Yearly Archives: 2011

Eat What You Kill

 

Eat What You Kill
 
 
          Many organizations experience high turnover or attrition rates of sales recruits at the entry level.  I often hear management proclaim it’s because their organization does not have the right training program.
          Oh how I wish this was the case! During the course of our various performance improvement projects, we often recommend and facilitate training as part of the solution to increasing our clients’ sales. So if our training were the magic cure-all, I’d be a happy camper.
          But seldom is training alone the sole solution. More often than not, it’s what I call the, “Make Them Eat What They Kill Syndrome” that sets up new recruits to fail.
          In addition to a lack of training, these high turnover organizations don’t give new recruits a fighting chance to ‘kill’ in these key areas;
1.)   Expectations; Advertising sales is a profession that takes time to learn. A typical trade apprenticeship takes 3-5 years to complete. Yet many sales managers claim they want ‘self-starters’ who can set the sales world on fire in 30, 60 or 90 days.
2.)   The mandate;Often we expect our newest, and arguably our weakest, sales people to sell the tough accounts our seniors couldn’t or wouldn’t sell. We let our best sales people horde the ‘easy’ accounts and never let our rookies taste success. Nothing breeds success as success itself. Having the opportunity to work and grow real accounts can be a huge motivator.
3.)   Remuneration; Eat-What-They-Kill Syndrome generally results in new recruits eating elsewhere when you cut off their meals…their guarantees. It’s hard to sell when your knees are knocking, and working on straight commission before you’ve had the chance to learn the profession is unfair to the recruit, the company, and your prospects.
4.)   Recruiting; Many stations use the mirror test to screen potential candidates; they place a cold mirror under the candidate’s nose and if it fogs up they get the job. You have to start with the right raw material if your recruits are going to succeed.
 
Of course, training is a key ingredient to new-recruit success. But it’s not the only ingredient in a successful new-recruit start up plan.
 
Randy’s What If
We know you have a full time day job, and focusing on the success of your new recruits can sometimes be difficult. What if you worked with ENS Media Inc. to create a new recruit start-up program that eliminated costly new rep turn-over?    

Who is Driving Your Rates?

 

Who is Driving Your Rates?
 
          In a recent survey of 110 local radio account executives, we asked, “What is the biggest hurdle to sales that you face each day?” 
          The most common answer? “Our competitors are driving our rates down.”
I’m sorry, but your competitors don’t set your rates at the local level, you do.
          We have numerous station managers whom we have consulted and mentored to significantly higher rates, and we continue to do so with great success.        Admittedly, it has not been easy, but we’ve proven rates can and should be increased.
          I’ve heard all of the defensive excuses for cutting rates.  The most laughable is the ‘perishable inventory’ argument….that it’s better to sell unsold inventory at any price rather than see it go unsold. I don’t think an audience that wants more news or music, or advertisers who want a stronger share of voice on your station, would agree.
          The defenders of unsold inventory discounts always point to the airline industry as the icon of perishable inventory pricing. Do you know any airlines that are not in financial trouble?
          And how do passengers feel about airlines gouging them when they need them the most in peak periods? Why would we hold the airline model in high esteem?
         Business leader Jack Welch said, “There is always a better way. Find it!” 
          In our 12 Profitable Pricing Strategies, strategy number two is “Leaders Must Lead”.
 
2.) Leaders Need to Lead
                    I shudder when I hear a heritage station manager or market leader talk about the competitive pressures created by the underdogs in the market. And the programming and promotions people who have worked so hard to give those stations a leadership position must think we’re just order takers.
          The market rate is established by the market leader. Period. If the market leader cuts their rate by 10%, the underdog will follow suit with a 15% rate reduction and the downward spiral begins.
          Market leaders have to act like leaders and be willing to walk from cut-rate business or be prepared to enter the never-ending downward spiral of rate cutting. 
          Just say ‘no’ to rate choppers!
          Ironically, maintaining the highest rate actually validates your claim to be the leader in the minds of your advertisers.
 
