“The purpose of business is to create and keep a customer.” Peter Drucker

Yes, radio is moving (or being pushed) towards a new business model. But, when it comes to generating revenue for The New Radio Model, the fundamentals don’t change.

How many customers did you create this month? How about so far this year, how many customers have you created? Every dollar your radio station receives comes from your clients, not from your products. Yet, most companies are organized to track the sale of products rather than to track the creation and growth of customers. Ask any radio manager how many digital dollars they did this month and he can tell you. Ask him how many NTR dollars they are supposed to do next quarter and they have an answer. But ask them how many accounts turned from prospects to customers in the recent past and they don’t know. The irony is that the digital and NTR numbers are but a small fraction of the total dollars those radio stations receive from their customers. But digital is the hot thing everybody wants to talk about. Perhaps more distressingly, digital is the thing that corporate wants to talk about. One wonders how much more money those companies would be making if corporate started talking about the creation and growth of customers.

Of course, all this begs the question, “what is a customer?” When Peter Drucker said that the purpose of a business is to create and keep a customer, he was talking about creating and keeping Key Accounts. Defining Key Accounts is simple: Your Key Accounts are the top 25% of your list sorted by total dollars spent. Now that you know what a customer is, we urge you to set up a mechanism that will allow you to readily answer the question, “How many customers did we create this month?”

Gerardo V. Tabío
President and Founder of Creative Resources
Member of The Radio Workout Team