Partnering with others can help manage circulation costs: Sustainability

May 4, 2018

By Martin Kirchner | Casa Grande Valley Newspapers Inc.

I recently joined Casa Grande Valley Newspapers Inc. as their circulation director after 24 years with Gannett. I’ve worn more than a few circulation hats over the years and have seen our business change in many ways. Like many newspapers, family run and corporate, we are the victim of falling circulation because of instant news made available on so many digital platforms.
Things we do as circulators usually gives us temporary boosts to our numbers. Initiatives like sampling programs and kiosking on the home delivery side bring moderate success. We are always looking to improve our position in retail locations, and who has not done the infamous newspaper/coffee bundle in your regional convenience store? We have saturated the market with racks and turned to non-conventional outlets such as dry cleaners and tire shops in the hopes of garnering new sales.
However, in order to establish long-term sustainability, it is important that we also manage costs and resources.
I’d like to start by discussing costs of delivery to news racks and news vending machines and segue into other distribution issues.
Our SCS distribution is done by Independent Contractor Delivery Agents. They are paid a fee per location to service racks. It’s “papers in, papers out.” The contractor is given a daily manifest with the draws by location. They perform their deliveries, enter returns and bring the unsold copies back, for recycling for which they are paid a negotiated rate between $1 and $2 per location.
So, what is the break-even point for a rack?
A daily newspaper costs about 27 cents to print. The contractor receives an average of $1.50 per drop. We must sell four copies per day to break even, and the rack must sell out 100 percent of the time. We don’t advocate sellouts, so we actually need a minimum draw of five copies. How many racks do you have on the street that meet this criteria?

Solutions
• Reduce the number of under-performing racks. On a recent SCS route audit, we found five racks in apartment complexes averaging three sales per week. It was nice to have our brand sitting next to the Coke machine but each of those racks cost us approximately $700 a year to service. We removed the racks and partnered with the leasing agents to include a bounce back flyer in the new-resident welcome package.
• Traditionally, there has been a line drawn between home delivery contractors and single-copy agents. Subsequently, we have two contractors entering parks or driving past racks and retail locations. Combo routes are becoming more the norm across the industry. It addresses two issues—delivery cost and carrier profit. Home-delivery carriers need to put an array of products on their upholstery in order to maintain the profit necessary to get them out of bed every morning. Servicing racks is one more avenue.
• Now cross over to ‘The Dark Side.” Coincidently enough, this is how my relationship began with Casa Grande Valley Newspapers. While working for The Arizona Republic, we formed a partnership with CGVNI to deliver their publications in areas where we had a stronger presence. The partnership enabled us to increase our carrier’s profit while substantially reducing distribution costs for CGVNI. It was a relationship that started small but grew over time. This is not unique and is becoming more commonplace across the industry. That SCS route I mentioned above has been trimmed of the under-performing racks and is now delivered by a publishing partner, resulting in an annual savings of $7,000.
• We can no longer be all things to all people. Years ago, it was not uncommon to have home-delivery routes with carrier rates that exceeded the retail cost of the paper. These routes usually required excessive miles over unmaintained roads. When I started in this business in 1994, we had a route we called the “100 Hat Trick,” 100 newspapers, 100 miles, $100 per day. We can no longer offer this type of service. The numbers simply do not pencil out.
When determining your geographic footprint, factors like volume, delivery cost and carrier turnover should be considered. Is a subscriber who lives on the end of a three-mile dirt road, 20 miles out of town entitled to the same service as a subscriber who lives in town on a paved road? Do we have a district manager delivering this route six months out of the year because we are burning through carriers? Can we move some of these subscribers to mail or set up tubes at the end of the road or by their mailboxes? Does the post office go there? If not, should we be asking a carrier to do it at 4 a.m. in his/her Honda Civic loaded with newspapers? What is our competition doing? Are there partnership opportunities available?
The dollars saved on the distribution side can be used to increase our presence in the communities we serve with community events and sponsorships. How many retail locations in your market could stand a new display? Are there new and innovative sales ideas in your toolbox you would like to try, if only it was in the budget? My publisher kiddingly says what I do is not rocket science and she is right. It’s common sense.

Marty Kirchner is a 25-year veteran of newspaper circulation. He began his career with The Desert Sun in Palm Springs, CA. While working for USA Today as a circulation manager, he won the 1999 Market of The Year award in Los Angeles. He currently holds the position of circulation director for Casa Grande Valley Newspapers Inc. He can be reached at mkirchner@pinalcentral.com.

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