Penny Wise, Customer Foolish

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Owners and managers of most commercial operations do everything they can to attract and hold loyal customers. These businesses understand that once a customer has been won over, that individual’s repeat business can add to the bottom line for years, even decades to come.

The same is true about Radio. As a multi-station manager, I often spent time with my staff brainstorming new ideas to increase our loyal customer base — both among advertisers and listeners.

Last month, I came across a new concept: a store policy designed to drive customers away.

Fortunately, this policy did not originate from any Radio station. Instead, it came from a well-known, national office supply chain. This was a franchise that was at the top of my “preferred business” list; low prices, convenient location, excellent selection of merchandise. For these reasons, it was my first stop when shopping for a replacement set of headphones for my PC. These days, headphones are encased in molded plastic suitable for guarding gold at Ft. Knox (assuming we have any gold remaining there). It required a sharp utility knife and several minutes work to free the headphones and position them over my ears…only to find them to be the most uncomfortable model I’ve ever worn.

After less than two hours of adjusting, repositioning, and pain, I returned to the store for a refund. It was then I learned there was a 15% “restocking” fee because I had opened the plastic package. I explained that I had to open the package in order to learn that the headphones were unsuitable; wearing the headset while it was still encased in plastic didn’t seem to work. Ah, but a policy is a policy, so I was charged $4 and change for returning an unsatisfactory product.

I found the entire experience unsatisfactory. So, in gaining their $4+ restocking fee, they lost a customer. I now travel slightly farther to a competing store and they get all my office supply business. There I found a better set of headphones (very comfortable!) for less money. And a formerly loyal customer has become a non-customer for my old office supply place.

Are your stations policies driving your customers away? While Radio doesn’t have “restocking” fees (thank God), think about policies that give new advertisers a discount while taking existing customers for granted. There may be other, more subtle ways that Radio discourages repeat business.

My recommendation: review your policies and make improvements where necessary. Your customers (and bottom line) will be better for it.

Sales Blinders

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How much sales training is enough? Personally, I believe a Radio sales rep cannot get enough training. With over 30 years in the business, I was always learning something new…for a while.

Then, after a period of time, I found I was hearing the same training but from different sources. Certainly there were variations on the theme, but overall few new concepts were introduced by the established “experts” in Radio sales training.

It was only when I moved to the world outside Radio that I started being exposed to new and different sales ideas. Suddenly, I was hearing some startling sales techniques, and immediately thought of how they could be applied to Radio sales.

One excellent resource for sales ideas is the field of Multi-Level Marketing (MLM) — otherwise known as network marketing. If there is a more difficult sales field than Radio, it’s MLM. If you haven’t yet, you might want to look into the techniques espoused by MLM experts Tom “Big Al” Schreiter, Todd Falcone, Art Jonak, Kim Klaver, and the terrifically-named Tim Sales. It’s not a perfect fit, but Radio — and your personal sales — can definitely benefit from MLM’s innovative approaches.

For too long, Radio sales training has been limited to the same pool of experts. It’s time to cast off the blinders and look to other fields for ideas on how to sell more Radio in 2011 and beyond.

Tools of the Trade

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Like many–if not most–Radio professionals, I’ve had the good fortune to work for a variety of station owners. Some owners are excellent, and these are the ones that truly understand the business. Often, a future owner starts out as a news reporter or air talent and either work their way up to ownership or inherit family-owned stations. Other owners are not so good, and some — more than I prefer — do serious damage to the Radio profession.

Of the many stations where I have worked, only a very few were truly well-equipped to enable the employees to do their jobs in an expeditious, professional manner. While no owner desires to throw money away, those in the “excellent” category are willing to invest the capital to build an organization of which every employee could be proud.

This is the difference that manifests itself at a live broadcast when one station arrives in a clean, professionally lettered/decorated station van, with wireless microphones, dedicated links to the studio, one or more air talent, a producer, and even the salesperson who sold the broadcast present to coordinate with the client. By contrast, another station arrives with the air talent driving his own personal vehicle, broadcasting the event via his hand-held cell phone or some combination of equipment cobbled together from a foray to the local Radio Shack.

There is much more to this than spending or saving money. Clients can see at a glance which stations care enough to invest in the future — and the future of the advertiser who purchases time on the stations. Employees who care about the owners for whom they work take pride in having the tools of the trade they need to do the job. Salespeople are confident the stations will produce results for clients. Better talent is attracted to successful stations, allowing the owners to build superior staffs.

