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Other Added - The Fundamentals of Direct Response Radio Advertising
Sociologists put 100 people in a room for fifteen minutes. They secretly instructed two of those people to say only negative things, and the other 98 to say only positive things. Guess how long it took the two negative people to find each other and talk? Fifteen minutes! Like attracts like.Some entrepreneurs love to blame their bad financial circumstances on others. But when things are good, they’re quick to take credit for it. That doesn’t make sense. Two entrepreneurs in exactly the same city, same market, selling the same products for the same price: one makes a fortune while the other one goes bankrupt. And the loser tells you it’s the fault of the government, the weather, the market, the competition. And when you ask him how he explains his competitor’s success, what does he say? He accuses him of dishonesty, greed and underhandedness. The tall trees catch the wind.Everything we have is what we have created. Nothing comes TO you – everything comes THROUGH you. YOU create your success and your failure. Naming, blaming, complaining and shaming, is loser behavior. It’s not WHERE you are, my friend; it’s WHO you are. We attract what we are. Our minds are magnets. “If it’s to be, it’s up to me.” It’s all about taking responsibility. We get back what we send out. “Whatever the mind of man can believe and conceive, it can achieve”, Napoleon Hill told us. At a seminar I presented last week in Ottawa, I told the audience, “The only people in this audience who will get restless, indignant and uncomfortable when I use the word, ‘Loser’, are the losers!”Business success or failure is no accident – it’s simply a RESULT – a CONSEQU
Improving Cost Per Order
Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.
1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant advertising. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.
2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.
3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web c
Medical billing can be a real nightmare. No wonder the turnover with medical billers is so great. Between the number of regulations, pile of forms and tons of red tape, it's enough to make anybody crazy. One of the worst culprits is the DMEPOS CMN, or the GU0 record, which is used for electronic transmission of claims using NSF 3.01 specifications. In this installment, we'll be covering the GU0 record, picking up with field number 8.GU0 field 8, positions 32 - 33, is the HCPCS modifier. The HCPCS modifiers are one of the big reasons that medical billers lose their minds so quickly. Having to keep track of which modifier goes with what month can be a real pain in the backside. Fortunately, most electronic billing software packages take care of this for you. This field is used to tell the carrier which month of billing you're in for the item or service in question.GU0 field 9, position 34, is the warranty reply field. This field tells the carrier if the item being billed for this CMN is under warranty or not. If it is, the field is transmitted as a Y. If it isn't, it is transmitted as an N. If this doesn't apply, then the field is transmitted as a D.GU0 field 10, positions 35 - 36, is the warranty length. If the item is under warranty, as designated by field number 9, then this field tells the carrier what the warranty period is in months.GU0 field 11, position 37, is the warranty type. This field tells the carrier what type of warranty the item comes with. There are four valid entries for this field. A 1 is entered if the item comes with a full replacement warranty. A 2 is entered if the item comes w
First, Two Important Concepts
Throw out all you think you know about advertising, radio advertising, and especially direct response advertising. It's best to begin with a clean slate, a blank whiteboard so-to-speak. There are two important concepts I want to introduce before moving forward.
Concept One: Radio as A Highway From Your Business to Your Potential Customers
Think of radio advertising as a 5,000 lane highway from your business to groups (station audiences) of your potential customers. The many lanes on this highway are the many different radio stations and radio networks that are available for you air your radio advertisement. It is on these "lanes" that you send your message to your customers.
The lanes are clustered in such a way that they reach groups collections of customers who have similar tastes and demographic profiles. Therefore, some of these lanes lead to groups that have a high concentration of people who match your target customer profile. As a result, advertising on those lanes (stations) is more profitable than others with a lower concentration of your target customer profile. These groupings are the radio formats, which are used in radio advertising to enhance the efficiency of, or return on, advertising efforts. For more about radio formats, see our summary at http://www.strategicmediainc.com/radio-advertising.php.
