Dion steers double-digit growth in new business lines

It was a plan set into motion almost two years ago.
Following in the footsteps of its U.S. parent, Reader's Digest Association (Canada) announced plans to invest substantially in the Internet, and to begin to expand the breadth of its customer offering beyond its traditional array of content-oriented products.

It was a plan set into motion almost two years ago.

Following in the footsteps of its U.S. parent, Reader’s Digest Association (Canada) announced plans to invest substantially in the Internet, and to begin to expand the breadth of its customer offering beyond its traditional array of content-oriented products.

Last year, for example, the Montreal-based publisher teamed up with Toronto’s direct-to-consumer property and casualty insurance company, BelairDirect to sell auto collision coverage and fire insurance, in addition to its core magazine subscriptions, books and videos.

It was a strategy spearheaded in Canada by Pierre Dion, Reader’s Digest president and CEO, and his mentor, former president and CEO Bernard Poirier, who retired just over a year ago.

And it’s beginning to bear fruit. Both Dion – who joined the company in 1996 as VP, marketing from the sales and marketing division of Montreal-based Videotron – and the Digest have experienced great success this year.

Last month, Dion won the Direct Marketing Association of Toronto’s Direct Marketer of the Year Award (DMYA). Earlier last summer, the Quebec Direct Marketing Association also honoured the 37-year-old president as Direct Marketing Personality of the Year.

Strategy sat down with Dion to discuss his achievements and the development of one of Canada’s most-oft read magazines (based on PMB data).

Q: Congratulations on your double-win. What do you think earned you the recognition of your peers?

PD: My first reaction was surprise. But I think it’s a combination of my involvement in the industry through the CMA and the DMA – and my personal career – but also the corporate achievement and the Canadian team. I took over as CEO a year ago from Bernard Poirier, who was at the Digest for 41 years. He was my boss, coach, mentor and friend – I didn’t lose the opportunity to learn as much as possible from him. That contributed to the company’s success and my success.

Q: Can you update us on the Reader’s Digest corporate strategy? What’s happened since you stepped in as president?

PD: Reader’s Digest has always been an important player as a direct marketer, but in the last few years we’ve done a lot of innovative things, both in publishing and also now in non-publishing.

We put together a strategic plan two years ago – the goal was to have double-digit growth each year. We felt that relying 100% on the core publishing business – that being the publishing products like the magazine and books, the music and the video product lines – was not enough.

We had four things that any company would want: a trusted brand, great Canadian content from our four core products, a large database (and most important in that, a great customer relationship with over four million households, as well as great supplier relationships), and finally, we have a good direct marketing expertise. We took those and combined it with customer needs. The last piece was the five affinities we were good in: health, finance, home, family and faith – these are the areas where we’ve always concentrated our publishing products.

If we’ve been good over the years, writing books on health, for example, or giving advice, or whatever (else) in the publishing product lines, maybe the customer would be interested in having health products in a non-publishing product line. We’re now in life and health insurance with Manulife, property and casualty insurance with ING and BelairDirect, and we partnered with VitaHealth of Winnipeg to launch a vitamin product line. And we are in the process of selecting a partner for personal finance – investment products and credit products like RRSPs and mortgages.

We’ve also launched two new services divisions – Reader’s Digest Custom Publishing, leveraging our Canadian content for third parties and partners; and our Reader’s Digest Marketing Services – that’s an interesting one. We’re taking our direct marketing expertise and using it to help other parties by bringing them direct marketing services.

Q: In an agency model?

PD: No. We’re going to concentrate on the database side. We’re talking about modeling, profiling, data mining, regression – all the segmentation. In fact, we’re even looking to work with advertising agencies and direct marketing agencies to complement some of their services. But we’re going to choose our partners selectively.

Q: What of the core businesses? Have you changed your strategy there?

PD: The challenge is to stay innovative on the core. Most of our revenue is still in products. We have more than four million customers that buy our products regularly – it is still the most important thing and will continue to be.

But there are an incredible number of things that we have done. The magazine, for example, has changed again. The editorial mission ‘to inspire and inform people with human stories’ has stayed the same, but we have changed the cover. It’s more of an evolution strategy on the core side – every year we’re making small changes.

On the channel side, there have been major differences – we’re really a multi-channel company.

Three years ago, 99% of our promotion was direct mail. Today, direct mail is 75% of what we do. Now we do newspaper inserts; we’re buying ads in magazines to sell our products; we’re telemarketing – inbound and outbound; we use the Internet (through our own sites and year-old EZWin.ca, a public opt-in sweepstakes site); and (we’re using) what we call EDM – electronic direct mail (we can really target e-mail to existing customers).

We’re doing a lot of different things on the product side, the channel side, and the database and customer segmentation side to offer more targeted products, to more people, through more channels. That’s how we’re growing the core. At the same time, we’re starting to be more aggressive on the new business front.

Q: Have advertisers changed their marketing spend?

PD: Advertisers are looking more and more into segmentation – there’s no doubt that targeting, segmenting and response is becoming more important with traditional advertisers. Those same advertisers are also looking more and more into the customer relationship, and the trust that’s required.

Q: What will your main focus for 2002 be?

PD: The focus will always remain on our core publishing product lines and we see growth in those core lines. But, our core efforts, which will probably be over 80% of our efforts, will be complemented by another 20%, which is what I described as our new business product lines. That’s where we think we’ll get double-digit growth every year for at least the next three to five years.

It’s an exciting time. Direct marketing is growing and there are more players and opportunities, and the technology allows us to do more things now, like EDM.

If you take the two major blockbuster ideas of the Digest over the last 40 years, they were really the introduction of sweepstakes in the 1960s, and the personalization of the promotion package in the early ’90s. Now that we’re in the year 2002, what we’re looking at is ‘What the next big thing?’ We have a few ideas, which I can’t really talk about, but they leverage some of the things I’ve just said: the technology, the growth of the industry, what we’re able to do as direct marketers. There are new possibilities to be even closer to the customers today.

Q: In your DMYA acceptance speech, you said, ‘Direct marketing is an art and it’s also a science.’ I’m wondering if you can elaborate on that a little.

PD: At the end of the day, you have to be innovative, creative; you cannot be on cruise control and think business as usual. So on the creative, promotion side, it’s an art.

But direct marketing is also a science, because as smart as you think you are, sometimes in creating those concepts, the customer tells you – through the numbers and the response and the technical aspect of direct marketing – if you were right or not. Direct marketing is a very detailed discipline.

For me, it’s the way you communicate on a one-to-one basis to customers, answering their needs, and being able to measure, but also allowing that customer to take a direct action – to be able to do something about your offer.

Q: How do you see direct marketing changing over the next few years?

PD: Today, direct marketing is about the convergence and the integration of all media. Marketers are realizing that there is an overlap now between the traditional marketing discipline and direct marketing.

The smartest marketers are able to put the two together and put an A-to-Z solution together to answer the customer needs. It could be a 30-second ad with a phone number, followed by an outbound telemarketing call, which is then confirmed through an EDM. Then the customer can pay the bill through the bank. It’s incredible what can be done today.

There’s also going to be a lot of new players entering the direct marketing discipline. Some of them are already doing it, but they will do more. Some of them were doing it, but did not realize it. There’s going to be more convergence, more industries and more possibilities because of the technology. If you multiply those together, it’s a pretty good future for direct marketing.