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MAY
5, 1923
THE
MUSIC
TRADE
REVIEW
The Dealer's Collection Department
The Third of a Series of Articles Dealing With the Proper Management of That Part of the Retail Organiza-
tion Which Brings in the Cash—System, Watchfulness and Firmness the Basis of Successful
Work—Examples of the Way in Which These Factors Are Applied
The factors that contribute most to the suc-
cessful operation of the collection department
of a retail piano house are system, watchfulness
and firmness, for this combination enables the
dealer to know where he stands regarding each
account, take the proper action as soon as it
is advisable and get results when he does take
action.
The systematic handling of collections is
necessary, whether a dealer is his own collec-
tion manager or whether the business is suf-
ficiently- large to warrant hiring a special man
to take charge of that work. Through use of
a proper system the dealer is able at all times
to determine at a glance just how many over-
due accounts are on his books and the amount
that is outstanding on such accounts. This is a
vital matter. In the opinion of dealers who
handle the better class of trade, overdue ac-
counts should not exceed 4 or 5 per cent of the
total amount due any one month and when the
percentage creeps over that figure and ap-
proaches 8 or 9 per cent it is time to put some
real energy back of the collection force.
The Advantage of Promptness
The advantage of promptness in getting after
collections is obvious, for after the second or
ihird month the customer who is inclined to
carry a little bit over payments learns that the
piano house works on schedule and that he is
expected to pay on or before the day upon
which an instalment is due, or he will hear about
it immediately. Carelessness in going after col-
lections is one of the prolific causes of re-
possessions, for the reason that the longer the
account is permitted to rest without action the
more difficult it is to persuade the customer to
catch up on arrears.
Under the heading of promptness in collec-
tions comes the practice followed by many
houses of sending a printed form to the cus-
tomer three or four days before the date on
which the instalment is due, giving a date on
which payment is to be made and the details
of the account. Should the payment not be
made, another printed form is mailed at once
setting forth the fact that the day of payment is
past and prompt attention is requested. In
some cases a third printed form with plenty of
red ink and firmer in text is sent to the cus-
tomer and in other instances recourse is made
to the first of a regular series of collection
letters.
Credit Success to Speed
Dealers have been known to question the ad-
visability of going after customers too soon
after payments have lapsed, but many success-
ful houses credit the success of their collection
departments to this quick action. One concern
in the East, after mailing due notice of the ap-
proach of the payment date, sends out the first.
collection letter four days after the date the in-
stalment is due, provided it has not been paid.
If the first letter brings no immediate response
the second letter is sent out four days later.
Should the account still remain unpaid a regis-
tered letter is mailed late in the afternoon of the
fourth day following the second letter, and
should that bring no response a telegram is dis-
patched to the customer on the evening of the
fourth day following.
The reason for a schedule of this sort is that
the customer is reminded four times in a period
of sixteen days and each time more forcefully.
Then should lie still neglect to make payment
the collection department can call on him or
take other energetic action and very probably
get results before the month has passed and a
second payment is due. To make the collection
before the second unpaid instalment is on the
books, it has been found, will reduce collection
troubles many per cent, for as the unpaid bal-
ance grows so does the problem of keeping the
account in good shape.
A four-day interval between notices of non-
payment is not, of course, the general rule,
for there are concerns who have adopted five
and ten-day schedules between notices and still
keep their collection accounts in very good
shape, with unpaid balances low. The chief
idea, however, is to have the work so systema-
tized that the customer is advised of the un-
paid balance promptly on a given date follow-
ing the regular payment day, for he soon real-
izes from that that the account is being
watched.
The Advantage of Firmness
The advantage of firmness in handling col-
lections is likewise obvious, for all the work
of the collection department is wasted if the
customer gains the impression that it is sim-
ply a routine matter and that the various notices
can be ignored without any dire results. The
average customer of intelligence can quickly
detect the fact that the dealer is too worried
over the possible loss of the account to be
firm in his collection methods and is as likely
as not to take full advantage of that fact.
