The Risks When You Bonus Your Radio Employees On Digital Benchmarks
April 19, 2016
At every radio station where I've ever worked, the relationship between the sales department and the programming department has run the gamut from frosty to all-out warfare. This happens because radio station incentives are often misaligned. The sales team is measured by the amount of ad dollars it brings in, while programming team is measured by the ratings it puts up on the board. Most of the time, these two goals go hand-in-hand: higher ratings lead to higher rates and more revenue.
But a small percentage of the time, these two incentives work at cross purposes. For example, sales can bring in more revenue if they run more spots per hour, but this often drives the ratings down. As a former Program Director, I have spent a fair amount of time at the intersection of revenue and ratings, fending off the dreaded remote broadcast from Aisle 6 of Home Depot. If only sales and programming were measured by the same yardstick, all of this friction could be avoided.
When radio station managers sit down to create a bonus structure for employees based on digital goals, they should be careful not to repeat the mistake of creating competing incentives. So what digital metrics should radio employees be bonused on?
Before the internet, there were not a lot of metrics to choose from. Ratings and revenue were usually the only measurements that mattered. But now, there's a ton of things we can measure: Facebook fans, Twitter followers, website visitors, email newsletter signups, mobile app downloads, etc. But remember: Just because you can measure it doesn't mean it's important.
Too often, I see radio employees with bonus incentives based on numbers that aren't very important, like Facebook fans.
So what should you be basing bonuses on? Here's a good rule of thumb: If you don't understand how a number has a meaningful impact on the radio station's bottom line, you shouldn't bonus an employee on it.
If you don't understand how any of these metrics impact the bottom line, you've got a larger problem; your radio station needs to figure out how its digital strategy connects back to revenue. Don't bonus anybody on digital metrics until you've figured this out.
NEXT STEP: Look at your digital strategy and figure out which metrics have the biggest impact on the bottom line. Create bonuses around these, making sure that you don't create incentives that are at cross-purposes with the incentives of other employees.