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REVIEW
THE
VOL. LXXXI. No. 5 Published Every Saturday. Edward Lyman Bill, Inc., 383 Madison Ave., New York, N. Y. August 1, 1925
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Do Not Substitute Long Terms 'Bait'
for Good Salesmanship
If Sales of Pianos Become Difficult to Close, the "Bait" of Long Terms Simply Makes a Temporarily Bad
Condition a Permanently Injurious One—The Longer the Terms at Which a Retail Piano Mer-
chant Sells the Higher His Percentage of Past Due and Repossessions
RE you selling pianos and players or are
you selling terms? In other words are
you selling music or are you selling the
idea that payment of the instruments you put
out is more or less a matter of indifference to
yourself, that a piano is something which has
such a small inherent value that payment for
it can be stretched over a period all out of
reason and controlled purely by the convenience
of the purchaser?
Advertising at Its Face Value
To judge by the face value of a good deal of
the retail piano publicity which is appearing in
the daily press at the present time, the number
of music merchants who can be placed in the
first category is growing, and all the work
which has been done in the industry during the
past ten years to check this deplorable tendency
is being disregarded, to some extent at least.
If this tendency continues, cash will once more
disappear and all the bad financing which foi
years was a drag on the industry's advancement
will again be with us.
The reason for this development is simple.
Sales to-day are not as easy to make as they
might be. In common with a great many of
the other industries of the country, the piano
trade is going through, not perhaps a period of
depression, but a period of dullness. Now un-
fortunately there is a type of merchant in the
retail trade who sees but one remedy for such
a condition, and he is also the type who be-
comes loudly vocal about it through the me-
dium of printers' ink. He is the type who
thinks that if you can not sell pianos on rea-
sonable terms, the thing to do is to lengthen
the terms, and if that does not bring results,
why, lengthen them some more. To the piano
man who really knows his business, that is
simply jumping from the frying pan into the
fire, or meeting one evil by creating a still
greater one. A temporary condition that is not
so good is met, when this policy is adopted,
by creating a condition worse still and extreme-
ly likely to be permanent. For when demand
once more appears, the long-time paper is still
with the merchant and stays with him until it
finally pays out, usually quite a time after the
written date of maturity, with the impossibility
of obtaining the interest.
A
The main factor in the success of any retail
music merchant are the terms on which he puts
out his instruments. The dealer whose average
terms are above the average for the industry as
a whole has a correspondingly higher percent-
age of past due and repossessions. Past due
always means an eventual loss; repossessions
do in a majority of cases. Furthermore a dealer
who sells regularly on long terms lowers his
capital turn-over, to say nothing of increasing
the expense of his financing. Both of these
points are worth a little analysis.
Capital Turn-Over and Financing
Suppose a dealer has $100,000 worth of piano
paper outstanding. If his average terms are
thirty-six months, one-third of that will mature
each year currently. If he carries his own
paper, it can easily be seen what that means,
for if he reduce his terms to twenty-four
months, his current annual collections are 50
per cent instead of HVz. In other words his
capital turn-over goes from once in three years
to once in two years. That alone is more than
sufficient to compensate for the few sales that
a dealer may think he loses by adhering to
short terms.
Then take the cost of financing. If a dealer
uses a discount company, his long-time paper
is of no use to him. He must pick out the
best paper he has to discount, and hold the
bag for the stuff that has not sufficient value for
the discount company to care to handle it. If
he handles his paper himself, he has to be con-
tent with problematical bank loan interest on
his capital, instead of with profit on capital
that is being turned over in his business. Neither
of these things are as they should be.
A Striking Proof
No better proof was ever shown of the con-
dition of the retail piano merchant who sells
on long terms than in a survey recently conduct-
ed by The Review on terms and credits in the
retail piano trade, in which 400 retail merchants
located in all sections of the country co-oper-
ated with this paper. In these 400 returns the
dealer who sold on the longest terms, accord-
ing to his own statement, was also the dealer
who reported the highest percentage of past
due and the highest percentage of reposses-
siom
This ratio was found to be absolute
throughout the 400 questionnaires that were
filled out with no deviations. A glance at the
average and maximum terms reported was al-
most sufficient to indicate the percentages of
past due and repossessions. If that holds good
for 400 merchants, it is unquestionable that it
holds good for all dealers.
The point in all this is that when sales be- .
come difficult to make don't try to substitute
long terms for salesmanship. Difficult sales
mean harder work and more intelligent work—
they don't mean changing the basis of the sale
from music to terms. A piano or a player-
piano is sold on the basis of the entertainment
and pleasure it is going to give its buyer if it
is sold right; it is sold wrong when the matter
of paying for it is made a matter of indiffer-
ence. The old-time salesman whose stock in
trade when payment was mentioned were words
to the effect that his house was backed by
wealthy manufacturers and therefore the pros-
pect could pay as he wished, is perhaps no
longer "so crude in his statements, but, judging
by some dealers' advertising, the same argu-
ment in slightly different form is still being
used.
Cannot Afford It
The piano industry at the present time can
not afford to stress terms. Instalment selling
is under fire throughout the country, an organ-
ized campaign is being conducted against it,
and already moves have been made to have a
government investigation of this particular
form of merchandising. The piano industry,
which has steadily lowered its terms and raised
its percentage of cash sales and down pay-
ments, is not likely to be judged by the major-
ity of the retail piano merchants who are sell-
ing on that basis, but rather by the majority
who are loudly using terms as a sales "bait"
and who are injuring themselves and every
other piano merchant in doing it. That is one
angle of the situation which must be always
considered, and if there is any feeling of soli-
darity in the trade, if there is any regard for
common interest, if there is any realization
that a condition which injures one merchant
in the long run injures all, the tendency to
longer terms should be checked now before it
has gone far enough to do real harm.
Hard Selling the Remedy
Hard selling in times when sales are not easy,
is the only efficient remedy. Using long terms
as "bait" injures the dealer who does it more
than any one else, but at the same time it al-
ways injures everyone else as well. Keeping
terms within reason means a steady substan-
tial trade, a volume of sales which brings an
adequate margin of profit. Long terms and
loss are synonymous to a great degree—they
have always been and they always will be.