Concept Two: Radio Advertising is a Profit-Driver, Not a Cost Center
At this juncture, the one thing many business people can't seem to put out of their mind is the one of "how much does it cost" to advertise on radio. We've written extensively about this question because it is one of the most common that we get. The problem is that embedded in this question is the presupposition that radio advertising is a cost. The concept that one needs to fully grasp is that radio advertising is not a cost center. That is, it does not stand alone without any relation to revenue or profit. It is detrimental to think of direct response radio advertising as a cost because that leads to managing as though it's a cost, which means minimizing or eliminating it. Contrast this with managing it like it's an investment, and maximizing the return you realize on it.
Direct response radio advertising - by its very definition - is a profit-driver. If it's not driving a profit, it would not exist - or at the very least it would not be called direct response radio advertising but instead "brand" or "awareness" advertising. Profitability is a fundamental aspect of direct response radio advertising.
On To the Fundamentals
Now that we've cleared our minds and allowed for two basic concepts about how to think about radio advertising, let's move on to the meat of the fundamentals of direct response radio advertising.
The Basic Formula
We'll begin with the basic formula involved in all direct response advertising:
You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.
Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.
Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.
From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").
The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn a lot from this. Identify widely appealing, complementary items and ensure they are offered as part of the sales process.
2. Increase repeat purchase. You have paid to acquire that customer, now develop a relationship and continue to meet their needs to drive repeat purchase. If they only buy once from you, you don't have a very viable business unless that first purchase is incredibly high margin.
3. Reduce your cost structure. Take advantage of your increased volume to negotiate better product costs, shipping costs, etc.
Improving Cost Per Order
Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.
1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant advertising. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.
2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.
3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web c
Due to the catastrophic affects of Hurricane Katrina there will be about 3 million people migrating to other cities? Where will they go? New Orleans had 1.3 million people in the surrounding area. There are few homes left, few jobs until relief efforts and rebuilding gets going. There will be need for engineers, heavy equipment operators, construction people, but their families will have no homes and will have to live elsewhere. One major industry and source of jobs was totally wiped out, along with its tax base; the entertainment and gaming industry. But where will these employees go, many have lost everything and their jobs were totally demolished?Which cities stand to gain people? Well let us look around. Shreveport and Tunica have casinos and will take some of those who worked in that industry and in the entertainment sectors of the Destroyed Gulfport Area and tourist areas of New Orleans. Some may move as far away as Las Vegas, which need labor for their growing gaming sector. Atlantic City is also growing and needs trained gaming workers.Tunica can take on about 1,000 or so of the employees, Atlantic City for those with funds to move or those who work for a gaming corporation, which had locations in both Gulfport and Atlantic City may find a nice package for a move. Las Vegas the home of the gaming industry always needs people. The LDS and Mormons who had typically worked in casinos are no longer having the ten kids per family that their parents had are now having fewer kids. Fewer people are moving from Salt Lake due to the booming economy there. The Filipinos who also are know as hard working family folks are welcomed by
Concept Two: Radio Advertising is a Profit-Driver, Not a Cost Center
At this juncture, the one thing many business people can't seem to put out of their mind is the one of "how much does it cost" to advertise on radio. We've written extensively about this question because it is one of the most common that we get. The problem is that embedded in this question is the presupposition that radio advertising is a cost. The concept that one needs to fully grasp is that radio advertising is not a cost center. That is, it does not stand alone without any relation to revenue or profit. It is detrimental to think of direct response radio advertising as a cost because that leads to managing as though it's a cost, which means minimizing or eliminating it. Contrast this with managing it like it's an investment, and maximizing the return you realize on it.
Direct response radio advertising - by its very definition - is a profit-driver. If it's not driving a profit, it would not exist - or at the very least it would not be called direct response radio advertising but instead "brand" or "awareness" advertising. Profitability is a fundamental aspect of direct response radio advertising.
On To the Fundamentals
Now that we've cleared our minds and allowed for two basic concepts about how to think about radio advertising, let's move on to the meat of the fundamentals of direct response radio advertising.
The Basic Formula
We'll begin with the basic formula involved in all direct response advertising:
You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.
Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.
Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.
From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").
The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn a lot from this. Identify widely appealing, complementary items and ensure they are offered as part of the sales process.
