Music Trade Review

:--JOVEMBER
17, 1923
THE
MUSIC
TRADE
REVIEW
5
Finding the Salesman's Real Value
The Man With the Large Volume of Sales Is Not Always as Profitable to the House as the Man With a
Smaller Volume but Who Concentrates on Making Better and More Profitable Sales-One Mer­
chant's Method of Seeing That the Latter Type Receives His Proper Reward
•
The salesman who has to his credit the great­
est gross volume of sales is not always the most
profitable salesman to the house. This, at first
glance, may seem somewhat of a paradox, but
a little analysis will soon show the truth of it.
There are two salesmen employed in certain
retail piano warerooms, one of whom will aver­
age yearly 20 per cent more gross business than
the other. Yet the second man is the more
profitable member of the selling organization.,
and the reason for this is not far to seek once
comparative statements of the business done
by each of them are laid side by side.
The first man is one of those salesmen com­
mon enough in the trade who seem to consider
the maximum period of time and the mlnlmUm
down payment the proper terms on whieh to
make a sale. Almost invariably his contracts
are made upon this basis, with the result that
all of his sales are expensive for the house to
handle.
The Cash Getter
The second salesman is the type who is
known as a cash getter. His down payments
ave rage 40 to 50 per cent higher than those of
the first man, and the average time for which
h.is contracts are written ranges from 10 to 15
per cent lower. Furthermore, the second sales­
man seeks to concentrate on pianos and players
on which the house makes the great cst margin
of profit, devoting most of his time to this
type of goods. He makes fewer sales than the
first man and his volume, as has been pointed
. out previously, is not as great. But the .mer­
chant who employs both of them states that
the net profit made on his business is from' 5
to S per cent greater.
This is sufficient to show that gross volume
of business is not th e sole criterion by which
to judge a salesman' s value. And this is more
emphatically so when conditions are as they
,lre in the retail piano business. The average
duration of sales contracts and average. down
paymen's here are factors of considerable im­
portance and their effect permeates the entire
situation.
One Merchant's Plan
How can a merchant know the individual
value of his salesmen? :\ plan that is used by
one de,lIer has proved highly successful in ob­
taining this information. He has worked upon
a series of points which are given for each sale
on somewhat the following system: If 8 sales­
man sells a player-piano at $700 on thirty
months' time and 10 per cent down, which are
the out~ide terms of this house, he receives the
followinv score: Seven points for the gross
value of the sale, one being awarded for each
$100; no points for time and none for the down
payment. If the salesman were to make this
same sale on tw.enty months' time and receive
" down payment of 20 per cent, the score would
be as follows: Seven points for the gross vol­
ume; ten points for the ten months cut off the
maximum terms of the house and ten points for
the increase in the down payment. In other
words, a point is given for each month cut
from the maximum terms of the house and one
point for each increase of 1 per cent in the
cash payment on the contract. On these two
sales the salesman with the first would be
awarded seven points, while the salesman who
made the second sale would receive twenty­
seven
The awarded points for cutting down the
maximum terms and for increasing the down
payments may seem disproportionate to those
who are awarded for the gross value of the
sale, but the dealer who uses the system states
that this apparent disproportion has 'been made
deliberately in order that stress might be placed
upon the two factors which he considers most
important.
"For instance," he said, in discussing this
matter: "Twenty months' time with a 20 per
cent down payment permits me to discount that
paper at the best rate possible and to allow
me to make a profit by the use of the money
received above the cost of obtaining it. On
the other hand, I have to carry thirty months'
paper myself and this capital is not available
for use in my business. I have always found
that the secret of success in piano selling is
short terms and large down payments, and that
the greatest difficulty in obtaining these is the
tendency the average salesman has to follow
the paths of least resistance and start with the
maximum terms of the house. If on the other
hand, there is some encouragement for him to
endeavor to lower these and to raise the down
payments this is reflected in the profit on his
sales and also in my profit. But it is quite
impossible to bring this about unless an induce­
ment is offered to the salesman to do it. To
do away with the complexities of bookkeeping
that arise from totaling the various ra~ifica­
tions of each sale, I have used this point sys­
tem which, though it is entirely arbitrary, gives
a very clear picture of the results which the
salesman achieves.
