by Tracy Johnson
For many years, my wife and I were regulars at a local Mexican restaurant. It was one of our favorite spots. I’m talking about avid, passionate fans. We were there at least once a week, often twice. We couldn’t get enough, and we often took friends. When guests came in from out of town, it was a destination. But they lost my business.
The main attraction (along with the margaritas) was a unique chicken and rice soup. It featured large servings, loaded with chicken and rice, and complemented with fresh vegetables. It also came with a side of chips smothered in cheese. Fantastic. And priced right. Not cheap, but a great value.
Then they made a few small changes.
First, they reduced portions. Not a lot. Just a little. They tried to hide it by serving it in smaller bowls.
Management likely reasoned:
Most customers won’t even notice, but we’ll save 10% or so on costs. That means more profits.
We noticed, but it wasn’t a problem. It was delicious and still a good value.
It wasn’t long until we realized there wasn’t as much shredded chicken. They added broth, watering down the soup. This was surely an even greater savings.
Of course, reducing it just a little more “isn’t going to matter”. Once again, they improved (or preserved) their profit margins.
They still offered chips, but with less cheese melted on top. There’s another few cents saved.
Now it was getting annoying, but it got worse.
While reducing costs, they were slowly increasing prices. Over a period of time, the cost of a bowl of soup had risen by 25%. The restaurant now offered less product at a higher cost.
You could almost hear the logic:
Raising the prices slowly, gradually, won’t cost any customers. They love our soup. Nobody has complained. They probably haven’t even noticed.
Except we did notice, and it does cost customers.
We still go there, but it’s no longer a favorite. We don’t go out of our way to visit, nor do we look forward to it as much. For us, it’s lost the excitement. Many times, we order takeout. That means no sale of high-profit margaritas. And, we usually only go when it’s convenient.
We are still customers, and it’s still our favorite Mexican restaurant, but we go far less often. They have lost my business. And, they have lost our recommendation. That’s a little less buzz, less viral, word-of-mouth marketing and less free promotion.
Audiences are attracted to your station for specific reasons: To be put into a mood, the selection of music, imaginative promotions, engaging personalities, relevant information or content, a connection to the community, etc.
The price they pay is their attention. Radio extracts value by selling commercials.
When listener benefits are reduced, and the cost of listening increases, what happens to stations? We lose fans. We lose buzz. We lose return visits.
It happens gradually over time. Seemingly small changes add up until the listener experience isn’t as exciting.
What causes it?
To save a few dollars, we skip a perceptual research project, promising ourselves it’s just for this year. We reason that we can rely on previous data to guide our brands forward.
A year later, our quarter hours are down but the share has held up, and the cume is still healthy. So maybe we don’t need research at all. And, since it wasn’t in the budget last year, it seems like a luxury cost we just don’t have room for.
If the project is reinstated, maybe we can get by with a smaller sample or shorter questionnaire. Can’t we save a bit? Compromise?
And, since music tastes don’t change that much, maybe we could survive with just one library music test a year instead of two. Nobody will notice that we’re holding on to some songs a little longer.
Sure, last year those burn scores were creeping up. Sure the stations may be a little more stale but, after all, a music test only results in about 10% adjustments. So we can get by. And other stations are cutting back on research too, so we’re not falling behind our competitors.
Sure, you can probably get by. That alone won’t be what causes the audience to say, “You lost my business”.
The morning show is doing well. We’re #1. But they’re expensive. Do we really need a phone screener? Couldn’t the producer double up and handle that task? How hard could it be?
Soon, callers aren’t as prepared when they go on. There are technical issues. The producer isn’t as focused on execution. The show doesn’t sound quite as sharp. Listeners don’t complain because they can’t quite put it into words, but it matters. It just seems different. It’s not as exciting.
Personnel changes aren’t limited to programming. Similar cuts have eliminated “non-essential” personnel in promotion and engineering. Little things slip through the cracks but they weren’t the reasons most listeners came to us anyway.
As the business cycle changes, ad rates have come down, but corporate insists we maintain a consistent profit margin. We’ve already made research and personnel cuts, so the marketing budget is next. Do we really need a billboard or TV campaign? Our cume is strong. They like us. Can’t we get by on 40% of the buy? After all, there was no measurable ratings gain during that last flight. Better yet, let’s cut it in half.
Last year’s promotion was great, and we had good feedback for that $10,000 grand prize. In fact, there was a positive impact on ratings in both spring and fall. But can’t we get the same impact with a $1,000 prize? That’s still a lot of money. Sure, let’s save a little. They’ll play for less.
We know how important social media is, and we want to have an active presence. We’re committed. But why can’t our personalities just update our Facebook page instead of hiring (or assigning) a dedicated expert to do it? How hard can it be? Of course, adding this responsibility takes time and attention from other areas. There’s less time to invest in show prep. And production. And promos. But It’ll save a few more dollars and listeners won’t notice.
Maybe you still haven’t lost my business. But you’re not getting more of it.
Several large clients have shifted ad budgets from radio to digital, so we’re going to compensate by adding a spot (or two, or three) each hour. “Don’t worry about it, it’s just adding another 10-15% increase to the cost of listening. It’s just one less song per hour. They won’t even notice if we do it slowly, over time.”
Oh, and while we’re at it, we’ve decided that commercials are commercials, whether they’re 10’s, 30’s or 60’s, so we’re going to charge only based on unit, not on length of spot. It won’t be long until the audience says, “You’ve lost my business”.
We have three show prep services. Do we need that many? Can’t you get by with just one? Let’s keep the bartered service and get rid of the two that are cash only. Sure, it’s only $40 or $50 a month, but that adds up. And it’s just one more spot a day.
Our consultant has been great. With his/her help, we grew to #1. But most of the hard work is done. We know what to do now. The station is sounding great. All we have to do is maintain. Let’s save the cost.
With no more cuts to make and the spot load running at dangerously high levels, what else can be done? Now we must get creative. What do those programmers do all day, anyway? Aren’t they just filling out the weekend jock schedule? Do we need a PD for each station? Can’t one person oversee three brands?
And why shouldn’t the PD have an air shift? If they can’t do a good show, they shouldn’t be managing air talent.
Come to think of it…With our automation system, the PD could do a live show on one station and voice track middays on another. It can’t be that hard, can it?
It’s nice having a music director. We know music is important, but the midday personality is only working 7 hours a day (a four hour live show, and voice tracking four stations in our other markets). Let’s have her schedule the music. Or, maybe we could get the music logs from another market. It’s almost the same, isn’t it?
Get it? Over time, the value we offer customers has changed. The product isn’t as valuable, and it costs more to listen.
Listeners return less frequently, and when they do, they spend less time. They don’t talk about us as much. We’re not as important in their lives. There are other options competing for their attention.
Their tastes haven’t changed. They still love what we represent. And the percentage of listening compared to other radio stations has remained constant.
But like the Mexican restaurant, the magic is gone. They lost my business. It’s no longer special.
Except the margaritas. They’re still good.
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