Classic Mode

Music Trade Review

Issue: 1925 Vol. 81 N. 23

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
DECEMBER 5, 1925
THE
MUSIC TRADE
REVIEW
Music Dealers Instalment Sales and
Their Collection Problems
Great Growth of Instalment Business in Rural Communities—Farm Mortgages and What This Means to
the Music Merchant—Weather as the Index to Credit Conditions—What a House Canvass Reveals
— Handling Rural Credits Co-operatively — Ninth Article by J. K. Novins
I
T is in the rural community that the instal-
ment business is now seeing its greatest
growth. Investigation by credit experts
shows up some amazing figures.
For instance, take Weld County in northern
Colorado. It comprises an area of more than
4,000 square miles—the size of the entire State
of Connecticut—with a rural population of
50,000. A recent survey by Frank Field, secre-
tary and manager of the Weld County Credit
Association, showed that during the first half of
1923 the chattel mortgages covering auto-
mobiles, pianos and Victrolas sold on contract
payments were almost half the amount of mort-
gages for financing crop operations.
You will get still a better idea when you are
told that these contract sales during the first
half of 1923 averaged $300 for each instalment
sale customer, and an average of $5 per capita
for every resident in the county!
Big Increase in Musical Instalment Sales
Further figures gathered by Mr. Field show
that, according to the instalment sale instru-
ments filed of record in the county during
four months of 1925 up to May 4, 1925, Weld
County residents had already obligated them-
selves on instalment payments for automobiles,
furniture, musical instruments and radios to the
extent of $505,909. This exceeded the record
for the same period the previous year by $41,403.
This means that during a four-month period
the average instalment sale per capita in this
county amounted to $10.
These figures represent typical credit condi-
tions in a typical agricultural district. You will
find similar conditions existing in other agri-
cultural communities, in the cotton, wheat and
fruit-growing belts.
Now let us look at another side of the picture.
A check made by the Weld County Credit
Association showed that in May, two years ago,
the chattel mortgages recorded in that county
totaled $1,500,000 for the month, as compared
with $85,000 the same month in 1918. In other
words, the extent of chattel mortgage incum-
brance was increased almost 100 per cent.
Taking into consideration the extent of instal-
ment sales, and also the extent of the farmer-
customer's legal encumbrances, you have a
pretty clear picture of the complicated credit
conditions that to-day exist in the rural district.
The music merchant who does business in
the rural community finds that his problems
are far more difficult of solution than they are
for the retailer in the big city. Credit condi-
tions in the rural communities have been less
stable in the rural communities than in the
cities, due chiefly to weather and crop market-
ing conditions.
The very life of the country merchant now
depends on shrewd judgment of crop conditions
and to the extent these conditions affect the
farmers' buying and buying capacity.
How Weather Affects Credit
The weather no doubt is the greatest factor
affecting crop conditions, and most often the
prosperity of the entire rural district. In dis-
cussing the development- of long-distance
weather forecasting and the effect on business,
Roger Babson', the eminent statistician, offered
the following suggestions at a recent conference
of weather forecasters:
"1. Be prepared for losses in any industry
or community which is dependent on a contin-
uation of the same weather conditions as have
existed for years. These changes may not come
for years, but they may come in 1926.
"2. Be prepared for crop failures in sections
where crops have been bountiful for many
years, and be prepared for bountiful crops in
sections which have been considered poor and
arid. Be prepared for dry, sunshiny weather
in sections which have long been humid; and
he prepared for frosts in sections which have
been considered frost-proof.
"3. Keep in touch with the studies being
made in connection with long-distance forecast-
ing. Don't swallow the theories all at once,
but on the other hand treat them with respect
and encourage experiments being made along
these lines."
"The trouble is," a retail credit man in an
agricultural district said recently, "that rural
district business men, like farmers, go from one
extreme to another extending liberal credit
when crop outlook is very good, to no credit,
even to farmers who have ample resources to
pay even if crops were a total failure."
There is need, therefore, for a central organ-
ization to advise the music retailer when it is
safe to extend liberal credit and when it is
necessary to "tighten up."
