Matzat focused on looking at ROI (return on investment), which he defined as gross profits divided by inventory. “I do it for the trailing 12 months at my business,” he said. “You must have an ROI of $1.30 at least. But you really need to have $1.50. For example, if your store had $15,000 in gross profits and $10,000 in inventory, your ROI would be $1.50.
“Our ROI increased 50 cents in the last few years. Order with your head, not just your gut.”
Maggiora told the audience to “promote the fun of playing music. That’s what I wanted to do when I started my Weekend Warriors program 16 years ago. One of the biggest concerns I had at the time was, I met people who used to be musicians. They had jobs. But with Weekend Warriors, they could have one rehearsal a week and later play in a hall in front of family and friends.”
Keeping with his innovation theme, Maggiora mentioned another idea he had: his Swap Meet. “I told customers to bring in your gear and we’ll sell it for you in an annual event. So many people have so much stuff sitting in their closets they don’t use. We gave store credit for the instruments, but those people often came in and spent more [than just the store credit] though.
“Focus on the new active customer,” he added. “Give them reasons to visit stores more often. We must grow the market itself.”
White had an idea of his own: charge a registration fee for lessons. It worked. “No one complains about it,” he said. “I charge $20 a month.”
He also advised retailers to employ teachers as part-time employees. “Give them a 50 to 60 percent commission. You get the rest. Even though there are some FICA fees to pay [to the federal government], it’s worth it.”
White offered more ways to rake in additional cash, including charging a $3 or $4 monthly shop fee for repairs that “makes a big difference,” $3 to $6 maintenance fees, and extended warranties that offer “excellent margins.”
Hines provided a way to sharpen your mental game with the “Law of Expectation.” “If you write something down, it becomes real. Is it OK to make an additional $20,000? If you write it down you work so hard to achieve that goal.”
But Hines has a way to improve your physical game as well. “It’s always great to have a people counter in your store to know how many people walk in,” he said. “Se-Kure Controls (www.sekure.com) makes them.”
Hines also has a “Customer Satisfaction Index.” When you walk in, I have a rule you must be greeted in 10 seconds,” he said. “I’ve hired an outside company to be secret shoppers and they report back to me about how we did.”
Added Hines: “There’s nothing like profit to increase the fun factor.”
Editor’s note: For much more about this NAMM Breakfast Session, see Column of the Month, authored by George Hines, in the back of the magazine.
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