Hamburg/Munich, Dec. 17, 2013. Newspaper and magazine publishers are facing shrinking revenues in their core markets. As a natural consequence, the efficiency of a publishing organization moves into the focus of the top management. But publishing organizations are complex systems and the traditional reporting is of no great help. SCHICKLER Media Consulting has developed a structured Key Performance Indicator (KPI) model for publishers. It is the result of more than 400 projects for newspaper and magazine publishers. Rolf-Dieter Lafrenz, partner at Schickler, explains how it works.
Why do newspaper and magazine publishers need Key Performance Indicators (KPIs) to manage their companies?
Rolf-Dieter Lafrenz, Schickler Media Consulting: In rising markets, Key Performance Indicators (KPI) and benchmarks are outside the focus of attention of newspaper and magazine publishers. The reason is simple: As long as the output of the organization goes up, the management only needs to make sure that costs do not increase at the same speed.
And this situation has changed?
Rolf-Dieter Lafrenz, Schickler Media Consulting: Indeed. But publishing markets react differently. We currently work for publishers in Europe, Asia and America. What is more, the market conditions for newspaper and magazine publishers are very different. Many publishers still see rising sales revenues while display advertising is going down and classifieds are dropping sharply.
What does this mean for the top management of newspaper and magazine publishers?
Rolf-Dieter Lafrenz, Schickler Media Consulting: You used to be able to steer a newspaper or magazine publisher like a big ship – because all markets and the organization went into the same direction. Nowadays, a publishing company can be compared to a fleet of small ships – all of them with different business models and markets. Each little ship possesses its own direction and speed. That is why the top management of a newspaper or magazine publisher needs a new generation of sophisticated controlling reports which is based on Key Performance Indicators (KPI) and top class benchmarks.
What is the main idea of a Key Performance Indicator (KPI) for publishers?
Rolf-Dieter Lafrenz, Schickler Media Consulting: Our experience shows that a successful KPI model for publishers should follow two main ideas. First, you need to link volume and cost data. As a result, you get efficiency parameters as performance indicators. Examples for top level Key Performance Indicators (KPI) are cost per page for editorial departments or cost per display ad for the advertising administration.
And the second idea?
Rolf-Dieter Lafrenz, Schickler Media Consulting: A Key Performance Indicator (KPI) model should be consistent. We have built a pyramid logic for newspaper or magazine publishers. At the upper end, you have the top management KPI dashboard. The operative units steer their business with the same Key Performance Indicators (KPI) as the top management. The only difference is that the top management uses a condensed and summarized version for its dashboard. The big advantage of this KPI logic is that you can drill down a problem: from the very top management level down to the operative level. A traffic light system indicates the areas where Key Performance Indicators (KPI) leave the aligned corridor. If you link the incentive systems of the management and employees to the Key Performance Indicators (KPI) you will get a self-consistent system which will solve many problems the top management of publishers face today.
That sounds quite attractive. But what do you need to consider for implementation?
Rolf-Dieter Lafrenz, Schickler Media Consulting: Take the following example: Most publishers know the cost of their reader service departments. But that is not the information you need in order to lead a company to success. You need a Key Performance Indicator (KPI) like cost per customer contact. Then you will drill down the KPI for the different contact points and cost types. The result is a structured pyramid of KPIs in the customer service department. You will need a very consistent and logic approach to build these KPI pyramids for each department and to combine them in a KPI management dashboard. Sometimes it reminds me of building a clockwork. It is hard work and all of the pieces need to fit together. But in the end, the system works almost self-sufficiently and provides you with exactly the information you need.