You can read all 12 Pricing Strategies on our website by clicking here
 
 
 
 
 
 
 
12 Profitable Pricing Strategies
 
Here are 12 ‘better ways’ you can consider to motivate you to take control of your rates:
 
1.) Your Commission Structure
Many stations reward sales people and sales managers, on gross sales, whether those sales are profitable or not. Talk about lunacy!
I liken it to the real estate sales person who would rather sell your house for $450,000 than $500,000. With commissions in the balance in excess of $20,000, and only a couple of thousand dollars difference in commission between the low price and the high price, many agents would rather take the least line of resistance and ‘sell’ at the lower price (I use the word ‘sell’ very loosely).
Car dealers don’t pay commissions on the total price of the car.  They only pay on the gross profit of each car.
While your bean counters might protest it’s more difficult to manage commissions based upon profit per spot than on gross sales, you know your rates would go up if you paid more for better rates. Right now your sales people only care about the total sale, and have no incentive to drive rate. This strategy leaves you with the headache of ‘inventory management’.  
 
2.) Leaders Need to Lead
I shudder when I hear a heritage station manager or market leader talk about the competitive pressures created by the underdogs in the market. And the programming and promotions people who have worked so hard to give those stations a leadership position must think we’re just order takers.
The market rate is established by the market leader. Period. If the market leader cuts their rate by 10%, the underdog will follow suit with a 15% rate reduction and the downward spiral begins.
Market leaders have to act like leaders and be willing to walk from cut-rate business or be prepared to enter the never-ending downward spiral of rate cutting. 
Just say ‘no’ to rate choppers!
Ironically, maintaining the highest rate actually validates your claim to be the leader in the minds of your advertisers.
 
 
3.)Practice What You Preach
You have probably told some of your clients about the importance of branding, and that only butchers and barbers can cut their way to success.
It’s time to put an end to hypocrisy.
You know that to a large degree you establish your image and credibility with your pricing policies. Can you say “Rolex” or “Mercedes Benz”? 
And when you hear a 50% off sale at a furniture store or men’s wear store, you tell yourself, “Boy, they must have a heck of a lot of margin. That 50% off is probably all the product is really worth”.
Could it be that radio’s small share of the overall advertising pie is directly attributable to the credibility and image we’ve established for radio with our one day sales, unsold inventory bonuses and rate slashing?
 
4.)Focus Upon Your Real Competitors
 Radio’s share of total advertising budgets is so small that it’s almost laughable to call another station that’s nipping at your heals ‘a competitor.’.
I recall when I left the newspaper business to begin my radio career. A stand alone ad (you had to have a full page to ‘stand alone’) in my paper cost $1,800 at the time. I was astonished that a stand alone ad on the radio was less than $30! Every ad is ‘stand alone’ on radio.
With that attitude I quickly became the station’s number one sales person, outselling many seasoned veterans who were focused on other station’s rates rather than on the rates at the paper.
I’m shocked when I ask a radio sales person today how much a billboard, a newspaper ad or a yellow directory ad in their market costs…..many don’t know! Your reps have to be trained on how attractive your pricing is relative to their real competitors.
Our market audits consistently prove that reps grossly underestimate the rates at competing radio stations in town. Sure, every station has the occasional ‘stinky’ deal. You probably have one yourself J.  But don’t think for a moment that every advertiser gets the same rate as that stinky deal you uncovered.
 
5.)Train Your Sales People to Embrace New Media
Advertisers have always needed two media strategies; an intrusive media ‘push’ strategy and a passive media ‘pull’ strategy. In the old media world most passive media; catalogues, newspaper, flyers, coupons, phone directories, invitation events, brochures, etc., were all expensive print products. ‘Expensive’ because of the heavy production and delivery costs of pulp and paper, printing presses, and delivery.
Today the production and delivery costs of passive media; anything digital or online, are basically free or very inexpensive. Compare the costs of a full color web page running 24/7 for a year, to that same page running in the local newspaper everyday for a year and you’ll see what I mean.
Or compare the cost of putting a coupon on your website versus a printed one delivered by the post office in a coupon envelope.     
Traditional media’s share of ad budgets; largely print in the forms of brochures, coupons, newspapers, directories etc., is predicted to decline more than 10% from the 85.9% captured last year.
By the year 2015 ‘traditional’ media’s share of ad budgets will shrink to 76.4%, still by far the largest share, largely because the shift to online passive media is so inexpensive to produce and deliver.
A properly trained radio sales force that understands the respective roles of intrusive and passive media in the new media mix can capture an astronomical growing share of that 76.4% and create an inventory shortage. The ‘unsold inventory’ problem will melt with the training of account executives to sell the new media mix with radio as a dominant player.    
 