House-to-house Canvass
In Greeley and surrounding towns of north-
ern Colorado the retail merchants have created
such an organization. Not only does the Weld
County Credit Association check up on the
credit standing of the local residents, but it
makes it part of its functions to study crop and
business conditions and to make this informa-
tion available to the merchants at the most ap-
propriate time.
To indicate the extent to which such infor-
mation is gathered, the writer has in mind an
experience recently related to him by Frank
Field, the active secretary-manager of this As-
sociation. Recently he made a house-to-house
canvass in the town of Brighton, which boasts
a population of 3,000. During a thirty-day pe-
riod he secured information from 1,000 families,
including those residing in the environs of
Brighton. He found out which of the families
owned their own homes, whether their homes
were encumbered and with whom they traded and
banked. In this way he opened a fertile mar-
ket for the Brighton retail merchants. He gave
them information that not only guided them in
extending credit to certain Brighton residents
but he gave them valuable sales leads. The
ones who especially benefited from the informa-
tion were the music houses.
Watchtowers of Credit
Mr. Field has found that one of the best
sources of information on credit conditions are
the automobile financing companies. These
companies use skilled judgment, based on thor-
ough investigation, when it is best to make
credit easy or hard, and Mr. Field advises the
retail merchants to watch the operations of the
financing companies.
Here is a typical message Mr. Field delivered
to the merchants, May 25, 1925:
"Greeley auto dealers and finance companies
closely checking all applications for loans on
cars due in Fall, 1925. Especially true in Long-
mont and Mead district, where reservoir water
is scarce and it can be determined already by
the farmers that they cannot expect to meet
secured obligations on new cars this Fall if they
have obligations for financing crop operations."
Other good sources, Mr. Field finds, are the
field men of the various sugar companies in the
district. It is the business of these experts to
estimate crops prior to harvest time, and this
information, when passed on in time to the
local merchants, will guide them whether to go
easy or tighten up on credit.
Indexes to the prosperity of the district are
bank clearances, the extent of bank loans, the
sales reported by wholesale houses, increase or
decrease of express shipments, post office re-
ceipts and the sales reported by building mate-
rial concerns. The music merchants can also
benefit from the business reports by furniture
and other stores, especially those selling on the
instalment plan. The report of automobile sales
also furnishes a reliable index to the prevailing
purchasing power in the community.
A 250-mile Retail Business Survey
Recently Mr. Field made a 250-mile trip
through the towns in the county in order to de-
termine the state of business and credit. He did
this because the local merchants were a bit
nervous about conditions, and they were in
need of some definite guide to the purchasing
capacities of the consuming public. During the
trip Mr. Field visited twenty-one towns, and up-
on his return he prepared a report which he
circulated among the merchants.
Several extracts from Mr. Field's report will
illustrate the type of information that the coun-
ty merchant now finds most valuable:
"AULT (name of town)—Bank deposits gain
$78,399, loans decrease $3,577. Crops—Rain
needed, but thirty days' run water available.
Wheat crops very light. Beans and spuds good
prospects, good net returns—as average year—
beet crop very short. Good dry land crop east
of Ault, will help trade this fall. Elevator re-
ports $31,000 over business of year ago. Garages
30 per cent slump since June. Hardware and
general stores 5 per cent and 10 per cent ahead
of last year.
"EATON—Bank deposits gained $65,425.
Loans decreased $9,705. Beet and other labor
conditions helped materially by sugar company
employing seventy men on new receiving sheds.
Beet acreage Eaton factory still estimated at
7,000. Water will be short, only sixteen days'
run left for Eaton Ditch, some of which will be
used this week. Crop yields estimated ten tons,
as compared with sixteen tons a year ago. Rain
very badly needed for crop. Wheat cutting
starting—acreage 15 per cent larger, but yields
will be less. Barley and oats crop made big
improvement past month. Trade conditions—
Garages, 30 per cent slump in car sales, repair
business normal. Lumber yards, 10 per cent
increase volume. Implement dealers, material
reduction since May. General stores, $4,000
ahead of last year, but expect big reduction in
farm and beet labor trade rest of year. Cloth-
ing firm, 10 per cent increase volume. Grocery
stores, slight decrease volume since June.
(All Rights Reserved.)
