This Restaurant Lost My Business The Same Way You May Be Losing Listeners

For many years, my wife and I were regulars at a Mexican restaurant. It was an absolute favorite. I’m talking about avid, P1 fans. We were there at least once a week, often twice. We couldn’t get enough of it.

The main attraction (along with the margaritas) was a unique soup: Large servings, loaded with chicken and rice, and complemented with fresh vegetables. And they included a side of chips smothered in cheese. Fantastic. And priced right. Not cheap, but a great value.

Over time, they made a few small changes.

First, the servings were reduced. Not a lot, just a little, maybe. It wasn’t a problem, though, because it was delicious and still a fair portion. Management likely reasoned that,

Most customers won’t even notice, but we’ll save 10% or so on costs. That means more profits.

Then, we noticed there wasn’t as much shredded chicken. They added more broth, watering it down. This is probably an even greater cost saving. And, of course reducing it a bit “isn’t going to matter”.  Once again, they’ve improved (or preserved) their margins.

The chips were still there, but they added a little less cheese melted over the top. There’s another few cents saved.

While reducing costs, they slowly increased the price, and over a couple of years, the cost of a bowl of soup had risen by 25%. The restaurant now offered less reward at a higher cost.

You could almost hear their management meetings:

Raising the prices slowly, gradually, won’t cost any customers. They love our soup.

Except it does cost customers.

We still go there, but it’s no longer a favorite. We don’t seek it out, nor look forward to it. It’s lost the excitement we used to feel. Many times, we just get the soup as takeout when it’s convenient. We are still customers (cume), but we’re no longer passionate P1 fans. They get fewer visits (occasions), less physical presence on location (meaning no sale of multiple margaritas) and have lost our recommendation (viral, word-of-mouth buzz-free marketing).

What Does This Have To Do With Your Radio Station?

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, and radio extracts their profit by selling commercials.

When the benefit is diluted and the price increases, what happens to our stations? We lose fans.

It doesn’t happen suddenly. Like the restaurant, seemingly small changes add up until the experience isn’t as exciting and listeners are subject to finding new sources of entertainment. How does this happen?

  • To save a few dollars, we skip that perceptual research project…just for this year We reason that we can rely on previous data to guide our brands forward. A year later ratings held up. So maybe we don’t need the research at all. And, since it wasn’t in the budget last year, now it seems like a luxury cost we just don’t need. Or, if the project is reinstated, maybe we an get by with a smaller sample size.
  • Since the music tastes don’t change that much, maybe we survive with just one music test a year instead of two. Nobody will notice that we’re holding on to some songs a little longer, even though last year those burn scores were creeping up. Our stations may be a little more stale but, after all, a music test only results in about 10% adjustments. So we can get by.
  • 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? The result: Callers aren’t as prepared when they go on. There are technical issues with callers. The producer isn’t as focused on the show’s execution. The show don’t sound quite as sharp. Listeners don’t complain about it because they can’t quite put it into words, but it matters.
  • The personnel changes aren’t limited to programming. Similar cuts have eliminated “non-essential” personnel in promotion, engineering, etc.
  • The business cycle changes. Ad rates have come down, but corporate insists we maintain our profit margin. We’ve already made personnel cuts so the marketing budget is next to go. Do we really need a billboard or TV campaign? Or can’t we get by with 60% of the exposure? After all, there was no directly measurable ratings gain during that last flight. Better yet, let’s cut it in half.
  • Last year’s promotion was great, and had a positive impact on the ratings in both spring and fall. But can’t we get the same impact with a $1,000 prize, rather than $10k? Sure, let’s save a little. $1,000 is still a lot of money for our audience. They like money.
  • We know how important social media is, and we want to be there. But why can’t our personalities just update the Facebook page instead of hiring (or assigning) a dedicated expert to do it right? How hard could it be? Well, even if existing personnel really does know how to manage social media, adding this responsibility takes time and attention away from other areas. There’s less time to invest in show prep. Or promos.
  • 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.”
  • We have three show prep services. Do we need that many? Can’t you get by with just one? Let’s get rid of the two that cost cash. Sure, it’s only $40 or $50 a month, but that adds up. We’ll keep the one that accepts barter. 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 now. The station is sounding great. All we have to do is maintain it. Let’s save the cost.
  • With no more cuts to make and the spot load running at dangerously high levels, what else can we do? Now it’s time to get creative. What do those programmers do all day, anyway? 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.
  • And with our automation system, the PD could do a live show on one station and voice track the midday show on one of the other stations. 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.

Get it?

Slowly, over time, the value we offer our customers has changed. The product subtly changes, while the costs increase. They come back less frequently and when they do, they spend less time. They talk about us less. We’re not as important in their lives. There are other options for their attention.

Their tastes haven’t changed. They still love what we represent.

But like the Mexican restaurant, the magic is gone. It’s no longer special. Well, except the margaritas.

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