It’s no secret that traditional media advertisers, like newspapers, are facing increasing pressure from the conversion to a digital experience. While traditional advertisers have made leaps to quickly develop digital, mobile and video solutions to maintain and grow their customer base, the steady growth of digital advertising dollars is not off-setting the losses in print, resulting in a net 5-10 percent decline in revenues. This annual decline in revenue newspapers face has been accepted as the new “reality.” However, based on some of the Alexander Group’s recent customer segmentation and opportunity identification work in media advertising, we have found there is growth to be captured at the Local level. How can traditional media companies unlock this growth? It begins by understanding the sources of revenue churn.
Time for a Reality Check
The median revenue churn for Local accounts in traditional media is about 35 percent. That means every year your sales force has to make up for over one-third of lost business by a) keeping more of the revenues they have, b) selling more product to their current accounts, and c) capturing new logos. And that’s a lot of work.
Chart 1: An example client experienced 10 percent revenue decline year-over-year, with a 35 percent churn in revenue.
Each market is different, but through detailed customer surveys and current account analyses across many of our clients, three common drivers have emerged:
Focus Drives Performance
If your sales organization can reduce its churn rate by 10 percent and increase its overall retention rate to 75 percent, you can start the year without facing the crushing deficit of replacing over one-third of your business.
By focusing sales reps on communicating an advertisement’s ROI, setting realistic success metrics and emphasizing the value of the advertising investment to their customers, we believe the high churn rates at Local accounts can be addressed. These sales effectiveness initiatives and more can be used to drive the value of your solutions, help sales reps sell more expansive campaigns, create a customer with a longer lifetime value and ultimately drive growth.
Revenue growth is a process. With the right tool set and management discipline, the new “reality” can actually be much brighter; and media companies, even hybrids, can get back to growing revenue.
Visit the Alexander Group to learn more about tools to turn your churn into growth, and read more about our perspective on the Media Advertising landscape.
Media Sales Practice Leaders: Matt Bartels and Rachel Parrinello
Originally published by Emily Randazzo.