MARKETING AT STATISTICS CANADA
Ivan P. Fellegi,
Chief Statistician of Canada
Statistical offices are fundamentally service organizations. Marketing, broadly interpreted, means placing the element of service at the centre of the organizational culture. Articulating and promoting this understanding within Statistics Canada has been a major management preoccupation since the early 1980s, with renewed emphasis in the 1990s.
Statistics Canada is the central statistical agency of the country, the source of a broad range of social, economic and socio-economic information. By tradition and policy, it serves a wide clientele: federal, provincial and local governments, business, labour unions, academic researchers, and the general public (primarily through the media). Users can access standard data products in print or electronic format. Should they have data needs which are not met by the standard products, they may opt to purchase products and services tailored to their specific needs.
The wealth of Statistics Canada information is found at the heart of many marketing initiatives in Canada; indeed, much of the information used in Canadian market research stems from Statistics Canada data products and services. Population characteristics (incomes, education levels, occupation, labour force activity, housing, age, and sex among many others) for identifying target markets by geographic areas come from data series such as the national census of population or the labour force survey. Information about consumer buying habits - the household appliances, home entertainment products, vehicles and utilities that Canadians purchase - comes from the agency's family expenditure and household facility surveys. Market conditions - industrial or small business performance and profitability, price levels, retail sales, import and export levels, value and volume of shipments by Canadian manufacturers, corporate finances and local labour markets - are tracked weekly, monthly or annually and are turned into information products to provide current estimates as well as time series information for measuring changing conditions.
Marketing, broadly interpreted, involves all activities designed to identify and satisfy latent needs. In the context of statistical agency work, this would include:
(a) the identification of substantive gaps in statistical information, and impediments to accessing existing information,
(b) the development of corresponding information products or services, and repackaging of existing products,
(c) their dissemination in a variety of formats corresponding to the needs of different market segments,
(d) the promotion of the availability to the public of particular information products, and
(e) the promotion and enhancement of the image of the statistical agency.
Traditionally, marketing has often been equated with promotion - and denigrated as a somewhat undignified activity. As a result, activities (a) and (b) have been carried out in an overly reactive, rather than proactive, manner leading to a product line which undoubtedly served the priority needs of the most important clients, but whose adaptations to changing circumstances were primarily driven by the needs of the most articulate users. Activity (c), the development of dissemination vehicles which best served users' needs, did not receive adequate attention: large volumes of data were published and/or made available in on-line electronic mode, with very little market assessment. And promotion was close to non-existent.
As a result of senior management initiatives, this changed gradually but fundamentally during the mid-1980s and early 1990s. The motivation for change stemmed from a widely recognized requirement to: (a) improve planning systems using systematically a variety of processes designed to review user needs - including market response; (b) increase the usefulness of available statistical information to Canadian society by making it more accessible and "user friendly"; (c) improve the efficiency of the dissemination program through the medium of having to meet specified cost-revenue balances; (d) create and market a capacity for user-funded information development which cannot be met from the statistical office's budget; and (e) earn revenue which, in turn, could be used to fill critical statistical information gaps. The remainder of the paper discusses each of these aspects of Statistics Canada's broad marketing activity.
2. Maintaining the relevance of product line
Maintaining awareness of the evolving statistical information needs of the agency's various client groups has to be the foundation for all other marketing activities. These efforts include:
- Interdepartmental consultations. Government agencies are priority clients because of their major impact on the policy agenda of the country. Bilateral committees at a senior level have been created with each of the major federal departments. These committees meet regularly several times a year and make Statistics Canada aware of the client departments' needs. Conversely, the committee meetings allow client departments to comment on the agency's plans. By increasing awareness, these committees play a major role in maintaining a client base. Where priority needs cannot be satisfied within Statistics Canada's budget, they become the vehicles for negotiating special surveys or other services on a cost recovered basis. To maintain an awareness of, and interest in, key statistical information, Statistics Canada started a program a few years ago involving personal letters by the Chief Statistician to relevant deputy ministers advising them of the highlights of unusual and particularly interesting releases. This is an important form of institutional marketing aimed at a group of particularly influential decision makers. The participation of the Chief Statistician in weekly meetings of deputy ministers is also important in maintaining an awareness by other deputy ministers of the role of existing statistical information as well as of persisting gaps; and conversely, of keeping Statistics Canada well informed of emerging government priorities.
