By John D. Verlin
"I had to write it down, because I couldn't remember it. One client said "you left out my profit margin"!
Starting a sales career is nerve-racking enough--but in radio advertising, it can be especially difficult.
Selling an intangible service, like insurance is one thing, but selling "air" is another (as in Billy Crystal, City Slickers).
When I first began my career in radio--I really didn't know the sales/business side of it as I had been recruited from the announcer/producer side.
So I had a fast learning curve to get up to speed on how to relate and sell to business owners.
Their focus on results and their bottom line was constant--and I was lucky if they gave me more than a month to prove it.
After my first year in the business--I began to realize that the classical radio station I worked with was lacking in suitable marketing materials and relied on brand sponsorships for most of their revenues. If a client asked for what type of return they could expect--we didn't have a clue other than what we were told by other advertisers--but they were hesitant to tell us the truth for fear we'd raise their rates.
A decade later--a new sales manager was brought in who looked like some slick ABC executive (he wasn't--but knew how to use his image).
One of the first things he taught us was a formula that we could use to help our prospects get a better understanding of what kind of return they needed (how many new customers each month based on an average annual sale) to make an average of 166.66% return on their investment.
It basically consisted of six steps using a prospects last year revenues, average customer sale, profit margin, etc.
As I met with clients using it--they seem intrigued--as this was a departure from the usual media sales rep (we were talking their language now).
The focus wasn't on how great our radio station was, ratings, ad cost, etc--but on THEIR business, using THEIR numbers.
Problem was--I kept forgetting parts of the formula--and sometimes got the figures wrong. In one case--the prospect told me I left out their profit margin!
I didn't want to use crib notes all the time, so one night I had an idea. This was born more out of a desire to get a laptop computer--as opposed to an actual business use.
But it did actually work out to be a godsend. I paid a little over $1100 back when along with a portable printer.
I realized I could put this formula into a spread sheet--and just show it to the client and punch in their numbers--and the figures would just appear!
I could then print that spreadsheet out on the spot and leave it with them with my name, number, etc.
Now they would have a yardstick to measure against if they did decide to advertise.
It set me as a rep apart--and it was a useful tool.
I began to learn that prior to the appointment--I needed to inform the prospect that I would be bringing a laptop to the meeting, asking them for "approximate" figures from their business. I later changed it to "industry average" figures so as not to pry or make them feel uncomfortable.
Three things happened:
I also saw how there was no way one radio station could produce the kind of results he needed to be profitable (1000 new customers per month)--yet their print budget was much greater than radio and there was no way they could justify that.
Which led us to a discussion of partnering up with another dealer, offer incentives for customers to use their service department--and see which media were being used by their national advertising (our station was bought by national--but not local).
They figured if their national was buying us--maybe they should make a separate buy as well.
Thus, I learned why most travel agencies (mom and pop) use them to get free trips and not necessarily to make a lot of money.
It's also why they promote cruises so much due to the large profit margins.
Finally--a long term kitchen company advertiser ran the numbers just for fun--and it showed that we produced over 300% return for them!
And the numbers it showed for their annual investment were almost identical to what they were spending.
In the best case--this tool actually showed that based on their numbers and goals for the next twelve months--we had to bring in 5, 6, etc new customers each month spending an average of $X for the year.
The "what if" was--if we reached 100,000 listeners in their demographic each week, was that achievable based on how many ads the formula suggested they run each month?
The worst case--it opened a discussion on what area's of their business they need to grow, idea's how we can help and made me stand out in their mind as a resource. It also directed the discussion from being the normal media-focused priority to something totally different--THEIR BUSINESS.
The constant return was 166.66% based on this formula. Most of them would be thrilled if they got a 10, 20 or 30% return on their investment.
After signing five clients using this laptop spreadsheet formula--I made a 400% return on MY investment!
If you're interested in getting this sent to you, click here to learn how you can in the bonus section.
If you'd like to get monthly advertising and marketing ideas for FREE, click here to sign up for our Marketing & Business Update e-newsletter.
If you enjoyed reading this--please "follow" me and share with your friends!
What ways have you been able to calculate your ROI on your advertising? Any successes to help other businesses you'd care to share?
Starting a sales career is nerve-racking enough--but in radio advertising, it can be especially difficult.
Selling an intangible service, like insurance is one thing, but selling "air" is another (as in Billy Crystal, City Slickers).