This all translates into an improved bottom line.  Not in the short term, necessarily, but over time, it is one of the ingredients that builds a good station into a great station.

I only wish more owners could come to realize it.

The Radio Barometer: No Change

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Working in Radio through the recession of the late ’70’s and various minor economic downturns over the decades, a pattern started to emerge.

Somehow, local retailers managed to sense a slowdown in business long before it revealed itself in national statistics.

They responded to their perceptions by cutting back on their advertising budgets. Our stations always saw a drop in overall revenue several months before the recession became apparent to everyone else.

The reverse was also true. After a time, while the media was still moaning about the slow economy, local retailers began increasing their ad budgets. Our stations’ revenues increased. And, a couple of months later — ta-dah! — the recession was over.

As a result, it was encouraging this month that some of the major radio groups are beginning to see sales increases of 4 percent or more over the previous year. It’s an indication that the economy is far from dead.

Given the right conditions, the economy’s natural tendency is to grow. In fact, it’s actually difficult to hold it back.

Unfortunately, we are not experiencing the right conditions. Instead of a government that encourages private industry and increased employment, it appears we have an administration that seeks to place more inhibitions, road blocks, burdens, and red tape on employers. The result is a chilling effect on economic growth.

The economy is trying to recover. We’ll keep an eye on our “Radio barometer” to see if the sales increases continue, and if Radio can predict the end — or continuation — of our current recession.

Nothing to Miss

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Hitting the “scan” button on your car radio these days can bring a deepening level of disappointment. Is it just me, or is there a bland sameness to music stations that have become little more than a jukebox…one song after another with the occasional bland comment thrown in?

I had the good fortune to grow up during the “golden age” of rock ‘n’ roll, and the stations that served up the great music also served up outstanding personalities. Think of the legends of the business: Larry Lujack, Charlie Tuna, Robert W. Morgan, Ron Lundy, John “Records” Landecker, to name but a few. They were inspirations for an entire host of jocks…some of whom became local personalities in their own right.

As operations manager of a small station in the 70’s, I had the good fortune to work with a staff of air talent that understood being a “personality” didn’t mean talking a lot. It meant thinking about what you were going to say before you said it, planning out your program, and having fun. And fun is what appears to be missing from most stations today.

One caller to that station summed up the essence of good Radio better than anything I could have said: “I can’t turn off the station…I’m afraid I’ll miss something.” That’s the highest compliment a station can receive.

I’m still looking for a station today that evokes that sentiment. All I can seem to find are stations where there’s nothing to miss.

Best of Both Worlds

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A sales consultant I know was recently telling me about one of his clients. He said the stations were experiencing a rough period — this is unusual? — and some days as much as 69% of the available inventory was going unsold.

The stations were only selling 31% of their ad time.

I asked if the stations were using a yield management system.

The answer was “no”, because management felt “rate integrity” was important. They thought “yield management” was another way of saying “cut rates”.

Well, rate integrity is important. And so is flexibility. What these station’s management doesn’t realize is that yield management can give you both.

With a well-run yield management system, your station’s rates adjust to the advertiser’s demand. The higher the demand, the higher your rates. If the demand drops, your ad prices drop with it. The goal is to sell more time, have less “wastage”, and increase yield.

So here’s a question for any station that hasn’t considered yield management: Is it better to get something for an ad slot or nothing? Changing 31% sold to 40% or 50% sold can and will make a big difference to your bottom line.

If my friend’s stations see the light, I’ll report the results here. But if they continue on their stubborn path of not considering a good yield management system, they’re missing out on the best of both worlds.

The Incredible Blog Post

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Yes, it’s the most unbelievable blog post! We’re blogging like never before! And you’re going to read fantastic words that are so incredible you won’t believe them ’til you see them!

Does that sound stupid to you?

How do you think it sounds to Radio listeners who hear that drivel in an unacceptable number of ads. Every hour. Of every day.

Over and over again.

We’ve covered this topic before, but perhaps a repetition of three or more is required to get the message across.

Ad copywriters need to give serious thought to obtaining a thesaurus and browsing its pages instead of watching American Idol or Dancing With The Stars.

As someone who is no longer involved with Radio on a day-to-day basis, I find I’m listening to Radio as an average listener and not a Radio guy. It makes a world of difference. Suddenly, you’re tuning out the trite phrases and meaningless words that populate far too many ads.

Which means your clients’ messages are not getting through.