- Federal-provincial consultations. The provinces in Canada have constitutional jurisdiction for health care, education, and major aspects of justice. In these areas in particular, elaborate mechanisms exist to ensure that statistical priorities correspond to provincial needs. Typically, in each of these areas there are senior working committees which have to submit an annual plan to a committee consisting of all appropriate provincial and federal deputy ministers and the Chief Statistician. These latter committees, in addition to their annual review, provide strategic direction.
Coordination with the provinces is all-embracing. It involves numerous working level committees created by and reporting to the Federal-Provincial Consultative Council on Statistical Policy, which is chaired by the Chief Statistician and involves a representative from each province nominated by the premier of the province. Such coordination is explicitly required by the Statistics Act.
- Advisory Committees and the National Statistics Council. There are fifteen advisory committees to advise the Chief Statistician in program areas such as demography, international trade, agriculture, etc. Members are chosen because of their personal expertise and represent a valuable external source of advice on the evolving needs of the most knowledgeable users in each area. In addition, through their own networks, they become influential external spokespersons for the agency. At the apex of the advisory committees stands the National Statistics Council appointed by the Minister responsible for Statistics Canada to advise the Chief Statistician on broad issues of statistical policy and program balance. It has approximately 40 members, selected on the basis of their individual expertise and prominence, but with care to ensure that at least one member of each of the other advisory committees is on the Council.
- Program evaluation. Every major program area is subject to a formal evaluation approximately every five years. A major focus of each evaluation is the extent to which the current program meets user needs, and whether it needs curtailment, modification or expansion. All evaluations are carried out by external experts under contract to Statistics Canada.
- User enquiries and market feedback. A systematic program has been organized to monitor the utilization of various data sources. This includes tracking the sales of publications (74,000 subscriptions in total); of accesses to different time series in CANSIM, Statistics Canada's on-line database (1,000,000 accesses by outside users per year); and of telephone enquiries received (over 400,000 calls per year in Statistics Canada Regional Offices alone). The information is analyzed as an indication of user interest which is all the more meaningful since appropriate charges ensure that the cost of data dissemination is fully recovered.
A comprehensive market research project has also been conducted to determine what modes of dissemination will best serve clients over the course of the next five years.
These are some of the systematic and comprehensive activities designed to be informed of users' needs - the first requirement of marketing. Other channels used are specific to particular products (e.g. cross-country public hearings organized to assess user needs and expectations for the census) or particular client groups (e.g. participating in various industry and professional association activities). In addition to their individual value, the sum total of these activities is designed to signal, both to clients and to agency staff, that a significant change in the corporate culture of Statistics Canada has occurred: reaching out to clients and potential clients as a priority management goal.
3. Maximizing the usefulness of available information
Statistical offices have traditionally been organized for the purpose of efficient production of statistics, resulting in output that is specific to the statistical collection vehicle. At the same time most users need information organized around analytic issues. Yet topic-oriented analytic output inevitably results in delays, contradicting another need of the most intensive and important users: timeliness.
We have attempted to resolve these tensions through a variety of outputs serving different recognized needs.
- Signalling the availability of information. The Daily, as its name implies, is a daily publication which each morning (at 8:30 a.m.) signals the statistical information which becomes available that day. For 40 of the most important series, this takes the form of a brief analytical write-up of the significant highlights, emphasizing important emerging trends, differences between regions, population groups, industries; for other series it is a simple notification of availability. When data availability is signalled, detailed information can be accessed through CANSIM, the agency's on-line database. A publication is also available for the most sensitive series at the same time; for others, The Daily may only signal that custom tabulations can be requested. The Daily serves an important marketing role. It notifies the most "serious" users of the earliest availability of data. For many other users The Daily serves as the (indirect) channel to Statistics Canada: its analytic text is regularly quoted verbatim by the news media. In this mode The Daily contributes importantly both to the marketing of specific statistical information, and to the institutional marketing of Statistics Canada: daily repeated references to its outputs enhance the agency's image as a source of relevant and reliable information about the country.
