Tuesday, October 30, 2012 | Edited by Daniel Moores
||When Disaster Strikes, Radio Provides an All-Important Lifeline
Hurricane Sandy is Latest Example of Medium's Dedication to Its Audience
With Hurricane Sandy bearing down on the Eastern seaboard on Monday, radio stations throughout the region were ready to provide the customary extra-mile level of emergency information and public service broadcasting that listeners have come to rely on in times of disaster.
"Are we ready? Of course; that's because we usually stand ready, often prepared for anything," Paul Rotella, President/CEO of the New Jersey Broadcasters Association said on Monday. "That's what local radio is all about: Being prepared, being nimble, and being informative, with real information our listeners need."
Rotella said he had been in contact with local, state and federal authorities, in addition to many of the stations in New Jersey, for the previous 48 hours.
"Without exception, all of the stations I have spoken with report that their entire staff is preparing for the storm with sleeping bags, emergency generators and special weather alerts," he continued. "It's simply amazing how dedicated people get in an emergency. This is what I love about our industry. We are resilient and we are dedicated no matter what!
"This is a perfect example of how only local radio and TV can provide the critical information our audiences need to know in times of emergency. Sure, you can get a 'big picture' overview from some media sources, but our citizens need to know much more detailed and salient information that only local broadcasters can provide," he added. "I remember during (Hurricane) Irene, our broadcasters stayed at their stations for three days straight, without commercial interruption, and without food and many of the necessities we take for granted under normal operating conditions."
The response by radio stations and staff to this week's emergency situation is the latest example of the medium's devotion to its listeners. According to a 2005 study by Arbitron, Riding Out the Storm: The Vital Role of Local Radio in Times of Crisis, "One of the main questions regarding radio and hurricane coverage has to do with radio in the context of other media. With Web sites designed to give ultra-specific radar coverage and tracking maps, and television providing Doppler radar images and reporters on the scene, is radio still vital in a natural-disaster situation?
"The answer is an overwhelming 'yes,' and the place radio occupies in a natural-disaster crisis is held by no other medium," the report stated. "Radio's portability, local information and battery power are unmatched once the storms hit and electricity goes by the wayside. Although television is the medium of choice when the storm approaches, once the storm arrives, radio still rules."
In 2010, NAB's "Radio Heard Here" initiative joined forces with the American Red Cross and radio manufacturer Eton to distribute radios in disaster-prone markets. The Red Cross also took to station airwaves across the country to remind listeners of the importance of radio during times of crisis.
Laura Howe, Vice President of Public Relations for the American Red Cross, said at the time, "Many recent disasters have shown that new media and technology have emerged as powerful ways to distribute and collect emergency information. But in most communities, radio continues to be the most reliable source for news and information when there is a disaster of any kind.
"Internet and television are often limited by the availability of power and other utilities during an emergency," she remarked. "But radio is immediately accessible, with or without power, and by people of any age or income level. Local radio personalities often serve as community bridge builders, helping people connect and assist one another, and as watchdogs to ensure that response organizations are meeting the needs of the community."
As NAB President/CEO Gordon Smith noted during his presentation at the Radio Show in September, "When I think about radio, the word 'courage' comes to mind. As you know so well, time and time again, radio broadcasters demonstrate their courage in many invaluable ways. Just several weeks ago, Hurricane Isaac struck the Gulf region, bringing powerful winds and pounding rain to communities in Florida, Louisiana and Mississippi. Broadcasters quickly stepped in, fulfilling their role as first informers...heeding warnings and providing non-stop coverage of the hurricane's path.
"Residents on the Gulf coast were fortunate; it could have been much worse. But seven years after Katrina, it was a fresh reminder of the lifeline role of local broadcasting."
||Study: Subway, Wendy's Among QSRs Likely to Lure Casual-Dining Customers
Since the start of the Great Recession, limited-service restaurants have sought to entice casual-dining customers to trade down to their quick-service and fast-casual offerings, and a new report from YouGov BrandIndex has found that several limited-service brands are positioning themselves to successfully lure those guests away.
Based on thousands of consumer interviews, New York-based BrandIndex identified brands such as Subway, Wendy's and Chipotle Mexican Grill as ideally positioned to attract casual-dining customers. Those chains scored the highest among limited-service brands in terms of BrandIndex's proprietary quality score and value score.
