It sure seems like it is taking longer than every to bring a business development prospect to the point of being a customer. That's why I look for any way to help best appraise the monetary value of a prospect before I begin investing my time.
Schonfeld and Associates prepared a study that shows the Advertising to Sales Ratios for most every industry. In essence, you can find how much each industry typically spends on advertising and select prospects with an idea of what they might invest in advertising.
Here are some examples from Schoenfeld's 2008 study:
|Advertising as a Percentage of Industry Sales |
| Amusement Parks ||8.5% |
| Auto Dealers ||0.8% |
| Auto Repair ||4.6% |
| Soft Drink Bottlers ||3.5% |
| Department Stores ||5.1% |
| Hospitals ||.6% |
| Furniture ||6.1% |
| Insurance Agents ||0.4% |
Those small percentages really add up to big dollars. The smallest percentages are typically from industries that see very high volume of business from consumers and businesses.
So how do you use this information?
Just ask your prospect what their sales for the last couple of years and multiply by the Ad To Sales percentage. Now, you know how much the prospect typically spends in media--if they are average for their industry.
These are just a few of the hundreds of industries available in the Schonfeld 2008 Ad-To-Sales Ratios study. You can get a copy of the study, plus a LOT more, with membership in the Radio Advertising Bureau. The RAB is an inexpensive way to work with your best prospects and develop a strong business case for their involvement with your station.