2. Increase repeat purchase. You have paid to acquire that customer, now develop a relationship and continue to meet their needs to drive repeat purchase. If they only buy once from you, you don't have a very viable business unless that first purchase is incredibly high margin.
3. Reduce your cost structure. Take advantage of your increased volume to negotiate better product costs, shipping costs, etc.
Improving Cost Per Order
Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.
1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant advertising. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.
2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.
3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web c
Due to the drought issues which persist still in many states we are seeing the emergence of a new type of car wash in America; one which is indeed quite healthy for the environment. Some car washes are now recycling 90-95% of their wash water, yes that means the water is used over and over and the filters are getting clogged. The POTWs; Publicly Owned Treatment Works must accept high concentrated wastewater once the reclaim tanks are dumped. The smell this creates is also a big deal. In a full service carwash, which there are about 20,000 in the US they will have problems with these nearly 100% reclaim systems.Coin-ops use 7 gallons of water there are 30,000 of these, recycling can be tough because you never know what kind of manure someone will clean off their vehicles. The Industry sector even has an email picture floating around where someone is using the coin-op spray gun at a self serve car wash to wash a cow in the bay. Gas Stations often have car washes too; there are 30,000 with roll over car washes in the United States alone. These issues will determine the future of the industry and they installation of such systems as water issues become more critical. The car wash industry’s reputation and their relative reputations with the consumers of America are also at risk.Of Course water is a very serious issue, our company (a mobile car wash) has often been asked to wash for multi-tenant housing complexes and they say definitely bring your own water. Many multi-unit housing complexes are moving to sub-metering of water as discussed in;http://www.multi-housingnews.com Front page of Magazine in April.It was a
You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.
Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.
Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.
From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").
The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn a lot from this. Identify widely appealing, complementary items and ensure they are offered as part of the sales process.
2. Increase repeat purchase. You have paid to acquire that customer, now develop a relationship and continue to meet their needs to drive repeat purchase. If they only buy once from you, you don't have a very viable business unless that first purchase is incredibly high margin.
3. Reduce your cost structure. Take advantage of your increased volume to negotiate better product costs, shipping costs, etc.
Improving Cost Per Order
Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.
1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant advertising. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.
2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.
3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web c
Are you a homeowner or a business owner in the Dallas area? If so, is your home or office carpeted? If it is, there is a good chance that you may need to have your carpets cleaned. Although carpeted flooring is nice, it can show signs of wear and tear or dirt quicker than hardwood or tiled flooring. If you are in need of having your carpets cleaned, whether those carpets are in your home or in your office, you may be wondering whether or not you should seek professional assistance.When it comes to carpet cleaning, there are many Dallas homeowners who choose to do their own carpet cleaning. Dallas is home to a number of retail stores that sell carpet cleaners or floor cleaners. Many of these cleaners can be purchased for reasonable prices. While it is nice to be able to clean your own carpets, it is important to remember the work that goes along with doing so. Depending on how much traffic your carpet receives, you may need multiple cleanings a month. Also, depending on the carpet cleaning machine you purchase, that work may be more than what you bargained for.While a large number of Dallas homeowners choose to do their own carpet cleaning, Dallas residents also prefer, in some cases, professional carpet cleaning. Dallas, in addition to being home to numerous retail stores that sell carpet cleaners, is also home to a number of carpet cleaning companies. In fact, in addition to Dallas carpet cleaning companies, there are also many cleaning companies or services that also offer carpet cleaning. The number of choices that you have, when choosing a Dallas carpet cleaning company, is one of the many benefits to seeking profes
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn a lot from this. Identify widely appealing, complementary items and ensure they are offered as part of the sales process.
2. Increase repeat purchase. You have paid to acquire that customer, now develop a relationship and continue to meet their needs to drive repeat purchase. If they only buy once from you, you don't have a very viable business unless that first purchase is incredibly high margin.
3. Reduce your cost structure. Take advantage of your increased volume to negotiate better product costs, shipping costs, etc.
Improving Cost Per Order
Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.
1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant advertising. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.
2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.