The consumer research firm's senior vice president, Ted Marzilli, also noted that Taco Bell, Domino's Pizza and Long John Silver's were among the brands that improved both metrics in the past 180 days.
Consumers in all segments, not just restaurants, remain willing to try brands from lower tiers if they are convinced that those brands offer a comparable product or service at a value, Marzilli said.
"We've noticed less brand loyalty and more people trading down to store brands in other retail segments," he said. "In restaurants, some of those folks who have traded down from casual dining and are eating at QSRs more frequently -- these are not mutually exclusive segments anymore. There's probably a lot of crossover, and that's an opportunity for those QSR chains."
Not limited by service style
By plotting chains based on their latest value and quality scores, BrandIndex found Subway, Wendy's and Chipotle as the limited-service trio likely to appeal to casual-dining customers.
BrandIndex calculated the scores by interviewing 5,000 consumers per weekday, asking for each brand two questions: "Does this brand give you good value for what you pay?" and "Is this brand high-quality or low-quality?"
Negative responses are subtracted from positive ones, and a moving average is tabulated on a scale from negative 100 to positive 100, with a zero value denoting a completely neutral perception for a brand's quality or value. The researchers then limited the data to responses only from survey respondents who had visited a casual-dining restaurant in the past month.
A second trio of Papa John's Pizza, Pizza Hut and Arby's was clustered behind the three top performers when accounting for combined value and quality scores.
Domino's Pizza, which has made improving its food quality a major focus of its brand proposition over the past three years, lagged its two major competitors on both metrics. However, a separate chart from BrandIndex showed that Domino's, Taco Bell and Long John Silver's have made the best improvements related to consumer perception in the past 180 days.
During that time, Domino's introduced a new pan pizza and has begun advertising the product through differentiating it on quality -- mainly the fact that its dough is never frozen. Taco Bell's new products this year have done much to improve its quality scores, as BrandIndex noted in an earlier study, though it likely would benefit from share gains from Chipotle and not as much from casual-dining players. And a new ad campaign for Long John Silver's, called "That's What I Like," debuted recently.
Even more important than the 2-percent improvement over the past 180 days for Domino's has been its steady climb up the scale for quality scores since the beginning of 2009, Marzilli said. "The good news there is that Domino's has moved up quite a bit, but the bad news is that they still trail their main competitors," he said. "But it gives you a sense that Domino's has come a long way over the last few years."
Though Chipotle had the biggest decline in value scores, it did increase its quality score more than any brand in the past 180 days among casual-dining consumers. Taco Bell improved on both metrics in the past 180 days, most significantly on value, even as its two major product introductions of 2012, the Doritos Locos Tacos and the Cantina Bell menu, trade at higher price points than their core menu items. As a result, BrandIndex's chart shows Taco Bell nearly reaching parity with Chipotle on value score while trailing significantly on quality.
Marzilli speculated that the collective actions among the quick-service brands -- from remodeled stores and premium limited-time offers at McDonald's to new ads for Wendy's or Arby's -- to improve perceptions of their quality and value could start to foster a more positive view of the segment in general among casual-dining customers.
"It's built up of all those individual brands, and some of the changes happening are very much larger in scale," he said. "A lot of people in the space are trying to provide healthier (menu items), appeal more to parents or offer items that you wouldn't have expected even three years ago from a QSR."
Serious solutions for casual chains
So how do casual-dining brands compete against limited-service chains cutting into their market share in this manner?
"They need to be asking, 'Is there enough difference in our casual-dining quality, versus what guests can expect to find in some of these QSRs?'" Marzilli said. "You have to always differentiate. It's been a strategy for QSRs to move up the quality food chain while still advertising value as well."
He noted that price-point-focused initiatives like Red Lobster's $15 "Maine Stays" campaign or Olive Garden's $12.95 "Dinner Today & Tomorrow" promotion would be one way for casual-dining chains to fight back on the value metric. But likely the best way to stay ahead of quick-service and casual-dining competitors would be to "re-differentiate on quality," he said.