The firmness does not necessarily mean dis-
courtesy or roughness, but the retailer who
sells on instalments must remember that the
customer has entered a definite and legal con-
tract with him to meet a real obligation repre-
senting a cash investment on a schedule. If
the matter is handled properly the retailer or
collection manager can convince the customer
of the justice of the dealer's attitude in expect-
ing that the contract for the purchase of a piano
on time is to be adhered to just as closely as
would be a contract covering any other form
of business deal. If the customer agrees to buy
a general line of merchandise at a certain fig-
ure and on certain terms he knows that he is
going to be held to that contract and expects
nothing else. If that same customer signs a
lease on a dwelling or office he knows that he
must meet the monthly terms of that lease or
face eviction. It is just as logical, therefore,
to impress upon him the fact that he is under
contract to make stipulated payments on his
piano account and that he is expected to keep
that contract or meet the consequences.
The Individual Factor
The average piano merchant must naturally
formulate his collection methods on the type
of trade that he caters to, for an appeal that
would get results from the well-to-do might be
wasted on those who through circumstances
are forced to buy cheaper instruments on more
or less lengthy terms. With certain types of
customers a letter announcing that the payment
is overdue will bring promptly a check and an
apology. With others, the services of a per-
sistent collector are required.
In deciding upon the proper collection follow-
up the retailer should make use of the infor-
mation that he has recorded at the time the sale
is made as to the character and general cir-
cumstances of the customer. The fact that a
man is well fixed financially does not always
mean that he is going to be good pay, nor does
the fact that an individual is a wage-earner in-
dicate that he is likely to ignore his obliga-
tions. The advantage, therefore, of keeping a
card file and noting on the cards every detail
possible regarding the customer is obvious when
it is considered that this information can be
utilized to considerable success.
This necessity of taking into consideration the
character of the individual is realized by a num-
ber of retail houses in the preparation of form
letters for following up slow accounts. Although
there are concerns which confine themselves to
a set series of four or five collection letters, and
apparently get good results therefrom, there are
others who utilize twenty or more types of form
letters and select from the series those which
they believe will best fit the individual case.
In a later article some of these series of form
letters will be reproduced for the information
of dealers who are interested in the improve-
ment of their collection service.
Time of Mailing
The time of mailing has in some cases been
found to have something to do with the effec-
tiveness of a collection letter. There is one
piano house in the East which sends its third
collection letter by special delivery, mailing it
between four and four-thirty in the afternoon.
On this schedule the letter reaches the cus-
tomer's house between six-thirty and eight in
the evening, when the family is at dinner or
gathered in the living-room. The reason for
this is that all members of the family are likely
to become acquainted with the contents of the
letter, and this piece of home publicity is likely
to bring results.
The practice grew out of an interesting inci-
dent wherein a wife had for two months re-
ceived from her husband the amount of the in-
stalment with the understanding that she would
make payment herself. When a special deliv-
ery letter was delivered in the evening her hus-
band saw it and a domestic war was on at once,
with the result that the overdue payments were
met and future payments taken care of on
schedule.
The piano dealer who follows this special
delivery schedule has secured enough direct re-
sults from it to make him believe there are
other families in which the holdout practice
prevails. In the case of an ordinary letter mailed
under a two-cent stamp and delivered in the
morning after the head of the house has gone
to work, it is a simple thing for the culprit to
hide the letter and permit the account to go
unpaid.
Using the Telegram
This same piano house follows the special
delivery letter with a telegram despatched from
the store between 5:30 and 6 in the evening and
also designed to be delivered at the customer's
home while the family is gathered together for
dinner. There is a chance that a letter may
be kept from all members of the family, but
the chances of a telegram being kept private
are so remote in the average home that the
result is worth the extra cost. The main idea
is that between two plain form letters, the
registered letter and the telegram, this par-
ticular piano house keeps its overdue accounts
below the 5 per cent mark under ordinary con-
ditions. In periods of depression and unem-
ployment, of course, no collection percentages
hold good.
NEW CABLE DANVILLE MANAGER
DANVILLE, III.., April 30.—Ralph I. Smith has
recently been made manager of the Danville
branch of the Cable Piano Co., succeeding
C. A. West, who has resigned. Mr. Smith was
formerly associated with the company as sales-
man and had been transferred from Hammond,
Ind., where he was manager for the past two
or three months. Assisting him will be Joe
Hagler and Cole Schumaker.