3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web c
Make-You-Happy Action Teams (MAT) plays a critical role in managing employee retention. This is Z-Theory management. To briefly sate, Z-Theory management means everyone that is effected by a decision for the company gets a “say” or a “vote” in the decision (tons more on Z-Theory Management in another article).This means employees are directly involved in decision making that affects them. When they make decisions that directly affect them, they stay around longer! Pretty simple.You’re going to want to form a MAT in a number of instances:* Whenever you’re working on one of those big issues that will get a better answer when you get the group of stakeholders involved.* When you have an issue that is causing conflict or problems in your business.* When to improve a situation or take advantage of an opportunity can better be answered by a group.* When the results will significantly affect another group.What is a MAT?A MAT is a group (two or more people) of stakeholders who get together to solved a problem or develops the best way to take advantage of an opportunity.Who’s in a MAT?Stakeholders. People who are affected or will be affected by the decisions that the MAT makes need to be included. That doesn’t mean everyone who is affected by the decision, but it does mean a representative of the groups affected.For instance, if we are discussing the best way to service clients who come to our facility to buy and pick up products we’ll have people from sales and warehouse on the team. While she doesn’t need to be in on the entire process, we’ll probably also invite the rec
Improving Cost Per Order
Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.
1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant advertising. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.
2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.
3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web copy, product offers, pricing, and your guarantee or return policy. As much as any other variable, these factors need to be tested and continuously refined.
Implications and Conclusions
Now that you understand the fundamentals of direct response radio advertising, let's look at the implications and conclusions that these fundamentals illuminate:
1. The role of database technology and analysis
By now it is clear that optimizing both lifetime value and cost per order maximizes your business profitability. But doing these things also requires capturing and analyzing an enormous quantity of data. To do this in a way that allows for distilling insights requires a robust database specifically tuned for direct response radio, along with well-refined analysis approaches. Fortunately, database technology and robust analysis are a part of the services your radio agency will provide for you.
2. The importance of ongoing testing
Any discussion of the fundamentals of direct response radio advertising (or any type of direct response advertising) would be incomplete without addressing the topic of testing. When you look at the above approaches to maximizing campaign profitability, you see the key metrics that must be impacted. But how do you actually impact them? How do you know whether offer A is better than offer B? or C? How do you know whether copy D drives a better response rate than the control? How do you know whether the sales scripting or the pricing structure could be improved by certain changes? The only way to know these things is to test. As a result, testing is a never-ending element in direct response radio advertising efforts. If you are not testing, you are slowly going out of business.
3. Success in direct response radio advertising is about more than costs
As we've mentioned, one of the biggest questions we get is "how much does it cost to advertise on the radio?". Done correctly, direct response radio advertising is not a cost center, it's a profit center. It's a very efficient way to acquire new customers at a low CPO. To learn more on the topic of radio advertising costs and how to budget for radio advertising, see our article at http://www.strategicmediainc.com/radio-advertising-articles/.
4. Nearly any business can grow profitably with direct response radio advertising
It is difficult for me to think of businesses that cannot benefit from the kind of radio advertising that we are involved in. Direct response radio advertising is different from other forms of advertising because it is accountable for results, and the only way it can be accountable is to leverage a set of technological and human systems and processes to accurately capture, analyze and interpret results of the advertising. Once you have that in place, you have established a continuous improvement loop. Therefore, provided you have a profitable business model and a good product that delivers on a unique and relevant promise, your business can profitably acquire new customers with direct response radio advertising. That's the ultimate promise of direct response radio: the ability to grow your business profitably at the rate you want to grow it. Once you establish profitability, you need only increase your media spend to drive higher revenues and profits.
The Fundamentals in Perspective
Direct response radio advertising does not stand alone in creating a business. It works in combination with your business model to acquire new customers at a low, and therefore profitable, CPO. What makes direct response radio advertising so attractive is its efficiency and flexibility, which results in comparatively low CPO's relative to other mediums.
This article explains the fundamental elements involved in how nearly any business can use direct response radio advertising to acquire new customers and grow both profitably and rapidly. Once you understand the fundamentals of radio advertising, you're ready to embark on the process of building a direct response radio advertising campaign. That process involves developing a radio advertising strategy, creating radio ads that drive response, and implementing a radio media plan that delivers your message to the right people for the right cost.
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