Weight Vs. Value, What are you?
Updated: Aug 20
If you only had a pound of inventory, whether gold or feathers, you would need a strategy to manage the demand variables, the sales negotiation, and the customers' price sensitivity. Gold and feathers fluctuate in price and respond to market forces, much like your OTA (over the air) inventory. OTA still represents a significant share of revenues for most radio groups; how you price and sell traditional inventory will significantly impact the top-line and bottom-line results.
What Tools Can Weigh Our Value?
In a previous post, "What Nine Factors Determine Price Sensitivity?" we promoted differentiation and substitution as two 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 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.
Always Manage Discounts From The Front To The 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, and early sellouts will cause you to miss premium pricing as demand peaks. Look at your annual agreements in Q4 this year 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 in weight, the value will always be the critical differentiation. The sales department must have the proper tools, content narratives to build value, and 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 that pound of gold.
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About Alec Drake:
As President of Drake Media Group, a content creation and sales consulting company, Alec is on a mission to share his unique perspective on best practices to enhance sales performance and drive revenue. The company offers a range of consulting expertise, including sales operations, team and individual coaching, yield and revenue management strategies, event sponsorship formats, and sales marketing.
Drake Media Group, LLC retains exclusive rights to the original content in all articles written by Alec Drake, contained in any podcast appearances, or articles published on third-party platforms.