Cox Radio’s New Sales Plan

Bob Neil, President and CEO of Cox Radio has been changing the sales structure of his radio group for about the past 12 months in an attempt to respond to changing times.

Most recently, the final piece of the puzzle was completed at the Atlanta cluster.

The revised sales strategy is significant and I thought you’d like to know more about it as so many radio CEOs are walking the plank even as the economy wallops their bottom lines.

At Cumulus, for example, CEO Lew Dickey has decided to centralize selling – conducting spy-in-the-sky camera meetings that local sales people hate. Cumulus also isolates which areas they want the local reps to pursue and the mothership forces its sellers to dial for dollars in the categories Atlanta decides is worth their time.

In addition, Cumulus has been taking away agency business and strategically placing it with an anointed rep who then leaves every other account exec short on commissions as they are related to sell direct. Selling direct in this economy and at the commissions being paid almost guarantees a huge pay cut for already hurting sellers.

Over at Cox, Bob Neil has taken a different approach.

He may not be the Harvard grad that Dickey is but Neil is no dummy. In fact, he's smarter. And to be fair, there has been some grumbling even within Cox about the changes Neil and his team have installed.

Grumbling – but no revolt – as salespeople (and everyone else) hate change. Especially change that might adversely impact their livings.

Back in February, 2008 Neil began to have conversations about what to do with sales in a time of great change. Cox wanted a shift in their sales department putting more focus on business they could control (i.e., based on ideas and solutions their sellers bring to agency or direct clients).

Then, as I have mentioned, Cox quietly rolled out its changes market by market taking the entire year to get it right and learn along the way. This is in stark contrast to Cumulus, for example, where it appears to be important to Dickey to show everyone he is the one changing things up.

So here’s how Cox is doing it – I’ll use Atlanta (the most recent cluster to switch as an example):

1. Changes have been made to the compensation schedule but according to a conversation Bob Neil and I had recently these changes did not put his sellers at risk of making less money. On the contrary, Neil is convinced they (and the company) can make more.

2. Three sales people in Atlanta’s 5-station cluster are now responsible for most of a certain type of agency business. Yes, Cox took that business away from some reps because it felt this particular type of agency business (cost per point sensitive) would be better in the hands of a few people who are expert at it. Neil says it's about 20% of all agency business affected by this change

3. The remaining 80% stays with the salespeople that sold it – that is, their agency accounts remain with them.

4. There is a new compensation model where a sales person who has what Cox designates as Key Account Status ($100,000 or more per year) is now incentivized by extra commission to exceed the amount of dollars that account was bringing in to the cluster.

5. Cox has isolated Target Accounts but unlike Cumulus that dictates which categories these accounts will be in, Cox simply says any new business that is not on-the-air and can be converted to advertiser status gets an increase in commission (above the usual level) for six to 12 months before the commission structure reverts back. That is, a bonus for bringing in new business that salespeople can put in their pockets. Not the cockamamie Cumulus plan that reduces commissions and takes away local incentive to scout for new accounts.

6. Each Cox station still has separate sales staffs – a must, in my opinion to maximize sales efforts and counter to the current trend to reduce local sales staffs to save money.

7. No commissions were lowered to save money – period – and Cox is operating in the same recession as the desperate and bankruptcy trio of Clear Channel, Cumulus and Citadel.

So basically, Bob Neil is reallocating the commission paid for salespeople to work on key and target accounts without doing harm to their reps’ ability to make a living. In fact, they can make a better living.

How is the Cox plan working?

Bob Neil tells me that Cox radio stations have outperformed the market every month but one and this has – I don’t have to remind you – a miserable recessionary year.

And under the new management structure at Cox, Neil also has control over the company’s West Palm Beach newspaper. Again, Neil has made changes that are going to potentially be more painful to print salespeople.

The paper was paying its reps 75% salary and 25% commission or bonus.

Starting in 2010, the print sellers will get 25% draw and 75% commission.

Print salespeople have had it good – real good – even in the two decade decline of their industry. But Neil’s new program rewards industrious sellers with a large commission.

Neil recognizes the folly of short spotting – the Citadel and Clear Channel excuse for lowering rates and that could have an impact on even well-run companies such as Cox.

Advertisers and agencies can now buy short spots for huge discounts so it allows the desperate consolidators to save face in a way and buyers to bend them over a barrel and – well, you get the picture.

Many of these desperate consolidators can’t understand why they couldn’t sell out at any price.

The “any price” is too low and as I have been screaming over and over – the biggest threat to radio in the year ahead is the decision to downsize rate cards.

And, I can promise you that if consolidators continue to bump the rates downward, the inability to increase sales revenue will not just affect them, but will take even the good operators down with them.

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