what’s a newspaper to do?

I have to confess that I did read the article, and it was an interesting read – I’m glad I read it.  But, I like print newspapers, and I want them to survive.  And despite their appeal, long-form articles like this just don’t belong in a daily newspaper anymore.

The decline in advertising revenue isn’t a result of this kind of reporting, but these narratives should be one of the first casualties as newspapers look to cut costs.  A friend of mine, familiar with such matters, recently told me that veteran L.A. Times reporters used to refer to their paper as the “velvet coffin”, because if you navigated the structure correctly, you could end up writing just a handful of plum stories for ~$200,000 a year and spend most of the year researching and writing books.  You’d have an unusually cushy job that you’d want to keep until you died (a little exaggeration never killed anyone, no pun intended).

That was all well and fine in less austere times, but with the newspaper industry losing billions in ad revenue, only the lean will survive.  These types of articles (including a recent one about a post-war LAPD gang squad) are routinely based on months of research and, in the case of the gangland story, 100+ interviews. While vastly informative, there are better vehicles for this reporting – like magazines and books.

My thought here is that in order to survive, newspapers will increasingly face challenging and unpleasant business choices.  The adage of “cut once, and cut deep” is one that is oft considered by executives facing the unfortunate prospect of layoffs, but I think it also applies here.  I’d rather see newspapers make dramatic changes one time and immediately – with an eye towards future sustainability – than witness the print newspaper undergo a slow death by a thousand cuts.

There are scores of changes that publishers will need to consider, and the elimination of the long-form, multi-part narrative is just one small recommendation (maybe pennies in the pot… but you need to start somewhere).  By no means am I an expert on such matters, but I do know business basics, and I know that no business will last long when expenditures exceed income.

With future advertising losses expected to continue, now is the time for newspapers to explore new ways of remaining viable.  I’d like to see print survive … who’s up for the challenge of ensuring that it does?

Ecommerce growth to continue

Via Preston Blog, the National Retail Association is forecasting 17% growth in 2008 for the Internet sector – with sales ranking in at $204 billion.  While the rest of the retail industry is expecting flat sales, it makes sense that growth will continue online.  As the economy depresses, more people will look to the web for the best deals, particularly on big-ticket items.  That said, 17% might be a stretch if the economy is hit worse than expected.

Strong Customer Service = Strong Customer Loyalty

Seth Godin says Internet shoe retailer Zappos wants you to use their customer support services:

Zappos wants you to call their 800 number. They want you to order too many shoes. They want you to return (at their expense) the shoes that don’t fit.

This is so diametrically opposite of how many companies function today – and indeed, it is to their loss.  A few weeks ago I wrote about consumers who are greedy with customer service resources and push companies to the limits.  With the exception of that very small group, firms should in fact strive for that additional contact with the customer.

At each contact, it is another chance to exceed expectations and to solidify the relationship.  A marketing professor of mine once shared an anecdote about a study conducted by a hotel franchise.  The study looked at three groups of hotel guests:

  1. Visitors who had a great stay, with no problems, whatsoever
  2. Visitors who had a bad stay (unresolved issues)
  3. Visitors who had a bad experience of some sort or another, but the hotel bent-over-backward and resolved the issues (they gave 110%)

I’m sure you can guess which guests were most likely to return AND refer their friends – Group 3!  That’s because the hotel not only resolved the issue, but they exceeded the customer’s expectations by offering even more.

That’s why Seth Godin says Zappos wants you to return your shoes.  They want to show you how awesome they are at taking care of you.  They want that extra contact with you so that you can come to the conclusion that “Hey, shopping with Zappos is easy and I know they will take care of me if I have a problem.”

If your company isn’t following this model, you’re literally bleeding a large portion of your customers and losing in the loyalty game.  The customers you’re leaving behind will not only shop at another company next time around, but they’ll also tell their friends how awful you are.

Seth Godin thinks it’s hard to be as good as Zappos when it comes to service.  I disagree.  I just think that the upfront costs are high and many firms are unwilling to make that sacrifice for long-term gain.