The Contest Idea
"When I first began it I used it as a basi s
for a yearly contest among the men, but I soon
found that this was not nearly so good as it
lllight seem at first glance. A contest is all
very well for the first two or three months,
but after that one or two men usually secure
quite a lead on their competitors and the lat­
ter's interest dies out a$ they come to consider
themselves entirely out of it. This to a great
extent defeated the very end for which I was
aiming. So after the first year I informed the
men that hereafter the contest would be done
away with and that the points scored for large
down payments and short terms would be cred­
ited towards a bonus system based on the com­
missions earned on the gross volume of sales for
each individual salesman during the year.
Compensation for Better Terms
"In other ",vords, my men are paid on th e
following basis: A certain commission on their
gross volume of business, plus a bonus every
three months based on the number of points
they score. As gross volume also counts in
these points to a certain extent, it is necessary
for a man to obtain his full income to make
as many sales as he can; but as terms and down
payments count to a much greater degree, he is
always forced to make them on the best basis
it is possible to ~ecure. Since I first began this
system I have found that my average terms on
outstanding leases have diminished by a very
apparent percentage, that my cash intake has
shown a good increase and that my past due in
the collection department has run lower than
it had ever been during the previous twenty
years I have been in business."
As pointed out by this merchant, this system
has all these advantages, but what he did not
lay particular emphasis on and what is one
of it; gr'eatest advantages is that it presents a
clear picture of each salesman's activities at all
times. The star who has the big volume can
no longer consider himself the cock of the ware·
rooms as he is so often prone to do. The sales­
man who makes each sale on the basis of the
best terms and the largest down payment that
he can has an equal chance with him or even
an advantage over him, due to the fact that
these sales in the long run are much more
profitable to the house.
The system outlined above may not be ap­
plicable to all warerooms, but, unquestionably,
it is only fair that the salesman who obtains
good short terms and large down payments
should be given credit not only in appreciation
but for their effect upon his annual income. The
latter is the type of man who is always working
for the house, as well as for himself; while the
former is too often the type that forgets team
play entirely in working for an individual rec­
ord. Such men are not the "stars" that they
think themselves or that a good many retail
music merchants seem to think them.
PROMOTION FOR FRANCIS X. REGAN
Former Sales Manager of Homer L. Kitt Co.,
Washington, D. C., Elected Secretary and
Treasurer of That Company
WASHINGTON, D. C, November 13.-Members of
the music trade in Washington are congratulat­
ing Francis X. Regan, former sales manager of
the Homer L. Kitt Co., 1330 G street, North­
west, on his election into the firm as secretary
and treasurer of the Kitt organization.
Mr. Regan's wide experience in the business
ably fits him for his new position. He was
Francis X. Regan
first introduced to the piano busi ness in Hous­
ton, Tex., where he was associated with his
uncle, the well-known "Judge" W . A. Hogan,
as manager at the store of Thomas Goggan
& Bros. From Texas he came East and joined
the sales force of the former Knabe warerooms
in Washington, then under the ownership of
J. H. Williams. When the Knabe warerooms
were taken over by the present owner, Homer
L. Kitt, some years ago, Mr. Regan took up
work with the new organization as sales man­
ager, a position which he has since retained.
Since the firm changed hands it has been
greatly enlarged, now occupying the entire four­
story building at 1330 G street. Knabe, Fisher
and Franklin Ampicos are carried, and a large
sheet music and music roll department has been
installed. A complete line of Victor talkmg
machines and records and Conn band instru­
ments are stocked. The company has, in addi­
tion, sought to promote better music in Wash­
ington by running a series of free public con­
certs each Winter, at which performances by
local artists with the Ampico are given.