Such a strategy is worth considering given that the post-recession economy has been sluggish for several years and that slow growth is expected over the near term, Marzilli said.
"We ask our value question by asking consumers what they think they get in exchange for what they pay," he explained. "As you improve the quality of your food and perhaps keep prices steady -- or don't increase the price as much as people think you've improved the quality -- people begin to think they're getting more, and the brand has probably improved both the value and quality positioning."
The other thing casual-dining brands could do is focus on the service aspects that set them apart from limited-service brands. "There's something to being in a nicer environment and being waited on for these customers," Marzilli said. "Casual-dining brands can sell a whole different experience."
(Source: Nation's Restaurant News, 10/23/12)
||Low Rates Pummel Banks
Superlow U.S. interest rates are squeezing bank profits, complicating the industry's nascent recovery from the financial crisis.
An important gauge of lending profitability, known as net interest margin, has dropped to its lowest level in three years. The measure tracks how much banks earn when they borrow from depositors and then lend or invest those funds.
The squeeze is the flip side of the Federal Reserve Board's four-year effort to revive the sluggish U.S. economy, with near-zero short-term interest rates and repeated rounds of bond purchases that aim to reduce long-term rates as well. Ten-year U.S. Treasury yields hit 1.43% in July, their lowest level since World War II.
Banks will be forced to consider new ways to make money by changing the services they offer, industry observers said. At the same time, higher costs for banking services could push more Americans out of the financial system altogether, adding to the millions of customers viewed by regulators as under-banked, or lacking access to affordable financial services.
"The prolonged low-interest rate environment is transforming the banking industry from savings and loans to service and loans," said Dan Geller, executive vice president of research firm Market Rates Insight in San Anselmo, Calif.
Fed officials say their low-rate policy boosts economic growth and employment, which have been slack since the financial crisis, by making it cheaper for companies and individuals to borrow. The superlow rates are encouraging a surge in mortgage refinancing that is bolstering fee revenue at J.P. Morgan Chase & Co. and Wells Fargo & Co., which together control roughly 44% of the mortgage market.
Katherine Karl, a 50-year-old attorney in Brighton, N.Y., was able to close on a home refinancing last week with M&T Bank Corp. that lowered her rate by 2.5 percentage points, to 2.875%. "Interest rates are at a historic low and that is certainly what motivated me," she said. "I'm very happy."
But the Fed's move is turning out to be as much bane as blessing for banks, whose dependence on lending income has grown following a regulatory overhaul and public backlash against fees.
"The longer the Fed stays down at these levels the more it will hurt banks," said Scott Lied, the chief financial officer of ENB Financial Corp., an Ephrata, Pa., institution that has eight branches and 225 employees. "It's painful."
Over time, subdued bank profits are likely to accelerate a shakeout that has halved the number of insured institutions over the past two decades, by increasing the pressure on smaller banks to bulk up to take advantage of new technologies and of loosened restrictions on interstate branches.
Hudson City Bancorp, a Paramus, N.J., lender whose profits have been hammered by falling income on its large mortgage portfolio and which agreed in August to sell itself, said in a recent filing that the Fed's moves "had an adverse effect" on the company, which has $43.6 billion in assets.
The spread between banks' deposit and lending rates has narrowed in part because of low Fed-influenced rates and slack demand for loans amid soft economic growth. Net interest margin fell during the third quarter at 79% of all banks tracked by investment bank Keefe, Bruyette & Woods. The average margin for the industry's largest banks, at 3.12%, is the lowest since the second quarter of 2009 and has been dropping since the third quarter of 2011, according to data tracker SNL Financial.
As higher-yielding loans and securities acquired before the crisis mature, the banks are forced to replace them with assets that carry much lower rates. With some sources of lucrative fee income such as debit card charges capped in 2010's Dodd-Frank law, the margin squeeze has an outsize impact on the bottom line.
Banking-industry net interest income last year was $422.58 billion, or 65% of revenue, according to Federal Deposit Insurance Corp. data. That is up from $397.68 billion, or 60%, in 2009. The declining net interest margins over the past few years suggest that a recent recovery for the industry's bottom line could be fleeting. U.S. banks earned $114.39 billion last year, their best showing since 2006.
