Innovation

THE GOLD STANDARD

Innovation is the implementation of a novel idea that creates positive change. It can take many forms and be applied to every aspect of media sales.

Innovation can be as simple as a unique inventory and yield management system that improves inventory spread and maximises revenue. In another paper, I talked about segmenting inventory from the easiest-to-sell through to the hardest-to-sell segments and applying a different controlled pricing strategy to each. That variable pricing policy can also be innovative in the way that is applied.

Innovation is never static; it’s always changing.

Yet we’re often reluctant to let go of what has worked well in the past. What often happens is that we start to spend more time and effort doing the same old thing for a lower return. Until what has served us well is no longer commercially viable and we’re forced to change. By then, it’s too late. You need to continually measure everything you do against past revenue benchmarks and when performance starts to wane, it’s time to introduce change. Not change for the sake of change, but change that makes a positive difference. The alternative is to persist with the old ways and suffer the consequences of lower revenue and profit.

Innovation Has a Use-By-Date

Take seminar or group sales events. When More FM and NRS Media started selling unique radio concepts through small group presentations 30 years ago, the success was immediate. These seminar presentations were novel, effective and, above all, represented a very cost- and timeefficient way to generate substantial annual revenue in a few days. Advertisers attended these seminars in droves and were excited by the offers being presented. They were different from anything they had been presented before and the group dynamics played a big part in the high conversion rates.

Typically, over 80% of those invited attended and conversion rates were over 70% - and almost all contracts were signed on the spot. Invariably the limited offers were sold out before the close-off date with a long waiting list of advertisers ready to take the place of anyone who cancelled.

Now these events are lucky to attract a 50% attendance rate and a 30% conversion rate is considered excellent. They’re never sold out and most contracts are signed days or weeks after the event. The revenue relative to the time and cost involved in running seminars doesn’t stack up. This style of presentation is no longer innovative – another example of a methodology that was unique then but isn’t fit for purpose now.

What worked 30 years ago doesn’t always work today.

Why have the performance metrics deteriorated so much? Because these offers no longer create advertiser excitement. This method of selling is outdated and, more importantly, overused. Advertisers have “seen it all before” and time-poor business owners don’t want to take an hour or more out of their day to attend a presentation that is no longer novel and different.

Innovation Can Come In Many Forms

Innovation can be as simple as the way you use everyday sales aids. For example, whenever we launched a new station, we gave our salespeople business cards. Nothing unusual about that. But these business cards were A4, briefcase size cards that stood out from our competitors. Imagine offering an advertiser a business card, then producing the oversize More FM version. Gimmicky? Maybe. Effective? Yes. It was about positioning More FM as different, creative and unconventional.

Or innovation can be in a new technique for creating effective sales presentations as More FM and NRS Media did when they introduced seminar selling all those years ago.
Or it can be in the way you structure remuneration.
Or a unique training program.
Or a revolutionary system for qualifying a database as NRS did with Profiler.
Or a business development system.

Innovation Can Be A New Sales Methodology

Radio stations have traditionally focused on outbound sales – and they’re very good at it (pitching offers to clients through face-to-face presentations or seminars/webinars – even telephone sales). But what about Inbound sales? Very few stations have inbound sales strategies of any kind (i.e. concepts that bring clients to the station – “passive” revenue involving minimal input from the station or its sales team). Creating an inbound sales strategy is an innovation worth considering. I’ll focus more on the benefits of inbound sales in a future paper.

Innovation Can Drive Better Results For Advertisers

Or innovation might be in a new scheduling technique that delivers greater impact and drives better results for advertisers. Why not offer a Total Coverage campaign with a commercial in every single ad break over, say, three days? Schedule a mix of 30 second, 15 second and 10 second commercials - perhaps even 5 seconders. Offer only one Total Coverage campaign a week – or even just one a month. You can vary the number of 30s, 15s, 10s and 5s to minimise inventory usage and make the campaign affordable. Imagine the impact of a commercial in every single break.

