A bunch of hints, tips and ideas to make raising rates simple, effective and (maybe even) fun.

It’s Time!

You've probably started already. It’s a new day. Every sign says that the economy is turning around. RAB and industry analysts are forecasting radio to be up six-percent (6%) for 2010. While there will be after-shocks, glitches and hiccups, the economy is essentially on the way up. It won’t go up at a perfect 45° angle, but up overall nonetheless. And since your clients also know this, your visit won’t be unexpected. We don’t get this kind of chance often.

Focus on their gain not yours

The over-riding principle: the most successful way to get to your goal rates in can be summarized in this suggested script for your clients:

We’d like to visit with you. Conditions are changing. We’re now seeing high demand and forecasting even higher for the coming quarters. Because of that and the coming political season, we’re getting sold out. So we need to talk about rates. We have a plan to insure that your advertising stays on the air through the coming period of high demand – and you’ll still have a great deal.

This is the posture to start a collaborative effort to keep their advertising in front of their prospects.

Our Needs Analysis

Before making those calls, answer these questions first:

• What’s our goal? Higher rate or larger billing, larger schedules. Longer term?

• How much, by when? Surely we’ll have some holdouts. How will we know we’re successful?

• Create a spreadsheet showing who are the best clients for up? Who are the potential Refuse-niks? What accounts will be in jeopardy? How many can we lose and still be in good shape?
  

• Who’s at the bottom of the average-unit-rate ladder; the ones tying up the prime inventory at the lowest rate?

• Who first? I'd recommend doing your first presentations to smaller customers because you have less to lose. They are your laboratory. It’s a good place hear the objections first – then practice your responses.

• Then, with that practice and preparation you’ll be in a better shape to successfully sell the larger clients who account for most billing. Even a small increase of these accounts will yield far higher billing overall.

Tips

• No surprise – give plenty heads up and advance notice.

• To managers who say, We deserve that rate, the answer is; the clients will decide whether you deserve it or not. The increase must be sold. Therefore …

• For larger clients do a full-on presentation. It’s worth it.

• Not all dayparts need go up equally. Wal-Mart has Everyday Low Prices, but not all prices are the lowest at Wal-mart.

• Categories. Start with the ones that are thriving. Examples include gold buyers, Ford dealers, cellular/mobile, bedding and furniture.

• No Sticker Shock. You’ll know it when several clients balk loudly at the percent of increase.

• In that case submit your Rate Protection Program; that is, negotiate the rate increase to occur in steps over xx weeks or months. Show it with a calendar. Focus on rate protection not the increase.

• Politicals. The laws for lowest unit rate come from, guess who? FCC? Nope. Congress decided they should have the lowest unit rate and passed a law that said so. Blame the politicians.

Objections & Responses

Many times the client’s response isn’t about the math or the rate but rather, perception.

Objection: Why are you doing this to me after I’ve been such a good customer?

Response: That’s why we’re doing this – because you are such a good customer. We’re going to our best customers first. Get on the new rate now and we can protect if for xxx (weeks, month or quarters).

Response: This isn’t about you and me; it’s about the market – supply & demand.

Objection: I can buy it cheaper down the street.

Response: Build in other considerations that just the rate. If you are moving Spots-Only and you have a close competitor offering Spots-Only, guess what? Cheap wins. Make your offering unique. (More on this below.)

Objection: Your ratings haven’t increased enough to justify this higher rate.

Response: With digital and NTR our effectiveness has increased.

Negotiation Tactics

• Two steps forward, one back. Get here – give there. Example; For the next xx (days, weeks, months) as long as we have the inventory we’ll add xx spots to the schedule

• Have a Stop Line. Don’t go in with your best final rate. Start with something higher. You might need it to give in – then again, you might get the asking rate.

• A good negotiator won’t tell you when you’re winning. Hang in there.

• People get emotional. That’s why I like to do this with a written presentation and constantly focus on the piece of paper – not each other.

• If you have a good working relationship with the client you needn’t worry about competitor that much. Make the presentation about their advertising, not radio or competitors.

Apples & Oranges

Make your offering different than the competitors. It’s tough when we’re dealing with only unit costs of spots versus a competitor or comparison to an old rate. Consider temporary Incentives such as sales promotions, digital, mobile, sponsorships as add-ons to make the rate more attractive. I love to smother a client in impressions.

Set a Rate Precedent

The real goal is for them to receive (and pay) an invoice with that new rate. If you include other goodies as an incentive to get on the rate, I’d list them on a separate invoice at zero cost. In time, these goodies will decrease and disappear – but you will have established the precedent of the new rate.

Ad Agencies

Media buyers are paid to buy quantity, not quality. The question is, how much (quantity) can I buy for how little? How much for how cheap? They care less about a station; far more about GRPs and CPP.

The sale takes place between buys. During the buy every buyer is overwhelmed and with calls and e-mails from reps asking How do we look? Are we OK? Immediately after submissions there’s a shark feeding frenzy. Everybody’s on the phone with the buyer and moving rates around. One thing I learned over the years: a strong relationship built between the buys will often trump rate. The time for trust building is before the buy.

Final Considerations

• Do clients talk to each other about their rate? Don’t think so. I’ve never, ever had a client want another client’s rate. Ever.

• Understand that your clients are going through this with many other suppliers, so they’re schooled at some great objections. Hear them first from your smaller clients.

• Believe. If you don’t believe in the rate increase – it’ll be tougher to get done.

• They’re also looking for confidence, justification, a plan and ideas. Make them a part of the rate increase.