- "Regular" publications. The agency's market research indicates a continuing need for publications corresponding to specific statistical vehicles. The agency still produces such publications, but they have undergone a major transformation. Indeed, to engineer this transformation, market feedback was very directly exploited: targets for cost-revenue balances for all publications were established. These were set in such a manner that the total publishing program (not including author costs, but including all costs of composition, printing, distribution) should break even. Having established pricing structures, two main methods could be exploited by author areas to achieve the specified cost-revenue balance of a publication: increase its market, and/or reduce the cost of production. Both of these were used extensively: publications became more user friendly; very large volumes were slimmed down; those with high potential were upgraded to prestige publications and received extensive marketing (including cross-advertising in other agency publications), while those with limited audience became more spartan; many publications were discontinued altogether, others were merged; as a matter of agency policy all publications now have to contain an analytic highlights section to make media reporting and quick review by busy clients easier; and the agency's publication process became heavily automated to reduce unit costs. Indeed, the management decision of specifying and enforcing cost-revenue balances for publications was a most successful means of forcing the agency to revamp published output so that it would correspond much more closely to users' needs.
- Electronic products. The most mature among the agency's electronic products is CANSIM - an on-line data bank of some 500,000 time series. It is made available to the public through private sector service bureaus. Market discipline operates in respect of CANSIM as well: the marginal cost of maintaining it is recovered by Statistics Canada. About half the costs recovered come through annual charges paid by secondary distributors, and half through a surcharge paid by end-users ($0.50 per time series accessed). Through this arrangement the private sector becomes directly interested and involved in marketing the CANSIM service.
It has been standard practice for many years to produce microdata tapes (with names and all other personal identifiers deleted) from household surveys, including a 1%-2% sample tape drawn from the population censuses. The practice has been extended to household surveys carried out on a cost recovered basis. Microdata tapes are marketed mostly to academic users interested in secondary analyses. Again, prices are set to recover marginal costs.
It would appear that, given the very widespread availability of micro-computers in Canada, many users might prefer to buy detailed statistical information on diskettes. The agency has carried out some experiments (e.g., detailed quarterly National Accounts information on diskettes), but so far sales have generally been disappointing.
The agency is well under way in marketing output on CD-ROM (Compact Disc, Read Only Memory). Given their enormous storage capacity, CD-ROMs lend themselves ideally to large, infrequently updated databases. Original CD-ROM products included the 1986 Census Profiles CD, the CANSIM Disc (with 500,000 time series) and the CANSIM Directory Disc. Newer products include the TIERS CD (Canadian import and export data with 200 countries), and the World Trade CD (160 countries, imports and exports). The CD program has expanded and become very successful with Statistics Canada clients.
- "Flagship publications" and compendia. Flagship publications, as their name implies, represent the best the agency has to offer. They are designed to be broadly informative, appeal to a significant segment of the population, and serve as marketing tools: marketing other publications to which they call attention, and marketing Statistics Canada as a source of wide-ranging relevant information about the country. The most important flagship publications are:
(1) The quarterly Canadian Social Trends, which provides magazine style articles about demographic, social, and socio-economic issues, with colourful pictures and an emphasis on graphics. It is designed to appeal to teachers, university students, and the general public with a broad interest in social issues. It has an annual paid subscription of 5,400 at $34 annually.
(2) The monthly Canadian Economic Observer provides a detailed analysis of current economic issues and trends, carries feature articles, and provides a ready reference for the most important economic time series. It is organized by sector and includes a large number of informative graphs. It has a paid subscription of 1,800 at $220 annually.
(3) The monthly Perspectives on Labour and Income is aimed at labour analysts in business, labour unions, and the academic sector. It has a paid subscription base of 2,100 at $53 annually.
(4) The biennial Canada - A Portrait is aimed at an even wider constituency: as a ready and highly readable reference about Canada in a style which is accessible to high school graduates, potential immigrants, and anyone else interested in learning about Canada. About 11,000 copies of the current issue have sold at $34.95.
