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Consumers Union is working on its image

After a year marked by record loss, the nonprofit organization behind Consumer Reports is looking to transform itself from stately to scrappy.

©Washington Post
April 7, 2002


Jim Guest grimaces as he ponders whether his organization, Consumers Union, has grown somewhat stodgy. "It's mature, somewhat staid," he acknowledges in a soft voice. But then Guest, the president of the nonprofit research organization that publishes Consumer Reports magazine, quickly corrects himself. Straightening up, and in a slightly louder voice, he says, "We're perceived as mature, somewhat staid."

And that's an image Guest is determined to change. As he wrote in a memo to CU employees in December, nine months after taking the reins of the 66-year-old organization, he wants to transform CU "from being stately and risk-averse to being more scrappy and entrepreneurial."

CU is best known for its monthly magazine, with its comparative ratings of everything from automobiles and personal computers to fabric softeners and doughnuts.

Guest, 61, has started to make changes, investing aggressively in CU's Web site, ConsumerReports.org, looking to start targeted electronic newsletters and beefing up the group's lobbying arm. He's also dealing with budget problems that last month caused the first layoffs at the Yonkers, N.Y., group in 20 years.

Last year, CU lost $7.5-million, its biggest loss ever. With magazine subscriptions and investment income falling while postal rates and other expenses rise, Guest launched a major cost-cutting campaign. He first offered buyouts and ordered a hiring freeze before announcing 17 layoffs, about 3 percent of the work force.

The recent financial squeeze also has prompted CU to alter a long-standing rule for maintaining its impartiality: Though it formerly limited contributions to $10,000 over a donor's lifetime, it now WILL accept larger donations; a special committee will review any large gift to ensure there is no conflict of interest.

Guest is undeterred by the financial picture, which is being adversely affected by the stock market. "We will lose a little bit this year but finish in the black next year," he predicted. The key to profitability, and growth, will come from consumers, not investments, he said.

"In the past we were slow to respond to opportunities, reluctant to launch new products, try new approaches unless we were sure it was going to work," Guest said. "That's changing. We need to be faster-acting."

That's particularly true for the Web site, which is testing and rating products almost as soon as they're released, not in roundups published at intervals of a year or longer. The magazine has about 4-million subscribers, and the new emphasis on the Web site, launched in late 1997, has brought in another 800,000 subscribers, who separately pay $24 a year, or $3.95 a month. That makes CU's the largest publication-based subscription site on the Web.

"I would say ConsumerReports.org is at the top of the heap when it comes to a paid subscriber base online," said Lisa Allen, principal analyst for the technology research firm Forrester Research Inc. "Very few publishers or programmers are able to command any payment for content online."

Now, Guest said, CU is looking to start up specialized e-newsletters that can be geared to targeted audiences, such as new parents, first-time homeowners or aging baby boomers. The group also is experimenting with providing its ratings over personal digital assistants, so consumers can take the data with them when they shop.

"In the past, we used to be somewhat monolithic -- one size fit all," he said. "Now we can tailor to individual needs. The Web makes it all possible."

And he views the new lobbying efforts as a way to seek a national voice on health care, financial and telecommunications services and product safety issues.

The Austin, Texas, and San Francisco offices are being encouraged to take their legislative successes, such as the California office's recent victory in getting public quality ratings for health care procedures, to other states.

In Washington, the organization took the unusual step last summer of publicly opposing the presidential nomination of Mary Sheila Gall to the chairmanship of the Consumer Product Safety Commission.

"The goal is to have an impact on the marketplace . . . if not through information, then through advocacy," Guest said.

His ultimate goal, he said, is to turn CU into "the consumer champion" -- to provide people with information to help them make effective buying choices. Informed consumers, in turn, will press manufacturers to make better and safer products and provide more equitable and cost-effective services, he said.

Guest is not widely known in the business world, but the low-key executive is no stranger to CU. For the past 21 years, he has been board chairman and on the committee assigned to find a replacement for former president Rhoda Karpatkin when she retired. After a number of interviews with other candidates, some other members of the search committee asked Guest if he was interested in the position.

Before joining CU full time at an annual salary of $304,000, Guest ran the 3-year-old American Pain Foundation, which he founded to be a consumer information and advocacy group for pain management and prevention. He worked earlier in senior positions at other high-profile advocacy organizations, including Handgun Control Inc. and Planned Parenthood of Maryland.

Demographically and economically, the growing emphasis on CU's Web site makes sense. The median age of the magazine reader is 56 and about two-thirds of the readers are male. Median household income is about 75 percent higher than U.S. residential households in general.

In contrast, the median age of CU's Web subscriber is 43 and the typical household income is more than twice that of all U.S. households.

The Web site has an added advantage: It doesn't have the ongoing printing, paper and postage costs of the magazine.

But Guest said CU doesn't plan to de-emphasize, much less scrap, the magazine. "For CU, the future is both" the magazine and the Web site, he said.

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