Innovation Can Introduce New Customers

Free Means Free - if you have availabilities, offer a free month of image advertising to advertisers you want to get on-air. Print advertisers. Businesses that advertise on other radio stations. Or new clients. It’s critical that only image advertising is offered because you don’t want to be judged on the direct results from a randomly placed campaign. Limit these free campaigns to, say, two a month. While this doesn’t generate immediate revenue, it is effective use of the time you can’t sell and should result in future revenue. Or, as an incentive to trial radio, offer a Money Back Guarantee (“if, for any reason, you’re not happy with your campaign, we’ll refund your money in full”). All you ask is that you have the opportunity to rectify any problems, and if they’re still not satisfied – for any reason whatsoever – you’ll offer a full refund. Offer only, say, two a month and have the sales manager call the client twice during the campaign and once after it has finished. You’ll be surprised at how few advertisers report any problems.

An Introduction To Radio offer could be a critical element in an effective inbound sales strategy.

Innovation Can Help Retain Existing Clients Innovation might be found in a customer retention program. On that point, I’ve never really understood why media companies don’t traditionally run Loyalty Programs. Your local coffee shop does, supermarkets do – chemists, rental car and credit card companies and dozens more all have their own schemes - and, of course, airlines are the market leaders. Yet, it’s easy to create a simple media rewards program, allocating points based on media spend with premium placements, free campaigns, upgrades, prime time bonuses, program sponsorships and other media benefits as rewards. Reminder campaigns (identical campaigns of 15 seconders to run two weeks after a paid campaign) can be offered. Or Profile Builders (5 or 10 second image commercials randomly placed). Or… There are many benefits you can incorporate to use inventory that would otherwise be wasted.

If you want to include other products and services, just work with a department store that carries a wide range of merchandise (preferably in return for a good discount and a spend on your station).

You can also incorporate all your short term, added-value campaigns under the Loyalty Program banner. It provides a clear rationale for making the offer - it’s much easier to justify a ‘deal” if it’s positioned as part of a Loyalty Program than as a stand-alone offer. Once again, there’s a condition: an advertiser must be a member to access the campaign. It costs nothing to sign up – so no one should decline - and membership provides a great data mining opportunity. It’s much easier to get detailed information on clients as part of the signing up process than it otherwise would be.

You can also build in status levels based on annual spend with added value benefits attached to each level. Double points can be offered on off-peak days or months. Or member discounts and bonuses – the opportunities are almost limitless. A simple Loyalty Program is relatively easy to administer and one of the major advantages of loyalty programs is that the more points a business accumulates, the more important it is to keep spending with the rewards provider rather than their competitors.

Innovation Can Drive Incremental Revenue Through Creative Concepts

Then there’s the innovation that directly impacts on revenue and profit – generally in the form of sales concepts or revenue growth strategies. The last 10% of revenue a radio station generates represents the bulk of its profit, so any concepts that deliver incremental revenue will have a disproportionately high impact on profitability. Many stations fail to capitalise on that last 10% of revenue because it’s the most difficult to sell – all the easy revenue has already been booked - and requires a more creative sales approach. Think inventory segmentation and variable pricing policies.

To spark your imagination, here are just a couple of simple ideas to generate revenue from that hardest-to-sell segment of your inventory. The 20/20 Prime Time Top Up - 20 additional prime time commercials at 20% of the standard rate. It’s only available to advertisers with a current campaign running and is sold after the campaign has been purchased. The Prime Time Top Up can only be offered by the sales manager, not individual salespeople. The rationale? It makes the offer seem more important and makes the clients feel important; it’s a good way for sales managers to communicate directly with clients; enables them to get feedback on each salesperson’s performance and service; and reduces the pressure on salespeople to sell a Prime Time top up with every campaign. And you only offer it when you know there’s time available to accommodate the additional spots, so you’re generating revenue from what would otherwise be wasted inventory. Just as importantly, you increase your Return On Inventory.

Make only one top-up available per week and offer advertisers no more than one every six months (so there’s no expectation). And stick to that policy. Unfortunately, stations seldom enforce conditions. Scarcity and urgency are big sales drivers, so it’s important to adhere to this rule.

There are many other innovative ideas for generating revenue from what is normally unsellable time. Some are so simple, you’ll wonder why you haven’t already thought of them and others are more radical and revolutionary. It’s all about exploring unique and exciting ways to boost sales that don’t involve significant time or effort.

Innovation Can Be Unconventional

If you really want to go out on a creative limb, try this (but check with the accountant and CEO first): Trade To Order - with this concept, staff become the clients, not the advertisers.