6.)Quit Selling ‘Spots’ or Cost Per Point
At the local level, you commoditize your product, making you vulnerable to price comparisons, when you sell spots or CPP or CPM. A competitor will always claim to sell spots cheaper.
I’ve often told advertisers, “We have a quarter hour average of six radio reps from competing stations, and every one of them is going to hear your campaign and tell you that you’ve bought the wrong station or they’ll sell spots cheaper than we do”.
But local advertisers don’t really want ‘spots’ anyway, and most don’t believe your audience claims and CPP numbers. Our research of 540 local advertising decision makers in three different markets reveals that advertisers don’t buy to get a lower spot rate or lower CPP.
They buy to increase sales. Period.
When you consult with your clients to establish strategies that will increase sales, and present creative campaign ideas to achieve their goals, the schedules and spot rates are inconsequential.
Often when I ask an account executive to tell me about a client’s campaign, they’ll say something like, “They bought 30 spots a week” or “they bought our 8 AM news”.  That’s not a ‘campaign’….that’s a spot schedule. A campaign has a marketing strategy, an objective, and creative communications solutions to achieving those objectives.
The advertiser cares more about how much they need to invest to increase their sales than how much a spot costs. What good is a cheap spot if sales don’t increase?
And notice, we’ve taken the focus off of ‘cost’ and we focus on ‘investment’ and return on investment.        
 
7.) Sell on Value
Selling on value, rather than cost, is key to radio capturing the investments you deserve. The secret to the value formula is that value is more perception than reality.
Value equals the customer’s expectation plus or minus the customer’s experience.
When you train your account executives to sell on value, they quickly learn how to manage the value perception.
At the customer expectation end of the equation it’s important to counsel the advertiser on the value of up-sells, repeat business and the lifetime customer value of every new customer your campaign attracts.
Multiply that lifetime customer value by word of mouth and referral rates and you can quickly establish very realistic and lucrative ROI expectations from your campaign. 
To manage the customer’s experience in the value equation, you simply always leave room in your presentation to under-promise and over-deliver.
When you conduct your post-campaign analysis and deliver your written wrap-up, you’ll clearly validate how you delivered beyond the expectation, and delivered value as defined by the value equation.
 
8.)Understand ‘Benchmarking’
When you release a package or cave to a cut-rate demand, you are establishing the real value of your product in the minds of your account executives.
The best account executives care about delivering value to their customers. When they know one of their client’s competitors bought you at a $60 rate, they have a moral conflict selling their client at your $90 rate.
It’s that simple. The low-ball rate you offer in one case eventually becomes your average perceived rate value because your team has lost confidence in the value you deliver at rate card.
The best reps will respect you, and themselves, when you fight for rate integrity.
Rate integrity is best preserved with a long-term rate strategy. Your lowest and best rate should ALWAYS go to the clients who book high frequency consistently over 52 weeks. Never let a Johnny Come Lately capture a lower rate than your best customers simply because you are missing budget this month.
 
9.)Sell Marketing Bundles
You have much more to sell than spots today. Your presentations can actually earmark a value to everything in your bundle, and offer the total bundle at a monthly investment rather than a spot rate.
Even if you ‘bonus’ (I hate that word) some of the elements in your bundle, at least show your prospect a value for each and every element in your bundle.
A sponsorship banner at a county fair, for example, is not valued at the cost of the banner, it’s valued by the exposure the client’s sponsorship achieves. So if you estimate 20,000 people will see your sponsor’s banner, the ‘value’ of a $50 banner to the sponsor (not the cost) is 20,000 people times 4 cents per person = $800, even though in your bundle price it might represent the cost only. Here are just a few of values you can include in various marketing bundles beyond spots;
·         Exclusivity; no competitors can participate
·         Marketing consulting
·         Creative writing
·         Guaranteed rotation of schedule
·         Website links or banners
·         Station or announcer endorsements
·         Station contest participation
·         Product placement at event and/or on air
·         Sales meeting participation
·         Social media exposure
·         Sponsorships
·         Sourcing co-op
 
ENS Media Inc. has dozens more, but these ideas will get you started on the right path.
 