Given the central importance of these publications, their marketing is the major preoccupation of the agency's marketing organization. Their efforts have been successful and their campaigns (with very modest budgets) succeeded in capturing two highly prestigious marketing industry awards for Statistics Canada two years ago.
Compendia are publications which deal with a particular issue or industry by means of an array of integrated data. So far the agency has launched the quarterly Health Reports, reviews of elementary/secondary and university education, and publications dealing with the major modes of transport. A prototype Industry Profile has been developed which will be produced for each major industry (integrating data on labour, capital, energy and other inputs, production, domestic and international sales, profits, special issues affecting the industry).
- Customer service. All divisions in Statistics Canada are strongly encouraged to try to satisfy special client needs. These take the form of custom retrievals, the provision of unpublished but regularly produced "standard" tables, facsimile transmission of special tables, telephone consulting, etc. Special services of this kind are billed at the level of out of pocket costs plus approximately 40% overhead. Total billings from this source have ranged from about $2 million to $2.5 million in the 1990s. The benefit to clients is customized information at low cost (the original data collection and processing costs are not charged); the benefits to Statistics Canada are: a very direct form of client feedback, and additional revenue.
- There is substantial scope in further developing and marketing customized services. Using a concept borrowed from the private sector (via the New Zealand Department of Statistics) the agency has established "key account managers". Their role is to detect and satisfy the special statistical information requirements of the largest potential users (mostly in the non-government sector since very close contacts with government users already exist).
- Licensing arrangements. The private sector is increasingly involved in making information from Statistics Canada available to the public. Most generally this involves licensing them for certain data sets in return for royalties. The arrangement is typified by seven distributors of CANSIM: each distributor carries a set of time series, and as a condition for using the name "CANSIM", the series must be updated within 24 hours. Other licenses involve census data, geographic information, and small area statistical information derived from tax data. The growth in such licensing arrangements has been very significant in the 1990s with 18 current agreements and another 27 in negotiation.
- Marketing to the next generation of users. All agency products are provided at a discount to educational institutions. Furthermore, out of date publications are even more heavily discounted (based on the reasonable assumption that, for teaching purposes, access to the very latest data points is not needed). A special subset of CANSIM is produced for universities, updated quarterly, at a fraction of the cost of the on-line service. Recently, the agency has embarked on a more ambitious approach. Micro-computers are very widely available in Canadian high schools. It was natural to try to take advantage of this capacity to make available to high schools a wide range of statistical information. The objectives of this approach were: to teach students how to use statistics; to help them learn about current issues affecting Canada; to market Statistics Canada as a relevant source of knowledge; and to promote the agency to its next generation of clients.
E-STAT (a CD-ROM product with selected CANSIM time series, 1986 Census data and enhanced graphing and mapping software) was developed and tested in 40 schools across the country. This product can now be found in 210 individual schools across the country as well as throughout an entire western province where a licence has been negotiated. Statistics Canada is very excited about the impact of this initiative, particularly in the medium and longer terms.
4. Exploiting market feedback to improve the efficiency and effectiveness of the dissemination program
Reference has already been made to the role played by the cost-revenue targets set for the publications of each subject matter area. Without any doubt this resulted in a major improvement in published output and in a generally heightened awareness of client needs. Also, the central publishing area is now operated along business principles - and its efficiency is carefully scrutinized by all the internal clients who have to pay for the service (unless they can find a cheaper alternative), while meeting the cost-revenue balances set by management. For some areas the balances are substantially positive (if they are fortunate to publish best-sellers); for others they are negative. As mentioned before, publication revenues are designed to break even with publishing and distribution costs, including composition and overhead, but excluding author costs. The overheads cover the cost of marketing initiatives, the production costs of The Daily (regarded as a marketing tool), production of catalogues, etc. A prerequisite for the success of this approach was the permission obtained for Statistics Canada (alone among government departments) to keep revenues earned from the sale of its publications. While the net publishing revenue is close to zero (as intended), the gross revenue last year was about $9 million - a sum which previously had to be met from Statistics Canada's budget appropriation.
