Jerry Woods “Losing Now to Win Later”

Crayola Markers – 12-pack for $.97 

Peaches — $.99 a pound 

Haagen-Daz Ice Cream – Buy-one, get one free 

Do those prices sound too good to be true? Those are real prices from ads from major grocery chains like Walmart and Safeway. They are called loss leaders. These are items that the stores are willing to lose money on just to get you into their store with the hope that you will spend more money on regularly priced items. The strategy has worked for more than 100 years when it was first introduced during the Great Depression. 

Using a loss leader to draw customers does involve taking a small risk, but it works as is evident in the strategy’s duration. So how does that apply to radio? I have watched general managers, sales managers, program directors, and other radio executives turn down good opportunities because it would not make them a lot of money in the short run. This kind of thinking for turning a quick profit is common, and it is one of many things that is hurting the radio industry. 

Practically, what does a loss leader look like on the radio? It could involve you investing money to make more money. Eleven years ago, WGTS 91.9 decided to go up against one of the largest pop stations in town by offering a free summer concert to listeners on an outdoor plaza at the largest mall in the Washington, D.C. region. For years, the iHeartRadio pop station had owned the series. They brought up-and-coming artists, and the mall paid for the shows. We approached mall management and asked them for an opportunity to present a Christian artist for one of the shows. At first, the mall balked. They made up a myriad of excuses like, “Christians could offend people,” “The music will not be popular enough,” and “No one will show up.” Finally, they relented just a little bit. They told us, “We’ll give you one show, but you have to pay for it.” 

Now many stations would have stopped there because the cost of the show was $25,000.  Like most stations, we did not have an extra $25,000 just laying around. However, we said yes to the mall’s offer, and went searching for sponsors.  Eventually we landed on the Washington Redskins quarterback Kirk Cousins who agreed to get behind the show. We talked to Fair Trade Services, and they agreed to send us Colton Dixon for the first show. Five thousand people showed up for the show. That is 10 times more than most of the iHeartRadio shows. For the next six years, the mall came to us to put on shows, and the mall paid north of $50,000 a show to cover the cost of the artist, production, travel, catering, hotel, and other expense. A $25,000 investment of sponsor money netted around $300,000 in the next six years.  That initial show with Colton Dixon was our loss leader. 

We cannot take every risk, but we can take calculated risks that will lead to big rewards. It takes leadership with vision, and a team willing to cast that vision for potential partners. It is not always easy, but it is almost always worth it. Your investment in station capital today can yield results in ratings, revenue, and ministry that you have never had before. 

Jerry Woods is the director of marketing and morning show host at WGTS 91.9 in Washington, D.C. He also runs a promotion idea factory called JAWS Consulting. You can reach him at woodje33@gmail.com