10.)        Tap New Wells
Many of the old traditional wells have been poisoned by radio’s weak transactional sellers! New businesses and new business categories not yet exposed to the rate discounters care more about monthly investment and return on investment than individual spot rates.
You’ll find most of the fresh untainted wells are not in retail where margins are squeezed to the limit by online shopping and big box stores. In fact retailers, by nature, delight in buying low and selling high…..that’s what they do for a living and they’re good at it.
The services or professions sectors; doctors, lawyers, roofers and plumbers are 100% local.  Consumers don’t go online to Pakistan when they have a toothache and local lawyers’ rates are not impacted by low Chinese legal rates. The service sector has many more prospects than traditional retail.
These non-traditional wells have much higher margins than the retail sector. Therefore they can achieve higher ROI’s from your campaigns. Tapping these fresh, new, more lucrative wells will always yield higher rates if you start them on the right foot.
But it takes training. Using old retail hot buttons like ‘traffic’ or ‘awareness’ with these prospects just doesn’t work.
 
11.)        Create Premium Packages versus Discount Packages
Why do we think ‘packages’ always infer discounts?
The best marketers sell premium packages.
BMW’s ‘sports package’ for example, artfully takes the customer’s focus off of the vehicle’s base price (the equivalent of your base spot rate) and focuses on selling a total package at a price considerably higher than the base vehicle price.
Sure, they ‘discount’ the sports accessories in the premium package, but that package consists of a list of options that few, if any, buyers would buy in total. The BMW sports package includes their highest margin products, leaving more room to give the appearance of discounts, without touching the base vehicle price. 
Their average sale is always higher, not lower, and their profits are considerably higher by selling premium packages.
Many of your prospects and customers don’t care as much about ‘spot rate’ or base price, as they do about the total monthly investment and what they receive in return.  Most who do focus on spot rate have been ‘trained’ by us to do so.
Package your spot campaign with low-cost, high-profit options that don’t devour your spot inventory. Options like product placement, on-air contests, product sampling, online surveys, mobile, data base marketing, better creative, guest appearances, and more, can take the focus off of your spot rate and result in higher average sales and happier clients.
Your ‘package price’ should always be higher than you’re A.M.I. (average monthly invoice). Average monthly invoice tells you what your market and your sales people perceive your station to be worth. A premium package that delivers more than just ‘spots’ will deliver sales higher than that average.
 
12.)        Understand Buyer’s School
While you are going to seller’s school, know that your clients are going to buyer’s school. They know how to manipulate you into thinking it’s all about rate.
The most important thing you can do is practice ENS Media’s Negotiating 101 (one-oh-one).  Never, never, never give one unless you get one!
For every rate concession you offer, you MUST get a concession in return. You might ask for wider rotation, payment up front, more frequency, longer term etc.
But if you reduce your rate without asking for a concession in return, the buyer will always believe you can reduce your rates even further. When you demand a concession before every concession you make, the buyer believes you’ve reached your limit.
 
 

What if you become one of the progressive stations that we consult and coach towards higher spot rates? Contact [email protected] to learn how we can guarantee a ten to one return on your investment w