The approach represented a significant culture change from the preceding situation where publications were sold at nominal prices as public goods; where publishing costs were met from a central bureau fund; and where, consequently, the implicit incentive was to publish large amounts of data. There were always users who asked for more data at nominal prices, and there was limited awareness of, or even interest in, publishing costs and sales volumes. In retrospect the new approach can be termed an unqualified success, although its implementation required great care.
Preceding the implementation of the new approach, the Chief Statistician met personally each of some 50 program managers to ensure their necessary reorientation. The occasion was also used to make a preliminary assessment of what might be reasonable publication prices and cost-revenue balances for each area. The visible personal commitment of senior management was essential to overcome the many apprehensions and objections.
Even while introducing the new market orientation, it was also important to maintain a policy balance to preserve the notion that Statistics Canada's output serves as a public good. The approach adopted was based on the premise that even at the earlier nominal prices, few of the 10 million households or businesses in Canada purchased Statistics Canada publications: and few editions sold more than 1,000 copies. Thus as a public good the information was acquired by the overwhelming proportion of Canadians through other means. These "other means" continue to be available free of charge to them. The most important among them is through the media: the agency provides free access and preferential service to this group. Next, a network of public libraries designated by the government continues to receive publications free of charge (but the agency is reimbursed, at a discounted price, by the government department responsible for "sales" to these libraries); and all Canadians can phone Statistics Canada for information, using a toll-free line, and there is no charge for the first 15 minutes of telephone assistance. The basic data collection, processing and manuscript preparation continue to be met from the public purse; but anyone or any organization (including government departments) who wish to have their own copy of a publication, or want to use a customized service, must pay the incremental cost (including an appropriate overhead).
Senior management support and a defensible policy framework were important. But success also depended on learning to market. This was a very large undertaking. A locus of marketing expertise was created, but it was clear from the beginning that the main responsibility for marketing rested with each line area. This was not only a practical necessity given the wide range of agency products, but even more fundamentally, it was designed to secure the major pay-off: reorienting agency managers so that they would pay a great deal more attention to customer feedback. In addition to the basic discipline of having to meet specified cost-revenue balances, a variety of tools were used. Formal training and seminars in marketing were provided. Regional meetings with clients were arranged. An important mechanism was the establishment of a marketing management committee who had control of a marketing "line of credit": all managers were encouraged to put forward to this committee requests for marketing funds accompanied by a business case. If the business case supported the likely recovery of at least the amount of marketing funds requested, these were granted. The resulting revenues have exceeded costs by a factor of between 1.5 and 2.5. Marketing initiatives included the following: cross-advertising within agency publications, purchase of appropriate mailing lists and direct mailing of information pamphlets, seminars whose fees included subscriptions to some relevant publication (e.g., Canadian Social Trends), advertising in trade and learned journals, telephone follow-up of subscribers who failed to renew their subscription, etc.
5. A capacity for user-funded information development
Statistics Canada has, for many years, carried out household surveys on a cost-recovered basis. And in recent years a very conscious effort was made to build on this capacity and expand it also into business surveys. Such surveys have to satisfy several criteria: the information must be appropriate for Statistics Canada to collect; it should serve the public interest; and the resulting information must be placed into the public domain. These conditions usually imply that most sponsors come from the public sector.
So far this capacity has been advantageous to all concerned. The benefits to direct clients are clear: Statistics Canada can carry out large scale national surveys with a higher quality and at a substantially lower cost than the private sector (even with overhead charges, costs seem to be of the order of one-half to one-third of the private sector). The benefits to the public include the provision of relevant statistical information which could not be funded from within Statistics Canada's budget. And the most direct benefits to Statistics Canada are to emphasize the user orientation and to earn net revenues (in the form of overhead charges). An important but subtle benefit is that the activity of cost recovered surveys is an excellent training ground for professional staff and managers: the variety of subject matter, client needs served and methodologies used result in the acquisition of exceptionally broad knowledge and the development of a high level of personal adaptability.
During the 1990s, gross revenues from cost-recovered surveys have been about $25 million (or about 9% of total expenditure).
