You know that local retail revenues for radio are flat at best. So why do you keep pursuing the same business over and over expecting a different result?
The stations we work with are capturing all of their increases from non-retail accounts, specifically the services and professions sectors.
The reality is, Main Street Retail is shrinking in every market. Markets that had eight or nine local retailers selling home electronics a few years ago, for example, now have two or three and their margins have been squeezed dramatically by the big box stores and online shopping.
Look around your market. The growth is not in local retail establishments. The largest and fastest growing sector of your economy is the service sector; services like law firms, plumbers, financial advisors, electricians, cosmetic surgeons, etc.
Not only is the number of locally-owned and operated retailers in your market shrinking, more importantly, online shopping, smart phones, a global economy and big box stores are dramatically squeezing retail profit margins; which in turn, puts the squeeze on local retail ad budgets.
Why should you be pursuing the service sector?
- Margins are excellent! Once the dentist’s first few patients have covered the dentist’s fixed costs such as rent, equipment and reception, the profit on the additional two patients you attract for them is nearly 100%! Service sector businesses do not have to buy what they sell. In comparison, if a retailer sells 200 units his cost is twice as high as selling 100 units because he has to buy everything he sells.
- Services Don’t Need Volume. One roofing job for a local roofer can pay for a sizable campaign on your station and a cosmetic surgeon doesn’t need to line patients up around the block to make a huge buck.
- No Global Competition. When you have a tooth ache or a leaky faucet you don’t go online to look for service from Hong Kong or Pakistan. The service must be performed locally and the decision-maker lives in your market.
- Less Haggling. Retailers, by definition, buy low and sell high. Most local professionals or service providers have never seen a radio account executive because our industry has been focused on retail in the past. Seldom do these industry professionals know radio rates and they are usually pleasantly surprised by how affordable radio can be.
We don’t have time in your short weekly ENS on Sales to explore all of the reasons the stations we consult are capturing huge increases from service sector clients but I think you get the point; your most lucrative growth opportunities in 2014, and beyond, are in the local services and professions. So as you plan for a “Happy New Year”, think about converting your retail sales people to become a local marketing team.
P.S. You won’t capture the lucrative service and professional sectors if you are speaking retail and using the same strategies and tactics that worked so well for retail in the past.
Click here to discuss how we can help you convert your retail sellers to a full service marketing team to increase your local-direct sales.