Stop Complaining About Competitors Dropping Rates - Part 2

Here is my follow-up to Monday's article "Stop Complaining About Competitors Dropping Rates." In that article, we gave you the first 6 tips to take control of your rates. (If you missed that article, just click on the red text in this story). Here are six more ways to take control of your rates.

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 council the advertiser on the value of up-sells, repeat business and the lifetime customer value of every new customer your campaign attracts. Multiplying 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 promised 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

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 and a lot less pressure on margins. 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 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 appear5ance of discounts, without touching the base vehicle price. 

Their average sale is always higher, not lower, and their profits are considerably higher 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 want 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.

Wayne Ens is President of ENS Media Inc and can be reached via e-mail Wayne Ens wayne@wensmedia.com

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