(By Alec Drake) Like me, you may have accumulated books over the years, and instead of reading thoroughly, some have bookmarks at the halfway point or are still on a “read soon list.” The books I read cover-to-cover usually transformed me with meaningful insights, added energy to my professional journey, and supported new directions in my growth. There are several standouts in my “cover-to-cover” section, and last week “The New Law of Demand and Supply” by Rick Kash jumped off the shelf to remind me of two lessons learned.
- Build It, and They Will Come: Creating supply only matters if you understand demand. Managing sales based on supply and looking for demand should flip to understanding demand and leveraging it to sell supply.
- The Value Formula: A simple relationship for price elasticity relating to value. Value = Benefits over Price; meaning, the value goes up in two ways, you can increase the benefits or lower the price.
How can we take these two lessons and apply them to radio sales?
Why Demand Comes First
The macro factors of barrier to entry breaking down, distribution channels increasing, and digital media platforms reaching a critical mass are in full stride. These factors complicate the understanding of demand and how we should structure our sales efforts.
We only need to look at the recent demise of CNN+ for a fresh example of misreading demand and putting supply upfront in the decision process. In less than one month, the plug was pulled on seven-hundred jobs, millions of dollars spent on marketing and talent contracts.
Radio managers must pay close attention to demand and shifts in patterns to understand sales strategies that match current circumstances.
What Are Your Customers Telling You About Demand?
Sales managers typically focus on using all available resources (supply) to reach revenue goals. Improved strategies to maximize revenues require looking to your customers for clues. Trying new things, taking risks, and testing the market is necessary for success. Asking questions can help guide your understanding of demand; here are some suggestions.
- What would your customers buy (natural demand) if there was no sales effort?
- Where are you creating artificial demand with short-term sales programs?
- Do you have a process to collect information from clients and prospects on what they value?
- What do your customers want to buy that you do not offer?
Adding Benefits Before Lowering Price
As stated in the value formula, you can choose to increase value by raising benefits. What can you add that your competition does not offer? Is there an opportunity based on service or terms and conditions?
Garner feedback from your sales team as a brainstorming exercise and survey your clients as the leading edge of your demand strategy. Your competition may follow your new benefits idea, which can be frustrating if you get a short rollout window. However, your company will be perceived as a leader in the market, which has a unique value benefit showing your progressive approach to providing solutions.
Upgrade Your Assets
Are you pushing a boulder up the hill? Where do you have low revenue-producing assets? Managing sales resources requires periodically evaluating opportunity costs. If you spend time on assets that have lost their appeal and hang around in sales collateral out of habit, it might be time to move on.
A gap in value fixed with lower prices could artificially boost demand with no change in benefits. While discounting can be tempting, it is a path of least resistance. Adding new benefits to replace the low-performing asset is a better choice to support a demand-first strategy.
What’s Old Is New Again
Our past learning curves deserve a fresh look for relevance in today’s business environment. In times of rapid change, not everything has to be new and shiny. It can be helpful to review previously beneficial ideas gathering dust in your mental closet. Do some spring cleaning in your head to leverage what you utilize now with what you may have forgotten. I plan to spend more time in the “cover-to-cover” section of my bookshelf to recycle solid ideas and put them to work today.
Alec Drake is President of Drake Media Group, a revenue management consulting company. You can contact Alec at his website Alecdrake.com, email [email protected] or 214-529-2007.
