Are You A Pound Of Feathers Or Gold?
Updated: Jan 19
While a pound does equal a pound, the value will always be the critical differentiation.
The Same and Different Simultaneously
If you only had a pound of inventory, whether it be gold or feathers, you would still need a strategy to manage the demand variables in the market, the sales negotiation, and the price sensitivity of customers. Gold and feathers fluctuate in price and respond to market forces, much like your OTA (over the air) inventory. OTA represents a major share of revenues for most radio groups (50% to 80%); how you price and sell this traditional inventory will impact the top-line and bottom-line results significantly.
Weight Vs. Value
In a previous post, "What Nine Factors Determine Price Sensitivity?" we promoted differentiation and substitution as two of the nine factors that play a pivotal role in sales negotiations and pricing decisions. This conflict between buyers who see you as the same (weight) vs. those who appreciate the difference (value) can also be managed with the customer segmentation strategies we featured in "What Terms and Conditions Support Yield Management?" Having a standard set of terms, and being aware of price sensitivity to navigate negotiations, will support increased revenue from the same amount of inventory.
Manage Discounts Front to Back
To further increase revenues, we need to understand how the rate curve for a station's inventory can segment opportunities and work with the list of terms and conditions. If you only have a pound of inventory based on our example and capacity is fixed, the pricing curve can stimulate demand via controlled discounts on the front end and deliver maximum revenue on the back end.
Unnecessary discounts on the front will cost you later in the selling timeframe. Early sellouts will cause you to miss premium pricing as demand hits its peak. Make it a resolution to avoid unnecessary discounts. Look at your annual agreements for opportunities to add terms to limit your exposure to discounts closer to sellout conditions.
Are You a Pound of Gold?
While a pound does equal a pound, the value will always be the critical differentiation. The sales department must have the proper tools and narratives to build value and solid yield management practices to deliver the revenue goal. If you have the right expertise and top management support, you can exceed your revenue goal and be a pound of gold.
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About The Author:
Alec Drake openly shares revenue management strategies and sales improvement ideas in the "Sales Success Library" at Alecdrake.com. He is a regular contributor to Radio Ink Magazine, where he leverages four decades of experience to write about sales and management. Alec is the founder of The Radio Invigoration Project (T.R.I.P.), a support initiative for local radio sales and promotion staff.
Drake Media Group, LLC retains exclusive rights to any original content in articles written by Alec Drake or published on any third-party platforms and featured in any podcast.