6. The benefit of earning revenues through improved marketing
Like most companies and organizations in Canada, Statistics Canada has been operating with leaner budgets as it has been adopting a marketing orientation. During the last eight years, the agency's programs and professional infrastructure remained intact as resource reductions were entirely met through efficiencies and additional (net) revenues. Even more importantly, there is general agreement among clients that the agency is now significantly more relevant, professionally active, and responsive to their needs.
It is important to note here that statistical agencies have a cost structure characterized by heavy overhead. Maintaining a variety of essential infrastructure is expensive (computing capacity, field organization, a range of methodological and subject matter expertise, registers, classification systems, etc.). But given this infrastructure, the marginal cost of particular surveys is relatively low. Therefore marginal changes in net revenue from various marketing efforts have an amplified effect on output. Based on some detailed analysis, these revenues saved Canada from what might have been quite disastrous reductions in statistical outputs and/or quality.
Maintaining a relevant statistical information system requires developing new areas of statistical enquiry for which significant need is identified over the years. In this area, improved marketing is paying dividends as well. Some information gaps have been filled (at least occasionally, if not regularly) through client-funded surveys. Secondly, the major improvement in interdepartmental liaison has resulted in influential client departments being fully aware of the information benefits available from Statistics Canada programs.
In the last several years, Statistics Canada has transformed by changing its approach to marketing. The implementation of this change required sustained managerial attention and some temporary dislocations (but surprisingly few!). The benefits are pervasive: there is better responsiveness to long-term client needs (e.g. basic information development) as well as to short-term ones (e.g. special services); the published product line has been streamlined and rendered much more relevant (after an initial decline induced by very substantial price increases, publication sales volume at market prices has actually surpassed where it was at nominal prices 8-10 years ago); a variety of new dissemination modes are in place and under development; "flagship publications" (and other measures) have significantly improved the agency's image; media orientation ensures a substantial flow of information to the general public (our daily press clippings from major newspapers on a typical day run to 15-20 pages); the public good continues to be served free of charge; and the magnitude of earned revenue seems to have convinced Canadian politicians of the relevance of the product line. Perhaps the most important benefit of this transformation has been in terms of the significantly improved client-oriented attitude of agency staff.
We therefore believe, on balance, that market orientation has pervasive benefits - quite out of proportion to the revenues earned. The current rate of revenue generation (some 10% of gross expenditures) may well not be the limit. Yet, for a variety of reasons (which clearly go beyond the scope of this paper), the substantial majority of the budget of a statistical agency should be directly provided by governments. This is to fund statistical infrastructure, to assure the secure and regular availability to all sectors (governments and non-government) of a range of information necessary for the effective functioning of modern society, and to safeguard the continued and objective availability to the public of the variety of indicators which electorates in democracies require to assess the performance of their governments and social-economic structures.
Ensuring that statistical offices are fundamentally service organizations requires a concerted and organized marketing effort. At Statistics Canada, new marketing initiatives have been the driving force behind major changes to the agency's corporate culture, product line and business management approach. The marketing approach used determines market needs, develops suitable products, disseminates and promotes those products and evaluates their effectiveness in meeting market demands.
Statistics Canada determines client needs through the use of advisory committees, market feedback and program evaluations. The agency has redeveloped its product line and implemented a policy of balancing costs of production (excluding data collection and processing) with earned revenues. In the face of significant and repeated budget cuts, Statistics Canada maintains its service to the public by making information available as a public good and by attracting more user-funded surveys and studies. The new marketing policy has helped to maintain the integrity of Canada's statistical information system.
Ivan P. Fellegi is Chief Statistician of Canada, Statistics Canada. In this position he is responsible for all aspects of Statistics Canada's work. A Ph.D. graduate in mathematical statistics from Carleton University (Ottawa), Dr. Fellegi is a past president of the International Statistical Institute, the International Association of Survey Statisticians, and the Statistical Society of Canada. He is an Honourary Fellow of the Royal Statistical Society, a Fellow of the American Statistical Association and a Fellow of the American Association for the Advancement of Science and one of nine Honourary Members of the International Statistical Institute.
 The special media attention also includes: special telephone numbers for media; advertising in each release in The Daily the name of a knowledgeable spokesperson; availability for interviews by senior personnel; a policy that erroneous media reports will be followed up through letters to the editor; seminars and background briefings.