The Missing Piece to the E.F.S.
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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 individuals comprised of corporate buyers and area managers) what it would take to get a Return on Investment using the computerized E.F.S./ROI Generator from Luce Performance Group. We brought it down to 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.
About four months ago, during a conference call with one of the GSM's we consult, he brought up the question, How can we determine listener to prospect ratio and could the current ROI formula from LPG be modified to calculate this? I assigned Paul White, our computer programmer here at LPG to go to work on it and see if it could be done with accuracy. We went through 4 versions in 4 weeks before we felt we had the answer and then went to the field to test it over the next three months using the over 200 sales reps/manager's we consult. Jeanette Radar, our GSM in Atlanta suggested we change the name of the ROI to what it really is after using the new computerized version, E.F.S that stands for 'Equation For Success'. That name stuck and you'll find the full computerized version on our website at http://www.luceperformancegroup.com/ on the home page.
The expansion of the EFS incorporates the percentage of listeners that a schedule will achieve that 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 there might be 1% of your total audience or measured target audience that might be in the buyers awareness cycle for a particular category of business.
Let's say you are targeting Women 35-54 on your soft rock station for a furniture store you are going to advertise for. Your total cume for that target is 30,000. 1% of that would be 3,000 women that might be in the BAC (Radio Ink 9/2003 Article) at any one time. The EFS Calculates based on your schedule and prospects what percentage of your target needs to become a prospect in order to figure in your closing ratio which becomes your expectation for total sales needed to be achieved for success. Mark also referred to the ICV and CLV (Radio Ink 2004 article), which was calculated in to the equation that got him his 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% in order to give you the confidence that you aren't trying to have your schedule/creative do 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! Sean Luce is the Head National Instructor for the Luce Performance Group and can be reached at 281-496-6340.
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