"Growing earnings will become more difficult over time unless interest rates move up," said Fred Cannon of Keefe, Bruyette & Woods.
BB&T Corp., a regional bank based in Winston-Salem, N.C., watched its stock drop more than 7% recently when its net interest margin dipped to 3.94% in the third quarter from 4.09% a year earlier. The chief financial officer of the nation's 11th-largest bank by assets said the figure will likely decline in the fourth quarter to roughly 3.75%. When BB&T convened a conference call to discuss the results, half of the 14 questions asked by analysts were about the bank's slumping margin.
"Artificially low rates are not good for anybody," said Daryl Bible, BB&T's chief financial officer. "Rates are way too low for this stage in the recovery."
The lower returns also are reducing banks' benefit of holding depositors' cash at rock-bottom rates. Domestic deposits at federally insured banks and thrifts rose 8.4% to $8.91 trillion at June 30, the latest available FDIC data show, from $8.23 trillion a year earlier. The problem for many banks is that surging deposits have left them with more money to invest at a time when returns on securities are poor and the cost of funding can't be lowered much further.
Deposit rates are already at their lowest levels since the 1950s; the five-year certificate of deposit dropped below 1% for the first time in mid August and is now 0.93%, according to Market Rates Insight.
An inflow of deposits during September was a big reason for a 0.25 percentage-point decline in Wells Fargo's net interest margin for the third quarter, to 3.66%. Its average deposit cost during the quarter was just 0.18%, compared with 0.19% the prior quarter.
"Banks may have to say 'we don't want these deposits,'" said Gerard Cassidy, banking analyst with RBC Capital Markets. "That is sacrilegious for banks to think that, let alone do that."
In its search for more yield, Wells Fargo said it kept nearly $10 billion of residential mortgages it would normally sell to investors. Other banks question that strategy, saying that doing so exposes them to losses if rates were to rise suddenly. That is because bond prices and interest rates move in opposite directions. Rising rates can leave holders of bonds issued at low yields holding debt they can't sell into the market without taking a loss.
Some bankers that bet on higher-yielding mortgage bonds already have paid the price. Hudson City decided to sell the bank to M&T Bank largely because it placed too many mortgage loans on its books before rates fell.
When Hudson City customers refinanced, yields on the bank's mortgage portfolio tumbled, slashing income and leaving investors skittish about the company's future as a stand-alone entity. "These market conditions have made it very difficult," the bank said in an Oct. 12 regulatory filing made jointly with merger partner M&T.
Some banks are reacting to the low rates by getting more aggressive on loan pricing, hoping to offset the margin squeeze by increasing lending volume. J.P. Morgan Chairman and Chief Executive James Dimon this month acknowledged such an approach on certain home and auto loans. Other lenders are loosening terms on commercial and industrial loans for small and midsize businesses.
"It's a fistfight out there in terms of competitive pricing day to day," Lars Anderson, a vice chairman of the Business Bank at Dallas-based Comerica Inc., told analysts on an Oct. 17 call.
But Mr. Lied of ENB Financial said he can't afford to load up on new loans because he knows he will "take it on the chin" if rates rise. Net interest margin for the bank, which has $784.8 million in assets, dropped by 0.09 percentage point in the third quarter, after a 0.06-point decline in the second quarter.
Many smaller banks will "throw in the towel" and sell, as Hudson City did, if low rates persist, Mr. Lied said. "There are no magic bullets and there is no easy answer."
(Source: The Wall Street Journal, 10/23/12)
Daily Sales Tip: Obtaining Convincing Testimonials
In my workshops and teleclasses, I tell attendees that there are two good times to ask for testimonials:
1. When a customer compliments you. After thanking them, ask if you can write it up for their signature. Most people will consent. Customers don't usually do a very good job of writing testimonials, so you have to help them. They also tend to forget, so this method helps remind them. You can say something like: "I know you are busy, so let me write something up and send it to you for your signature."
Need some compliments in a hurry? Get on the phone and call some of your best customers to see how things are going. Ask if they were happy with their last order. Then listen.
2. At the end of a job. This is when your customers should be happiest and the great results or service you provided is still fresh in their minds. Again, probe by asking enough specific questions to develop a compelling endorsement.
Source: Sales consultant/author Jim McCraigh