It works particularly well in December – or in any other month when availabilities are really tight. In November, advise staff that you can save them big money on their Christmas shopping. Invite them to compile a list of products and services they would purchase if they were offered at a significant discount with an extended payment plan. The list would include the items they’d like to purchase, the approximate retail price and where they can be purchased.

Tell staff you can’t guarantee to get everything they want but, if you’re successful, you’ll charge just 70% of the best advertised price and spread payments over the first three months of the next year.

Then give the sales team two days on the phones to negotiate as many of the products as possible on a trade or contra basis (preferably from new clients). Christmas essentials like wine, hams, groceries - even restaurant and gift vouchers - will also be easily “sold” to staff. Products obtained are billed to the relevant staff members, who then become the station’s clients. Salespeople get commission on net revenue.

I suggested this to one of our clients. When they tried it, one staff member purchased a new kitchen; another a new car. I won’t tell you how much revenue was generated in two days because you wouldn’t believe me.

It’s a very effective way of turning trade or contra into cash and a good way to attract new clients. Please note, though, that tax rules vary country to country and regulatory obstacles may rule this out in some tax jurisdictions.

Innovation Doesn’t Stay Innovative Forever

It’s important, though, to recognise when past innovation is no longer innovative. Take telephone sales. I trialled telephone sales to generate quick revenue over 40 years ago. It was an instant success. Forty years on, some stations are still running phone campaigns, even though overexposure and advertiser resistance have pushed them well past their useby date. Telephone sales have morphed into panic selling with little discipline and excessive discounts instead of an opportunity to generate revenue from the hardest-to-sell segment of inventory with a controlled formula.

My rule of thumb was to devote 5% of the active selling time (1 day a month out of approximately 22 selling days) to generate 10% or more of the monthly revenue. No advertiser was ever approached more than once every three months. That made good commercial sense.

That last 10% of revenue was almost all profit. Now I suspect that stations that do persist with telephone sales spend more than 10% of the active selling time to generate less than 5% of monthly revenue – and contact the same advertisers every month. Clients know they get a cheap deal at the end of the month – and wait for the latest offer.

Innovation Is About Thinking Differently

I talked before about NRS Media, the company I owned with Mike Brunel. Roy Hawker, another New Zealand radio professional now running his own successful international media company, was another key executive at NRS. We prided ourselves on being an innovative, entrepreneurial company and created a portfolio of products to combat any revenue challenge. If a station wanted to improve yield, we had a premium rate program.

If a station needed to attract new clients, we had several acquisition systems. If media company required strategic input, we had a templated consultancy service on offer. If a high-value, face-to-face offer was needed, we had one. If short-term revenue gains were necessary, we could deliver. Each had their own unique benefits and sales methodology. I mention this not because I’m suggesting that NRS was some sort of creative superstar – in fact some of those products are now well past their use-by date – but simply to emphasise that if you challenge traditional thinking, you’ll find new ways to develop untapped revenue opportunities.

Over US$2 billion in new revenue for media companies around the world suggests that NRS must have been doing something right. Since we sold NRS, I have often wondered how I could turn the NRS sales model upside down and eliminate all its negatives – the high cost of running seminars, time off the road for sales staff, high commissions, time-consuming database builds - and create a time- and cost-efficient sales model that generates new revenue from the hardest-to-sell inventory. It’s about challenging the old ideas and looking for new and innovative sales methodologies. Is there some radical and revolutionary sales solution that no media company has yet exploited? I’m not sure, but new opportunities are always worth exploring, even if they do carry risks.

Innovation Is Not Always Successful

Innovation and creativity don’t always result in success, but fear of failure is no reason to stop trying new ideas. I’ve had lots of failures – more than I care to admit to – but I’ve always subscribed to the theory that it’s better to have tried and failed than not to have tried at all. If you create a concept that has never been tried before, the outcome is never certain. But the one thing that is certain is that you can’t allow tradition to get in the way of innovation. By all means, respect the past and learn from it, but you can’t let the past dictate the future.

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Innovation Requires Courage

It’s easy to come up with new ideas; the hard part is having the courage to put them into practice and accept the risk of failure. And also to recognise that when you do have a success, your competitors will probably take that successful idea and exploit it for themselves. But true innovators are always improving and enhancing their ideas and keep a step ahead of the competition, while followers are always several steps behind.

When More FM first sold the Gold Key Program through small group presentations, that was innovation. When other stations copied this successful formula, that was imitation.

There’s a big difference!