Calculating A Client's Listener-To-Prospect Ratio

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The following e-mail came a few days ago in reference to a project we designed in Houston at the LPG offices early this summer. It has now been field-tested in three countries, and here is one of the many success stories that are swarming in:

"I have been working with a large, regional tire dealer for the last year and have had a hard time getting pertinent business information from them to complete an ROI. They recently had their annual media planning meetings. They have bought our FM but not our AM, and our AM just went through a format change that the local manager was excited about. I explained to him that, with just a few
facts, I could show him and his buying group (about 10 corporate buyers and area managers) what it would take to get a Return On Investment using the computerized E.F.S./ROI Generator. "We showed them how just one new customer each week, making their average purchase, would give them a good ROI. They were amazed when we factored in the lifetime value of each customer and the value of referrals along with managing their expectations with the Buyers Awareness Cycle. The client agreed to add our AM but only after they could evaluate their return on investment with the E.F.S. Generator."

- Mark Maier, General Manager-KSRV/Ontario, Oregon

During a conference call about four months ago, a GSM raised the question: "How can we determine listener-to-prospect ratio, and could the current ROI formula be modified to calculate this?" I assigned Paul White, our computer programmer here at LPG, to see if it could be done with accuracy. We went through four versions in four weeks before we felt we had the answer. Then we went to the field to test it over the next three months, using the 200+ sales reps and managers we consult.

Jeanette Radar, our GSM in Atlanta, suggested that we change the name of the ROI to what it really is after using the new computerized version: E.F.S, which stands for "Equation For Success." That name stuck, and you'll find the full, computerized version on our website at www.luceperformancegroup.com on the home page.

The expansion of the EFS incorporates the percentage of listeners that a schedule could turn into prospects. Rule of thumb, according to many branding experts - including Scott Davis, who co-authored the book Building the Brand Driven Business - concludes that, at any one time, one percent of your total audience or measured target audience might be in the buyer-awareness cycle (BAC) for a particular category of business.

Let's say you are targeting women 35-54 on your Soft Rock station.Your total cume for that target is 30,000. One percent of that would be 300, who might be in the BAC at any one time for a furniture store that you are trying to encourage to advertise. Based on your schedule and prospects, the EFS calculates the percentage of your target audience that must become prospects in order to figure in your closing ratio, which becomes your expectation for total sales needed to be achieved for success.

In the e-mail above, Mark also referred to the "incremental customer value" and "customer lifetime value" (mentioned in my column for Radio Ink, April 12, 2004, page 38), both of which were calculated into the equation that resulted in his getting one extra sale to justify his up-sell of the client that is also in the EFS.

The listener-to-prospect ratio should be under 1 percent in order to give you the confidence that you aren't trying to have your schedule or creative perform miracles for the client. In order to be precise, once you get the percentage of the listener-to-prospect ratio, you would have to figure in all clients you have in that category battling for SOV. All definitions are in the "?" box on the EFS. Enjoy!