Great Expectations

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How do you define success?

For most Radio salespeople, success is making the sale. Closing the deal. Bringing back a nice order. Seeing the sales manager smiling as you turn in the big-ticket, multi-month buy you’ve worked on for weeks.

But what constitutes success for the client? What yardstick does he use to determine if his ad campaign has paid off for him? For most clients, the goal appears to be to “sell a lot”. However, his definition of “a lot” is probably very different from yours.

In order to achieve a goal, that goal must be measurable. This requires a specific number on which everyone can agree is reasonable and achievable. It means setting the client’s expectations to a realistic level rather than “a lot”.

So, how do you develop a goal for your client’s ad campaign that measures the success of your stations’ efforts to deliver customers to his store? Whoa…this is a scary concept!

“Do you mean to say the client should expect a specific number of our listeners to shop his store based exclusively on the ads our stations air?”

Yes, that’s exactly what I’m saying.

If your station reaches 100,000 people each week (cumulative audience or cume), how many of them need to go to the advertiser’s business for him to sell enough products so that he makes back all the money he invested with your station, plus a reasonable profit?

To answer that question, we need some information about the proposed ad schedule and the advertiser’s business, specifically:

  • The total amount of the advertising investment on your station(s)
  • The return on investment (ROI) desired by the advertiser, expressed as a percentage
  • The advertiser’s profit margin, as a percentage
  • The amount of the average sale
  • The advertiser’s closing ratio (out of 10 customers visiting his store, what percentage does he sell?)

Armed with these facts, we can determine exactly how many of our 100,000 listeners must respond to the advertiser’s ad message in order for him to recover his ad budget plus a reasonable profit.

If this sounds like a lot of work, it really isn’t. That’s because Radio3K.com has a nifty free tool called the Radio Return on Investment Calculator that takes the above information and instantly gives you the answers.

In our scenario above, our hypothetical advertiser has an ad budget of $3,200, would like a 20% return on his ad investment, has a 40% profit margin, an average sale of $985, and closes 19% of the customers who come to his store. Based on this information, your station only has to deliver 51 people out of your cume of 100,000! That’s one person for every 1,960 listeners.

Your question to the advertiser: “When our 100,000 listeners hear your ad message, do you feel that 51 of them will find it compelling enough to respond by coming to your store?”

Suddenly, the burden to deliver is no longer on your station. The strength of the advertiser’s message is the determining factor for the success or failure of the ad campaign. Also, the advertiser is no longer expecting “a lot” of response…he only needs 51 people to come in so he can close 19% of them, giving him 10 sales, and all his money back plus 20% profit.

Managing the advertiser’s expectations via return on investment is smart selling. Try it!