Death of A. D. McCall
SAVANNAH, GA., November 30.—Angus D. Mc-
Call, for several years a member of the music
firm of Alnutt & McCall, of this city, died re-
cently at the Savannah Public Hospital as a
result of apoplexy. Mr. McCall was thirty-eight
years of age. He is survived by his widow,
one daughter and two sons.
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
MUSIC TRADE
REVIEW
DECEMBER 5,
1925
Crux of the Radio Service Problem
Is Primarily in Selling
Heavy Service Expenses in the Radio Department of the Retail Music Merchant Can Almost Invariably Be
Traced Directly to an Incorrect Method of Selling on the Part of the Retail Sales Force—Two
Examples of Solving the Service Question by the Retail Music Merchant
T
H E crux of the radio service problem in
the retail music store lies not in the type
of set that is handled, but primarily in
the way in which the retail sales force is trained
to handle the prospective buyer while the sale
is being made upon the floor.
This may sound like a truism, but neverthe-
less it is something which a good many retail
music merchants who handle radio have not as
yet learned, or at least have not as yet taughl
their salesmen. Or, if they have endeavored to
teach them, the salespeople themselves, in their
anxiety to close sales, disregard their instruc-
tions and create in the buyer's mind a condi-
tion which no radio set can possibly meet under
any and all circumstances.
Learning From Service Reports
One oi the leading retail music organizations
in New York, which has a large radio depart-
ment handling several of the best-known lines
in the country, recently found its service costs
steadily increasing. Month after month, the
percentage of expense in the general overhead'
represented by this work showed a slight but
appreciable advance. At the end of three
months, the manager called for the reports of
the service men, each of whom is instructed to
make a general report of the conditions he finds
upon each call, and went into seclusion to study
them carefully. Here is what he found, in his
own words:
"Over 35 per cent of the calls we were mak-
ing to carry out the terms of our sales contracts
were quite unnecessary. They were due, as
nearly as I could make out from what the serv-
ice men reported, to overexpectation on the
part of the buyer. In other words, the old dis-
tance selling point was evidently being used by
the salesmen in order to close sales. In these
reports, which I laid to one side, the customer
almost invariably claimed that he could not get
the service from the set he had purchased that
had been promised him and that he thought he
ought to get, considering the price he had paid
for it. Many of them told the service men that
friends of theirs could get much more distance
from sets that had cost from one-quarter to
one-half of what the set we handle is priced at,
and that they thought something must be wrong
if they could not get the same thing.
"Of course, the latter I had to attribute to
the 'distance liar,' the fellow who has a cheap
set and goes around telling the impossible dis-
tance that he always gets when nobody else is
around. But that was only a minor part of the
trouble—the real trouble was being created by
our own sales force, as nearly as I could make
out."
The remedy this manager used was to call
the salesmen together and once more impress
upon them that distance was not guaranteed un-
der any circumstances, and to tell them, without
equivocation, that the first salesman who was
caught making a point of distance reception in
his selling talk would have to resign immedi-
ately. Two months have passed since this pol-
icy was emphasized, for it was not really new
with the house, and the service expense has
6hown an appreciable decrease.
Free Service
A second problem in the service question,
which is extremely important, is the length of
time during which free service will be given
after a receiving set is sold. There are a good
many dealers who believe free service a neces-
sity and who give it for varying lengths of time.
As a matter of fact, there are several successful
dealers who have abolished free service entirely,
with the exception of proper installation, and
who find that this has no particular effect upon
their business. The music merchant in this
problem has a fund of experience at his com-
mand in his piano and player service depart-
ment, where free service has also been done
away with in many cases successfully and with-
out any depreciation in the gross sales.
As a matter of fact, if a dealer feels that he
must give free service on the radio sets that he
sells, thirty days is the safe maximum. If a set
has defects they will show up in that time. If
the installation has not been properly handled
that time is sufficient to correct the work. If
free service is given for a longer period it cuts
too heavily into the net profit in the sale, the
gross margin not being sufficient to meet it.
Service over longer periods also gives the cus-
tomer the idea that he can call indefinitely upon
the dealer, and when the dealer refuses cre-
ates ill will, in fact, more ill will than could pos-
sibly be created by the shorter period. Human
psychology has queer quirks, which must be
taken into consideration in any such problem
as the one we are dealing with.
