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Dealers can no longer simply rely on freight specials, “sale” pricing and a good staff to move product and stay afloat.It takes a combination of strategies. The proliferation of music lesson programs around the country is evidence that many retailers cannot make margins on retail sales alone (even big-box stores offer in store lessons now). Yet for various reasons, including economic, they are finding it tough to generate students to make up for the loss in sales.
Three years ago I put together a retail plan, what I considered a “facelift” for MI, that subsidizes the costs of equipment (drum sets, keyboards, basses and guitars, etc...) to the student in return for a lesson term commitment to our lesson programs. It has been the subject of articles in UK trade magazines, as well as the cover story for Music Inc.‘s July 2013 issue. It has worked amazingly well for my locations.
So well, in fact, that we now have $75,000 - $80,000 at any given time on contract.
How did I come up with this idea?I copied another industry that already has it figured out.
Cell phone manufacturers realized a long time ago they could move more units through subsidizes to the customer.For me, I did not have to do deep training for my staff or a lot of training to the customer. They have already been “trained” by the cell phone industry to understand how it works.What if the MI industry introduced drum sets where the prices hover around $599 retail for a decent entry-level drum set with decent cymbals and hardware.
Consider this: The number one issue I hear from parents, and in some cases the student, is the upfront cost of instruments. The second hurdle is the lack of commitment from the parent. “I don’t want to put a lot of money in this until little Johnny proves he is serious about playing guitar”. Would you send little Johnny on the soccer field with cleats a half size too small and a half inflated soccer ball?
Economic situations also come into play. It’s a vicious cycle: Many families in this country simply can not afford quality drum sets, guitars and amps, but parents want to see some unattainable goal before they “commit” to purchasing a quality instrument. So the student is forced onto a second rate instrument that creates more problems in reaching the “goals” the parents want to see. What is the commitment point of the parent? My program solves many of those issues, and I’m not sitting on the same inventory month after month.
1. Order/Stock Products 2. Select products are available for special pricing with a 12-, 24- or 36-month LESSON commitment. The cost of the equipment is subsidized and margins are made over 12 months of lessons. More expensive equipment is eligible for longer terms, 24 and 36 months. Progressive Music Center’s New MI Retail Model 4. Manufacturer now moves twice as many units annually to that dealer, and you are a retail God! Benefit: Lesson Program gains students for long-term, teachers are employed and students have quality equipment to learn on. • Benefits: • sell more picks, sticks, strings and accessories to that student over length of lesson contract • your inventory is no longer a museum piece hanging on your wall month after month • be a hero because you saved lots of local families money • all of the above 3. Equipment is now even more affordable to more people, and you can “upgrade” the customer to intermediate lines. Students start lessons immediately, dealer moves more inventory.
You will need a few things in place to make this program work for you. 1. Lesson Program2. POS System Must Be In Place3. Price Tags4. Trained Staff
iConsult. • billy@RaleighMusicLessons.com
