Classic, highly-ranked radio brands are changing their format to automated or syndicated services because they are losing money. High-performing morning shows are being replaced by shows piped in from stations in other markets owned by the same company. I know of another station making plans for life after their top-ranked morning show because they don’t want to pay for a new contract. Meanwhile, the best talent (those who haven’t been terminated) is asked to “wear more hats” to create new revenue and compensate terminated coworkers. And that’s just this week. I get it. Revenues are collapsing as AQH declines. These are hard decisions, but radio is causing irreparable damage. It reminds me of how a Mexican restaurant lost my business a few years ago.
Indulge me in this short story. There’s a point that will resonate with you.
How A Restaurant Lost My Business
It’s hard to lose passionate, raving, loyal fans. My wife and I were regulars at a local mom-and-pop Mexican restaurant for years. It was one of our favorite spots in San Diego. We were there at least once a week, often twice, and frequently took friends. When guests visited, it was a must-visit destination. But they lost my business.
The main attraction (along with the margaritas) was a unique soup that featured large servings loaded with chicken, rice, and fresh vegetables. It also came with a side of chips smothered in cheese. It was amazing and priced right. It wasn’t cheap, but it was a great value.
But things changed.
First, they reduced portions just a little. They tried hiding it by serving it in smaller bowls. Management likely reasoned:
Most customers won’t notice, but we’ll save 10% on costs. We can create more profit.
We noticed. But it was still a good value.
Soon, they replaced some of the shredded chicken with more broth. The soup was diluted, no doubt reducing their budget for the primary ingredient of their signature dish. Of course, “reducing it just a little more won’t matter, right?”
Then, in an ongoing attempt to increase (or preserve) profit margins, they stopped melting cheese on the chips to save another few pennies. This was annoying, but they still had not lost my business because we were fans, and they were part of our routine.
How They Lost My Business
While reducing costs, prices slowly increased. Little by little, prices rose by more than 25%, meaning long-term fans received less value at a higher cost. In management meetings, they probably justified the logic:
Raising prices slowly won’t cost any customers. They love our soup. Nobody has complained. They probably haven’t even noticed.
We noticed but never said anything. We still go there, but it’s no longer a favorite. Most of the time, we order takeout when it’s convenient. That means no sale of high-profit margaritas, tips for the staff, and guests coming along.
We are still customers, but it’s not unique. They get less buzz, word-of-mouth marketing, and free promotion.
Is This About A Restaurant?
Audiences are attracted to a radio station for specific reasons: to be put into a mood, to hear a selection of music, to experience imaginative promotions, to interact with engaging personalities, to receive relevant information, to connect with the community, etc.
Great programmers and personalities are like chefs, preparing each ingredient with care and serving it in a special way.
There is a cost to the consumer. They pay with their attention. Most listeners understand the price they pay by tolerating (or escaping from) commercials that disrupt their attention.
But what happens when listener benefits are reduced and the endless stream of commercials increases? The value proposition is reduced as prices increase. You lose fans, buzz, and return visits.
It happens gradually, starting with fewer new customers finding your brand. Other sources offer more value and better choices for their taste.
What Is Happening To Radio?
I think you understand the analogy. Here are a few ways broadcasters have diluted the soup and raised prices:
Serve Smaller Portions: They cut back on research to save a few dollars, reasoning that perceptions don’t change much. A year later, quarter hours are down (every station is down), but the share has held up (compared to other stations), and the cume is healthy. So maybe we don’t need research after all. Now, it’s a luxury we can live without. That alone won’t be what causes the audience to say, “You lost my business.”
Dilute the Soup: The morning show is #1. Listeners love it, but it is expensive. Can we get by without a minimum-wage phone screener? Couldn’t the producer handle that task? How hard could it be? Soon, callers aren’t prepared. There are technical issues. The producer’s focus is split. The show doesn’t sound as sharp, and they’re unhappy. Listeners don’t complain because they can’t put it into words, but something is different. The show is not as exciting. Shares decline. Management reasons: “Sure, some things slip through the cracks, but they weren’t why most listeners came to us anyway. We’re fine, right?”
Raise Prices: Large clients continue to shift ad budgets from radio to digital, so broadcasters 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. If we can’t sell them for as much as we used to, we must sell more.
The Customer Experience: Behind the scenes, the support staff is gutted. Phones are not answered. We post more often on social media, but nobody on the staff responds. Fans are no longer delighted. They feel disconnected. They still check in, but it’s like picking up takeout instead of dining in.
Cut Into The Bone
Ad rates are down, and we’ve made personnel cuts. What else can we do?
Franchise: Instead of a fan-favorite brand immersed in the community, we import a brand to consolidate costs, hoping to reduce marketing. It worked in Des Moines. Why won’t it work in Boise? And, since it’s an established show (in Des Moines), do we need an ad campaign? Or maybe we can trade out a campaign with a TV station. They’re suffering, too, and have a ton of unsold inventory (for a reason).
Promotion: Last year’s promotion was great, and there’s good feedback for our $10,000 grand prize giveaway. It had a measurable 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, and contest players will still play.
Add More Responsibility: Social media and digital traffic are critical. We must develop this revenue stream, but there’s no budget. Why can’t air personalities update the Facebook page instead of hiring a dedicated expert? How hard can it be? Of course, adding this responsibility takes time and attention from show prep, production, and promos. But It’ll save a few more dollars, and listeners won’t notice. It’s like having the server double up as the restaurant’s host and dishwasher.
Death By 1,000 Cuts
The list goes on and on:
There were three show prep services. Can’t you get by with one? Let’s keep the bartered service and eliminate the two that are cash only. Sure, it’s only a few dollars monthly, but that adds up.
The consultant has been great, but the hard work is done. All we have to do is maintain. Let’s save the cost.
What do our programmers do all day, anyway? Aren’t they just filling out weekend voice-tracking schedules? 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, the PD could do a live show on one station and voice track middays on another. It can’t be that hard, can it?
We know music is important, but the midday personality only works seven hours a day (a four-hour live show and voice-tracking four stations in other markets). She can schedule the music, or maybe we could get the music logs from another market.
Conclusion
Get it? The product isn’t as valuable, and it costs more to listen. The best employees leave the industry because it’s not worth it anymore.
Meanwhile, listeners are making a loud, clear statement:
You lost my business.
They return less frequently and spend less time when they do. They don’t talk about us as much, and we’re not as important.
Their tastes haven’t changed, and their needs are still the same. Most still love what we represent.
But, like my formerly favorite Mexican restaurant, the magic is gone. They lost my business.
Except the margaritas. They’re still good.
The question is: What will you do to get it back?
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