For 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 often took friends. When guests came from out of town, it was a destination. But they lost my business.
The main attraction (along with the margaritas) was a unique soup. It featured large servings, loaded with chicken and rice, 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 in smaller bowls.
Management likely reasoned:
Most customers won’t notice, but we’ll save 10% on costs. That means more profits.
We noticed. But it wasn’t a problem. It was delicious and still good value.
Then we realized there wasn’t as much shredded chicken. They added broth, watering down the soup. This was surely a greater saving.
Of course, reducing it just a little more “isn’t going to matter”. Once again, they improved (or preserved) profit margins.
They still offered chips, but with less cheese melted on top. Another few cents are saved.
Now it was getting annoying.
How They Lost My Business
While reducing costs, they slowly increased prices. Over time, the cost of a bowl of soup had risen 25%. The restaurant now offered fewer products at a higher cost.
You could almost hear the logic:
Raising prices slowly 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. It’s lost the excitement. Many times, we order takeout. That means no sale of high-profit margaritas. And, we usually only go if it’s convenient.
We are still customers, and it’s still our favorite Mexican restaurant, but it’s not special. They have lost business. And, they have lost recommendation. It may not be a big deal to them, but there’s a little less buzz, word-of-mouth marketing, and free promotion.
What Does This Have To Do With Radio?
Audiences are attracted to a station for specific reasons: To be put into a mood, selection of music, imaginative promotions, engaging personalities, relevant information, a connection to community, etc.
The price they pay is attention. Radio extracts value by selling commercials.
When listener benefits are reduced, and the cost of listening increases, what happens? We lose fans. We lose buzz. We lose return visits.
It happens gradually. Small changes add up until the listener experience is less exciting.
What causes it?
Cut the Research
To save a few dollars, we skip a perceptual research project, promising it’ll be back. We can rely on previous data to guide the brand forward.
A year later, quarter hours are down but the share has held up, and the cume is 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 we don’t have room for.
If the project is restored, 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 one library music test a year instead of two. Nobody will notice that we’re holding on to songs a little longer.
Sure, the burn scores were creeping up last year. And the station may be a little stale. But a music test only results in about 10% of the songs changing. So we can get by. Other stations are cutting back on research, too. It’s not like we are falling behind competitors.
Okay. Reduce the research. That alone won’t be what causes the audience to say, “You lost my business”.
Cut The Support Staff
The morning show is doing well. We’re #1. But they’re expensive. Do we really need a phone screener? Couldn’t the producer handle that task? How hard could it be?
Soon, callers aren’t as prepared. There are technical issues. The producer isn’t as focused on execution. The show doesn’t sound as sharp. Listeners don’t complain because they can’t put it into words, but it matters. It just seems different. It’s not as exciting.
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.
We Don’t Need to Promote-Do We?
As the business cycle changes, ad rates are down, but corporate insists on a consistent profit margin. We’ve already made research and personnel cuts, so marketing is next. Do we really need a billboard or TV campaign? The cume is strong. Can’t we get by on 40% of the buy? Or maybe we can trade it out. After all, there was no measurable rating gain during that last flight.
Last year’s promotion was great, and there’s good feedback for our $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. Contest players will play for less.
We know how important social media is, and we want an active presence. But why can’t air personalities update the Facebook page instead of hiring (or assigning) a dedicated expert? 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 listeners don’t say, “You lost my business”. But it doesn’t attract more listening, either.
A Couple More Spots
Several large clients 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 we’ve decided that commercials are commercials, whether they’re 10’s, 30’s or 60’s. So we’re going to charge based on unit, not on the length of a spot.
Cut What’s Left
We have three show prep services. Do we need that many? Can’t you get by with 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 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. 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 weekend
jock 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…With automation, 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 other markets). Let’s have her schedule music.
Or, maybe we could get the music logs from another market. It’s almost the same, isn’t it?
Get it? The product isn’t as valuable, and it costs more to listen. Tune-in occasions are down to a little over 7 minutes, 25% lower than a couple of years ago. Daily Cume is plummeting, especially with younger demos. Listeners are making a statement:
You lost my business.
Listeners return less frequently and spend less time when they do. They don’t talk about us as much. We’re not as important. There are other options competing for 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. It’s no longer special.
Except the margaritas. They’re still good.