Three Strikes

 Three Strikes

          I recently had a relatively new sales manager confide in me that she was wrestling with the internal discomfort of initiating her first firing.
          I recall the first time I had to terminate an employee. I was the ripe old age of 24, and found the task so distasteful that I had to pull off on the side of the road on the way home that evening and throw up.
          To this day, I feel that failure of a staff member is also partially failure on management’s part. It’s management’s mandate to recruit and cultivate great people.
          Having said that, management can lose the respect of the rest of the staff if they are perceived to be too weak to do what is in the company’s best interest and tolerate an underperforming employee.
          And you can bet your underperformer doesn’t feel very good about their career either.
          Before dismissing a person for underperformance, however, I recommend you use my Three Strikes process.
          Step one: is to only manage what can be measured.  Underperformance is the generic result of not doing certain things right or often enough. Identify exactly and precisely what steps the ‘underperformer’ is missing or why they aren’t performing to par.
          Get them to agree to specific tactics or actions, complete with specific measureable goals and deadlines, to improve their results and document and confirm that agreement in writing. ‘Attitude’ for example, can be subjective and hard to measure, but showing up on time every day or making ‘x’ number of presentations is a measurable sign of a good attitude.
          Step two:  give the person three opportunities to correct those specific causes. And during each of those opportunities, offer your assistance, training, coaching and whatever resources you can bring to the table to help them achieve those goals.
          Once you’ve done your best three times and the individual has not progressed in those specific problem areas, you’re doing them, yourself, your company, and the other people on staff a huge favor when you give them the opportunity to seek a new career.  
          Need a management or leadership coach and mentor? The best performers in sports, entertainment and business, have mentors and/or coaches to help them improve their performance  Contact me in complete confidence to enquire about the ENS Media mentoring and coaching program.  
 

The Smartest People in the World

 

The Smartest People in the World
 
          Have you ever noticed that you believe the most intelligent people are the people who think just like you? Those who differ, are often dismissed as out of touch or ‘idiots’.
          For example, I’ve long held Roy Williams, the Wizard of Ads, in high regard because he’s been able to articulate exactly what I already believed.
          The advent of everything from social media to streaming, and from satellites to the internet, and rumors about the death of traditional media have confused your clients. 
          They are looking for intelligent media advisors or account executives who can demonstrate how their media is a perfect fit for what they already believe to be true.
          The largest part of selling today occurs long before your presentation. It includes asking meaningful open ended questions to uncover what your prospects already believe.
          It includes learning who their mentors are, what books they read, and what other influences and influencers have formed their beliefs.
          And it involves pre-selling with a minimum of five to seven value statements that perfectly align your solutions with your prospect’s beliefs about marketing and advertising.
          The old sales tactic of ‘handling objections’ by changing a prospect’s beliefs is dead!
          Your advertisers have more choices today than ever before, and they’ll choose the solutions that are most closely aligned with what they believe.
          Click here to inquire how our Becoming A Master Questioner workshop reveals the secrets to uncovering your prospect’s beliefs, and how our SoundADvice e-marketing system helps align you with those beliefs to pre-sell your ‘intelligence’ before you present your solutions.

Genius vs Insanity

 

Genius vs Insanity
 
          I think retail advertising expert Morris Saffer said it best when he said, “It doesn’t take a genius to increase your sales. Simply cut your prices in half and you’ll make more sales. The genius” said Morris “is in increasing your sales at a profit!”
          I often marvel at media sales managers who wear being “sold out” as a badge of honour.  To me, being sold out is NOT a good thing.  Being sold out simply means your prices are too low, and you’re turning down business. Where is the honour in that?
          And the long term damage that is caused by commoditising our industry with ‘unsold inventory sales’ makes me feel like the inmates are running the asylum.
          In our 12 Profitable Pricing Strategies, one of the strategies we suggest is to re-examine your sales compensation system.
          Many stations reward salespeople and sales managers, on gross sales, whether those sales are profitable or not. Talk about lunacy!
          I compare it to the real estate salesperson who would rather sell your house for $450,000 than $500,000.  The difference to you is $50,000. But with commissions in excess of $20,000, the difference in commission between the low price and the high price, is only a couple of thousand dollars to the agent. Many agents would rather take the least line of resistance and ‘sell’ at the lower price (I use the word ‘sell’ very loosely).
          Car dealers don’t pay commissions on the total price of the car.  They only pay on the gross profit of each car.
          While your bean counters might protest it’s more difficult to manage commissions based upon profit per spot than on gross sales, you know your rates would go up if you paid more for better rates.  Right now your salespeople only care about the total sale, and have no incentive to drive rate. This strategy leaves you with the headache of ‘inventory management’. 
          If you did not see our 12 Profitable Pricing Strategies for radio and TV last week, see them on our website here.