In the last year, we’ve been in lots of conversations with leaders about the high percentage of churn in many of our digital service businesses. When churn numbers are sometimes close to 50%, it’s impossibly hard to maintain solid growth in this part of our business. That’s a big issue, as many have hoped to offset the slow/no growth of our core business with more robust growth in digital services.
What’s causing this high churn? I’m sure there are dozens of reasons. But from the perspective of a company that spends a whole lot of time interacting with AE’s and Digital Managers, let me offer three things I think are a huge part of this problem. There’s no attempt here to order these by priority, and I’m positive many of you can add things to this list, but I think each of these things is significant.
1. AE’s, even digital leaders, who don’t understand which marketing principles should drive the digital tools a client uses.
This means that clients are all too frequently being sold solutions to problems they don’t have, and not being sold the things that could really make a difference in their business.
Linked to this is the tendency to sell the client the newest and brightest product because we’re energized about it. An example… I love what geo-fencing can do. In the right situation, it’s a powerful targeting product. But when geo-fencing started getting hot two years ago, we saw dozens of situations where a client had been sold geo-fencing by an AE who loved it but didn’t understand whether it made sense for his/her particular client.
How to solve this problem? Start by being really clear about identifying the marketing priority of a client. Do they have a basic awareness problem? Here are the specific products that might fit with that. Need help separating yourself from your competitors? These products would be in the sweet spot for that. Promoting an event that might help you take customers away from a competitor? Use these products. Have a dealer with a pump in/pump out imbalance? These are the products that might help them. Truth be told, there are only about 8-10 basic marketing challenges that show up in the 5000+ sales calls Jim Doyle & Associates will make this year. So this isn’t as big an undertaking as it seems. But it needs leadership that sees the significance of this and is driven to try to fix it. It won’t happen on its own.
This is part of the ongoing effort to make our digital services business more customer-focused than product-focused. This is way more than teaching AE’s how to do a solid business diagnosis call. It’s helping all involved to understand what products to suggest once you determine each client’s specific marketing needs.
2. We need to ask for more money for our digital products.
Serious money = Serious results. Little money = Little results. That’s a basic principle of all advertising. If I were leading digital sales, I’d be analyzing my churn by spending level. I’m going to guess that just like with our core TV product, your churn will be a much higher percentage when clients are spending a small amount and will go down as spending increases. We have way too many clients spending peanuts on our digital service products.
But there’s an elephant in the room on this subject. Our sellers are straddling a line between wanting to sell more digital, but at the same time, not wanting to take money from their core TV spending. I can also tell you, without equivocation, that many, many sellers don’t believe in the power of these products the way they do the core TV products. This causes a self-fulfilling prophecy. We continue to sell clients a mix of products that put 90-95% of the money on TV. So guess what? The digital part doesn’t perform as well. Little money = Little results.
This is a complicated issue to solve since most of our digital services revenue comes from existing TV advertisers. I’ve seen stations solve it with incredibly talented digital sales managers, who are focused on looking at comprehensive solutions for clients. These digital leaders are passionate about their products and are experts at accountability. And, they’re not afraid to ask for bigger dollars and push their reluctant AE’s to step up their asks.
An educated guess? I think smart, effective, client-focused digital sales managers might really be the key difference between high-churn and low-churn stations. They’re hard to find, so we’ll need to grow more.
3. The client wants to cancel their digital spending. What do we do?
Let’s be honest. I’m an AE with a $100,000 client and $12,000 is digital —not our O and O inventory but digital service products. My client calls me concerned about the results of their digital. They want to cancel. It’s a rare AE who will argue with the client about that because they’re afraid it might jeopardize the bigger piece of the money. So we take a cancellation without pushing back.
This problem may be the easiest to solve. We have to get better at mandating regular reporting on the results that digital schedules are getting. The power of digital is accountability. I can keep a client sold with regular, perhaps monthly, reporting and discussions married to making changes when the results suggest a new approach has to be taken. I think we have too many AE’s who set up schedules, both TV and digital, and don’t check in often enough with the client. That’s dangerous. And on digital, it will absolutely increase your churn. Don’t plug and play.
There’s a huge business reason to pay attention to the amount of digital churn and work hard to get it lower. We have a massive opportunity in this part of our business. It’s not just the digital revenue in play. A powerful digital services component allows us to truly become a marketing partner with our clients, and that has lots of impact on our traditional TV spending as well. But if we can’t get the churn lower, we’ll be chasing our tails, needing to replace a huge part of our business every year, just to stay even.
And that’s not going to get us where we need to be.
Jim Doyle and the JDA team are passionate about helping sales managers get better. One of the ways they do that is the Sales Manager’s High Performance Boot Camp. This program gets rave reviews with a combination of real-world ideas and inspirational outside speakers. Our next Boot Camp is in Tampa, January 2018. More info: Boot Camp 2018