Radio Broadcast (May 1928-Apr 1929)

RADIO BROADCAST while in the first case a net profit of 5 per cent, on $3000.00 represents an actual gain of 15 per cent, on the investment of $1000.00, the same percentage of gain on a $5000.00 gross means a gain of 25 per cent, on the investment. Another important difference between these two classes of service work is the difference of stability. If a serviceman is relying upon one store or even half a dozen stores for all or most of his income, and the one store, or two or three of the half dozen stores, should suddenly decide to farm out their service work to a competitor, who offered to do the same work cheaper, the business of the man who had been doing that work would be totally, or at the very least, badly crippled. On the other hand, if the serviceman is depending upon a comparatively large number of individuals, the loss of a few of them, while unfortunate, cannot ruin his business, a point which is extremely important and cannot be emphasized too strongly. The only important advantage contract work has over individual work is that it may be built up with much greater rapidity. The acquisition by a serviceman of one radio store may give him that store's work for perhaps 500 individuals, whereas it may take him a year or more to build up a steady individual clientele of that number. Sales vs. Service THE next problem is that of how much relative emphasis to place upon service and upon sales. Shall we devote all of our energy to increasing the efficiency of our service, making only such sales as are necessary adjuncts to proper, complete service; shall we divide our energy equally between service and sales; or shall we devote the major portion of our energy to making sales, using service only as a gateway for sales and as a method of keeping in touch with the customers to whom we have made sales? It seems to be a popular belief among servicemen that a greater percentage of profit may be had from selling tubes, batteries and apparatus, including parts, accessories, and complete sets, than may be had from the sale of service itself. That this belief, while popular, is a misconception, has been amply proven by the records of the organization of which the author is a member. The greatest gross profit which the average service concern can make from sales of whatever radio supplies may be sold, as an average of all of them over a period of a year, is about 35 per cent, and we believe that only a very small proportion of the service concerns in this country even closely approach that as an actual figure, if their accounting is properly done. An average gross profit of 40 per cent, on labor, however, is a practical possibility for the average service concern, and because that percentage of profit is not limited by fixed dealer discounts, 40 per cent, can be, and is, exceeded in actual practice. Other things being equal, there is, then, a decided advantage in keeping the income from service as large a proportion of the total income as possible. It would be an ideal condition if one could do only service work and eliminate selling, but that condition cannot be attained. Even with no sales effort, the sales of those things which necessarily go with service will be large. In the author's organization, to give a concrete example, despite the facts that receiving sets are not sold at all and that no emphasis is placed or energy expended in attempting to sell parts or accessories, the actual gross sales to individual customers of tubes, batteries, replacement parts, accessories such as trickle chargers and relays, with an occasional good loud speaker, total more than the gross sales of service alone to those customers. So that every service concern, regardless of size, is a sales concern to a very considerable extent, whether or not they desire to be, which leads us to the germane observation that a service concern can devote its entire effort Service organisations may be located on the second floor in low-rent districts. to the improvement of the efficiency of its service and still derive a very large proportion of its income from sales. Large and Small Cities WE BELIEVE that, in all of the larger cities of the country, the serviceman can obtain a larger number of steady customers within a given area, and build up a more permanent, profitable business by developing the most efficient service possible and letting the sales take care of themselves, than he can by dividing his energy between service and sales effort. One great advantage of this policy in large cities is that, with sales effort in the background, a location on a prominent street or even a ground floor location on any street, with its attendant high rent, is not at all necessary, thus permitting a much lower overhead expense than would otherwise be the case. In smaller cities and towns, where the possible number of individual customers is not so great, the amount of income which must be derived per year from each customer is necessarily greater in order that a sufficient total income may be had. We believe that condition exists in fewer places than is the general belief among servicemen, but if it actually is the case, then it becomes necessary to devote more energy to sales, even to the extent of selling complete sets in order to avoid losing customers who would otherwise purchase them elsewhere and then have the service performed by the dealer from whom the set was bought. The serviceman should be courteous first, last, and always. • fcbruary, 1929 . . . page 238 » No-Charge Calls ONE other major problem which we shall i discuss briefly is the question of just how far we shall go to satisfy our customers. ! Shall we keep our percentage of no-charge calls down to the absolute minimum by making only those which are necessary in order to collect money due us on a previous call; ; shall we make without question as many free calls as each customer would like without making any attempt to limit the percentage of such calls ; or shall we adopt a middle course somewhere between those two extremes? The basic consideration is the well-known fact that a thoroughly satisfied customer means — in the vast majority of cases — not only a permanent customer but also the best possible advertising medium which exists. All organizations that have achieved a large and : : permanent success, no matter what they are selling, have done so because, first of all, they have satisfied each individual customer better than most of their competitors in the same field. Many highly successful concerns, especially in the retail field, have gone so far as to adopt the policy that "the customer is always right." That policy can be applied very advantageously in our own field of radio service, and we believe it needs to be , applied more generally than it has been. It is fairly obvious that if, by making a no-charge call in order to satisfy a customer, we succeed in keeping him as a regular customer where he otherwise would go to some one of our competitors, we have then made an entirely justifiable sales expenditure, for by that free call we have secured future profitable business, from the customer himself and also from those friends of his to whom he will mention his satisfaction. On the other hand, we cannot afford to give( such a large percentage of free calls that our, profit on chargeable calls will be eaten up by them. If, however, we find that we are giving too many free calls, the remedy for that condition is not to limit the number of free calls we will make, but to make our service so efficient and so pleasing to our customers that we will not need to make many free calls in order to give satisfactory service. The efficiency of the serviceman in the field, providing he is properly equipped, can be, and should be, kept over 95 per cent. In other words, the no-charge calls necessitated by the failure of a serviceman to cure properly the troubles in a radio, or by his failure to take with him the type and number of tubes and batteries or other supplies he may require need not exceed 5 per cent, of the total number of calls made. The percentage of no-charge calls of that nature made by the author's organization during the twelve months ending November 30th, 1928, was under 3 per cent. The exact figure was 2.68 per cent. The percentage of no-charge calls made for other reasons, as a matter of policy to keep the good will of customers, automatically will remain low so long as the service efficiency is high and customers are handled fairly, courteously and with a real desire to serve them to the utmost of our ability. The total percentage of no-charge calls made, from all causes, should not exceed 15 per cent, and can be kept, as a matter of actual record in practice, under 10 per cent. Every service concern, even if it consists of only one man, should keep an accurate classified record of the nocharge calls made, to be tabulated monthly and analyzed along the lines which are suggested in this article.