(By Alec Drake) “It was the best of times; it was the worst of times,” is the first line of “A Tale of Two Cities” by Charles Dickens. The opening for this novel speaks to the ongoing dilemma in radio sales between local direct, national, and transactional sales. Management decisions have underlying friction between selling for a more significant budget share in the national or transactional process and the critical higher-margin clients in local markets.
A market manager must straddle the agendas of both revenue streams. How do you protect the value of your inventory in a commodity-minded marketplace? You love the big orders from national, but you might regret how much inventory is chewed up in the sale. How can you dial down the sporadic flare-ups between your local managers serving their community of clients and national sales banging their heads against a wall of take-it-or-leave-it big agency buyers?
Three Strategies for The Best Topline And Bottom-Line Performance
Get Everyone on the Same Team
Trying to appease both sides in the local vs. national competition for station inventory and customers (in some cases) will not work.
Plan a meeting and clearly, state the benefits from each side, and list the pitfalls of each approach in sales.
Be open to solutions, not objections, to build a streamlined communication pipeline, with a point person on each side focused on the big picture.
Celebrate wins on both fronts that support cooperation for the common goal of growing revenues. Add incentives for local managers to benefit from total revenues since they are sometimes pulled into national campaign performance objectives.
How To Balance the Share vs. Rate Dilemma
Use a robust inventory and yield management strategy to provide a backdrop of data and direction on decisions regarding a particular order.
Partition inventory designated for share goal orders that drive bottom-up demand on your rate curves to price remaining orders.
Use terms and conditions to lay in long-term business with minimum damage to future revenue potential.
Be ready to lose a piece of business to win on the next round or serve a different customer locally or nationally. Not all business is good business.
Top Line vs. Bottom Line
Review your commission structures to incentivize and confirm what business best contributes to the bottom-line metrics.
Consider any “add-ons” to the order, like rebates on schedule performance from the post-buy review, that can show up as negatives to revenue performance in future quarters.
Protect high-margin inventory such as “Endorsements” from national clients’ overuse, discounting pressure due to order size, or a low-Cost Per Point (rating metric).
Are there any corporate deals that penalize the local P&L and should be noted in the margins when considering bottom-line goals for bonuses?
Summary:
While the capacity of your stations has limits, there is room for expanding cooperation between your national and local sales effort. It is not a choice of best or worst; it’s a goal to build a shared vision and value to understand what success looks like from a macro point of view.
Thoughtful planning, solid communication, staying on top of market conditions, and any client shifts from local to national buying lead to better management decisions. In a shrinking pie of national and traditional dollars, maximizing the revenue potential for your station’s inventory is critical.
Alec Drake, President of Drake Media Group, writes on revenue management and sales improvement strategies. You will find more of his articles in the “Sales Success Library” at Alecdrake.com. Alec is the founder of The Radio Invigoration Project (T.R.I.P.) LinkedIn group to benefit local radio sales, and can be reached at [email protected].