When I first began my career in radio--I really didn't know the sales/business side of it as I had been recruited from the announcer/producer side.
So I had a fast learning curve to get up to speed on how to relate and sell to business owners.
Their focus on results and their bottom line was constant--and I was lucky if they gave me more than a month to prove it.
After my first year in the business--I began to realize that the classical radio station I worked with was lacking in suitable marketing materials and relied on brand sponsorships for most of their revenues. If a client asked for what type of return they could expect--we didn't have a clue other than what we were told by other advertisers--but they were hesitant to tell us the truth for fear we'd raise their rates.
A decade later--a new sales manager was brought in who looked like some slick ABC executive (he wasn't--but knew how to use his image).
One of the first things he taught us was a formula that we could use to help our prospects get a better understanding of what kind of return they needed (how many new customers each month based on an average annual sale) to make an average of 166.66% return on their investment.
It basically consisted of six steps using a prospects last year revenues, average customer sale, profit margin, etc.
As I met with clients using it--they seem intrigued--as this was a departure from the usual media sales rep (we were talking their language now).
The focus wasn't on how great our radio station was, ratings, ad cost, etc--but on THEIR business, using THEIR numbers.
Problem was--I kept forgetting parts of the formula--and sometimes got the figures wrong. In one case--the prospect told me I left out their profit margin!
I didn't want to use crib notes all the time, so one night I had an idea. This was born more out of a desire to get a laptop computer--as opposed to an actual business use.
But it did actually work out to be a godsend. I paid a little over $1100 back when along with a portable printer.
I realized I could put this formula into a spread sheet--and just show it to the client and punch in their numbers--and the figures would just appear!
I could then print that spreadsheet out on the spot and leave it with them with my name, number, etc.
Now they would have a yardstick to measure against if they did decide to advertise.
It set me as a rep apart--and it was a useful tool.
I began to learn that prior to the appointment--I needed to inform the prospect that I would be bringing a laptop to the meeting, asking them for "approximate" figures from their business. I later changed it to "industry average" figures so as not to pry or make them feel uncomfortable.
Three things happened:
- Clients in some cases took the laptop out of my hands and began playing "what if" scenarios using various customer purchase figures and advertising investment amounts.
- They began to get a feel for what variables were realistic and what were pie in the sky.
- Some of the results were very close to what they had spent in the past--and we were able to focus on the elements of their ads and how to increase results (in the case of several current advertisers we used this with for their next year budget planning).
I also saw how there was no way one radio station could produce the kind of results he needed to be profitable (1000 new customers per month)--yet their print budget was much greater than radio and there was no way they could justify that.
Which led us to a discussion of partnering up with another dealer, offer incentives for customers to use their service department--and see which media were being used by their national advertising (our station was bought by national--but not local).
They figured if their national was buying us--maybe they should make a separate buy as well.
I ran the formula with an owner of a travel agency--and her margins were so small (@ 2%) that we couldn't produce anywhere what she needed to make a profit.
Thus, I learned why most travel agencies (mom and pop) use them to get free trips and not necessarily to make a lot of money.
It's also why they promote cruises so much due to the large profit margins.
Finally--a long term kitchen company advertiser ran the numbers just for fun--and it showed that we produced over 300% return for them!
And the numbers it showed for their annual investment were almost identical to what they were spending.
In the best case--this tool actually showed that based on their numbers and goals for the next twelve months--we had to bring in 5, 6, etc new customers each month spending an average of $X for the year.
The "what if" was--if we reached 100,000 listeners in their demographic each week, was that achievable based on how many ads the formula suggested they run each month?
The worst case--it opened a discussion on what area's of their business they need to grow, idea's how we can help and made me stand out in their mind as a resource. It also directed the discussion from being the normal media-focused priority to something totally different--THEIR BUSINESS.
The constant return was 166.66% based on this formula. Most of them would be thrilled if they got a 10, 20 or 30% return on their investment.
After signing five clients using this laptop spreadsheet formula--I made a 400% return on MY investment!
If you're interested in getting this sent to you, click here to learn how you can in the bonus section.
If you'd like to get monthly advertising and marketing ideas for FREE, click here to sign up for our Marketing & Business Update e-newsletter.
If you enjoyed reading this--please "follow" me and share with your friends!
What ways have you been able to calculate your ROI on your advertising? Any successes to help other businesses you'd care to share?
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