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.