Writing with an ear for what the listener actually hears can revolutionize ads on your stations. For example, the next time you’re taking 40 seconds to bang out 30 seconds worth of copy, you might try these substitutions, just for starters:

Exceptional instead of “incredible”. (“Incredible” means “lacking credibility”).

Extraordinary instead of “unbelievable”.

Unusual instead of “fantastic”.

Of course, these words and the sentences that contain them should be delivered in a realistic, adult manner. No screaming or loud music, thank you.

Clients might actually find they get extraordinary results from ads that are written to be listened to and not just to fill space with cliches.

And maybe that just might improve their bottom line.

Yours, too.

Let’s Be Fair

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The topic of Radio paying performance rights to recording artists has been tossed about like a hot potato for the past several months. And there are good arguments on both sides of the issue.

In today’s economy — what little of it remains — many stations are on the edge of bankruptcy. Will adding another revenue drain to their burden prove to be fatal? And if Radio stations go silent or switch to news/talk to avoid the performance fees, how does that help the artists sell more of their music?

The symbiotic relationship that has directly benefited artists by making them (in more than a few cases) millionaires has also helped Radio. If artists are to be paid for their music, perhaps Radio stations should be paid for the time required to air the artists’ songs.

Just to be fair about it.

Peering Into Radio’s Magic 8-Ball

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As a kid, I remember being amused and perhaps a little fascinated by the “Magic 8-Ball”. You may recall the over-sized sphere — black with the number “8” in a white circle — was supposed to be able to answer questions about the future. For me, the answer that appeared most often in the window was: “Ask again later”.

So what does Radio’s “Magic 8-Ball” reveal?

Will Radio survive the economic doldrums that continue to stifle revenues? Yes.

Will some major Radio companies not make the cut? Yes.

Will increased health care expenses force most companies to reduce the number of employees? Yes.

Several years ago, the group for which I managed a cluster of stations provided an extremely generous health care plan. There was no employee contribution; all expenses were covered by the company save a $10 per-visit co-pay.

We saw our health care costs escalate 20% per year, and it was only a matter of time until the company would have no longer been able to absorb the increases. The acquisition of the stations by a large conglomerate resolved that issue (although the quality of the new company’s health care plan was a disappointment to employees).

The new government-mandated health care system will be phased in over the next several years. However, premiums are projected to increase dramatically as insurers are required to accept individuals with preexisting conditions. Since the federal government will cap the amount of premium increases allowed, most insurance companies will likely be squeezed out of business within 2-3 years. The end result will be government-run health care insurance (a.k.a. “single payer”).

Radio’s revenues have suffered greatly over the past two years. Only now are some operators starting to see a reduction of losses…some even are enjoying increases. A Magic 8-Ball is not required to determine that the advent of skyrocketing insurance premiums is a factor that will further hamper Radio’s recovery (as well as most other business).

Will government continue to seize more control over the nation’s private sector? Ask again later.

Getting Out While The Getting Is Good

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It has been eleven months since this blog has addressed a political topic. The accuracy of that previous observation is yet to be determined, but certainly appears to have gained credibility following some of the recent comments by President Obama.

Now, we see a number of prominent Democrat politicians opting to retire or resign from the House and Senate in a trend that is threatening to become an exodus. The apparent reasoning is the electorate tide has turned and many of these long-serving incumbents cannot be re-elected. Anger over out of control spending, loss of jobs, and a depressed economy are all good reasons for this trend.

But could it be there is something more?

In my experience, most politicians are not afraid of fighting for re-election. No matter the poll numbers, seasoned candidates — especially incumbents — are more than willing to battle to keep the position and perks of public office. Also, a number of Republican members of Congress have also decided to “pull the pin” and retire…even though the 2010 elections are trending strongly in the Republicans’ favor (at least, this month).

So why would so many of the “senior” political class choose now to abandon their careers?

One possible answer: the fragile economy is about to suffer a major body blow — such as bankruptcy — and none of these pols want to be in office when the earthquake hits.

We’ve heard warnings from Radio pundits such as Glenn Beck and Neal Boortz that the country cannot sustain our insane spending and borrowing. What if the top-level Congressional insiders have been briefed on a coming financial meltdown and want to be as far away as possible from ground zero when the disaster hits? If you were in office, would you want to face the voter’s wrath if our currency becomes worthless?

I hope and pray this nightmare scenario does not come to pass. But a financial Armageddon is certainly one possible additional reason why so many politicians have decided to head for the lifeboats.

What do they know they’re not telling us?