Thirty Days' Free Service
"The thirty days' free service," said a music
dealer recently who has handled radio practically
since its advent to popularity, "we find solves
the problem both from the customers' and our
own standpoints. When we first started to han-
dle radio we gave free service for months, but
found that this was quite impossible. During
those days it was no infrequent thing for a serv-
ice man to make from ten to twelve calls on a
single set, which left us in a hole on the sale.
The greater percentage of these calls was en-
tirely the customer's own fault.
"When we cut our service period to ninety
days we had practically no complaint, and when
we cut it to thirty days the same thing hap-
pened. So far as my experience goes, tne
whole service question, that is, how long free
service will be given, depends entirely upon the
agreement made at the time of the sale. If you
are going to promise a man six months' service
he is going to get his money's worth from you
in nine cases out of ten. If receiving condi-
tions are bad he wants a service man to fix the
weather, not the set; if he is an amateur radio
engineer and tries to improve his set accord-
ing to his own ideas he expects you to fix the
damage which his enthusiasm has caused.
He doesn't do those things when he knows
that a service man's time is going to cost him
$1.50 per hour, figured from the time the man
leaves the store until he gets to the next job.
He makes allowances for conditions then, and
doesn't expect California on the loud speaker at
6 o'clock in the evening. And his liking for
tinkering soon disappears after the first time it
has cost him $3 or $4."
Short Service and Collections
"What effect has the shorter period of free
service upon collections on sets that are sold
on the instalment basis?" this merchant was
asked.
"Under the guarantee by which we sell none
at all, so far as we can find out. Out past due
on radio is no higher now than it was when we
were giving six or three months' free service.
In fact, our trouble along this line is less, if any-
thing. There are two reasons for this. The
radio-buying public, at least here in New York,
has learned a great deal during the past two
years. The distance craze, which was the cause
of most of our troubles, has died away. People
know that radio doesn't work the same under
all weather conditions. The second is that peo-
ple to whom we sell are led to expect exactly
what they get by the salesman, with the result
that they know what they are up against when
they buy. A radio set improperly sold by the
salesman in the first place is always a factor of
future expense to the dealer, and the whole
question of service lies in the selling. We have
only one policy in that direction, and that has
turned our radio service department from a big
item of overhead expense to a department that
to-day is paying for itself and really carrying
the burden of the thirty days' free service with-
out additional expense to us. For every job we
handle after the free-service period is over
shows us a profit."
All in the Selling
Here are two instances that show that the
crux of the service problem, as stated at the
beginning of this article, is entirely in the sell-
ing and that the way to eliminate over-heavy
service expense in the radio department is to
sell the receivers right in the first place.
To Concentrate on Three
Atwater Kent Speakers
Atwater Kent Mfg. Co. Announces the Discon-
tinuance of Two of the Five Present Models
of Radio Speakers
PHILADELPHIA, PA., November 28.—The Atwater
Kent Mfg. Co. has announced to its dealers
that owing to the growing popularity of the
Type H, Type L and Type K models of the
Atwater Kent radio speaker, the production de-
partment is being changed over to manufacture
only those types, which means that the Model
M and Model R speakers will be discontinued
as soon as possible. The move is made in the
belief that fewer models will mean better pro-
duction at the factory and simplify the dealer's
stock problem.
Stewart-Warner Booklet
The Stewart-Warner Speedometer Corp.,
manufacturer of Stewart-Warner Matched-Unit
Radio, is furnishing its retail dealers with an
attractive little booklet, in several colors, tell-
in R the story of the Stewart-Warner radio line,
for distribution to prospects. The booklet is
convenient in size for mailing purposes and will
undoubtedly be found very effective by dealers
in pushing sales.
Only 17.6 per cent of American homes arc to-
day enjoying the benefits of radio, according to
a survey recently completed by the General
Federation of Women's Clubs. In striking con-
trast with the radio figures, and indicating the
vast undeveloped field for the sale of radio, it
is interesting to note that pianos and phono-
graphs were found in more than 50 per cent of
the homes.

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