How to Zig When Others Zag in this Economy

No, you did not awaken to a bad dream. Business is bad all around us. One of my radio group colleagues shared that his business was off 28% last month and he expected this month to echo last month's decline. We're watching an industry make the sound of a giant exhale as they breathe out staff members, kill entire departments, and change the way business has to be done. Though many are doing it because they paid an unrealisticly high multiple for their stations and cannot meet their debt service or covenants, others are doing it because they simply have no other choice. It is in these times, which the previously protected status quo is nolonger the holy grail. The way business is done will change forever.

Winners & Loosers
In every down economy there are winners and losers. Though our instinct (and usually necessity) is to cut expenses, typically the losers are those, who do what comes naturally. If there is no money to pay they have no choice but to shrink. Shrinkage sometimes causes lapses in customer service and quality of product, and reduced marketing which results in dropping revenues.

Almost 300% Increase?

From every crisis emerges opportunity. The last big recession was 1981-1982. McGraw-Hill researched 600 companies covering 16 different industries from 1980 to 1985. During the 1981-1982 recession, companies that maintained advertising, developed personal customer relationships, and provided superior customer service realized a 256% increase in sales by 1985!

Recessions historically reward companies with the most aggressive sales forces and penalize the timid.

In the branding business, big, confident brands that do not reinforce their leadership during a recession are often replaced by aggressive competitors that end up owning the top position thanks to aggressive marketing while their competitors hunker down.

Radio Is Hunkering Down
We ask people to advertise with us yet we don't do it? We pressure our sales teams to perform, yet we fired our most expensive and most productive sellers to save money. We want to maintain our audiences, yet we're cutting valuable and expensive local icons in exchange for national talent.

Jobs That Never Return

Chances are that most of the lost jobs in radio will NEVER be replaced as these companies realize that their new way of doing business will work well for them. For instance one big broadcast company plans to cut all local traffic and accounting departments and operate them as a central operation. If this works without sufficient problems, it makes sense. I suspect the big companies will nationalize production operations as well. The same goes for national talent vs. local talent. Television switched to this model decades ago and it's hard to argue that a strong local talent could beat the Tonite show or CSI. I suspect radio will become mostly national talent across all formats, much like talk radio is today, with only minimal local presence. (Though I'm a big believer that strong local "friends" with longevity would be a big loss to radio audiences.)

Taking Advantage of the Opportunity

I have one advertiser who is DOUBLING down his bet by doubling his advertising budget. He knows that he can increase his business while his competitors hunker down and play safe. He see's it as the best possible opportunity to grow his business.

Another advertiser fired two people and took the salaries of those people and put it towards marketing increases. He is building his business when his compeitors are sleeping and knows that visibility when others have none will recast leading brand preferences and he will get any business that is currently out there.

I know of a radio station who started advertising heavily on local television because he believes he can steal market share from competitors who can't afford to advertise, and he believes he will stand out as secure, confident, and practicing what he preaches to local advertisers. Plus he can dominate local tv at the lowest prices in history.

A sales trainer told me that while most companies have droped training sales people, several of his clients are getting 10% above the market in most cases because his clients continue to invest in sales training.

When Clear Channel cut its sales force I received a call from a large competitor looking for a list of all the people cut, because he decided to increase his sales force by hiring these former competiors.

What Will You Do?

In the great depression millions were made by companies who refused to give in and who used every possible tool to gain advantage over their competitors. What about you?

There is no doubt that most of us have to slash expenses until business improves, but if there is some creative way to increase your sales effort, your marketing effort, your client relationships? There has never been a better time to get aggressive. There is less noise to overcome and you'll stand out, which results in radid accomplishment of your goals. A good rule of success is to zig when others zag. Following the pack is never a good practice.

Eric Rhoads

Radio Ink

www.radioink.com

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