from October 2000 MMR Magazine

Still young enough to continue my NAYMM membership and having more than 16 years experience on the floor selling home organs, I would like to share some thoughts on the current state of Home Organ Retail.

            During the last few years I’ve seen an increasing number of dealers getting back into the organ business. The success enjoyed by dealers who never wavered from their business plans, coupled with a growing target age clientele has caused some music companies to re-evaluate the potential of the organ business.

“If I could play like you, I’d buy it.” – The Consumer

            Surveys show that people who cannot play a musical instrument wish they could. The organ salesperson converts that dream into reality. In assisting people to achieve their dream of playing music the organ salesperson creates his own market. This is the essence of the creative selling process we call home organ retailing.

            During the “heyday” of the organ business this creative selling process was honed. It was fueled by the technology of the day and accelerated by a plethora of new retail opportunities — shopping malls. Manufacturers raced ahead of one another opening mall stores and front pumping their latest advances to the constant throng of shoppers who passed “the pump” with the dream of being able to play music.

            A decade of innovation brought features to the instrument a non-musician could learn with ease. Organ sales boomed!  Industry veterans with more than 20 years experience remember the boom well. Now it’s regarded as “The Good Old Days” of the organ business.

What constitutes an organ sale?           

Mark Twain once commented, “ The reports of my death have been greatly exaggerated.” The same can be said of the organ business. We can all agree that unit sales of organs are a fraction of “heyday” levels, yet there remains a core group of organ dealers and manufacturers who continually succeed. The same trade publications that predict the demise of the organ business are touting the recent success of the piano business, where unit sales are lower than the piano boom of 80 years ago.

Lloyd Robbins of Rodgers posed an interesting question in last month’s article “The Home Organ in Today’s Marketplace.”

 “As far as the so-called decline of the home organ business, has anyone stopped to factor in the number of digital pianos with ‘good organ sounds’ that may have been purchased instead of organs in recent years?”

It may be time for us as an industry niche to reclassify product categories by marketing method. From NAMM we can follow trends of product categories and unit sales. Yet we cannot track to whom these instruments were sold. If a dealer markets a digital ensemble to an over 60 year old consumer and includes a comprehensive class lesson package with purchase that seems like an organ sale to me. If organ retailers don’t view that as an organ sale they certainly should view it as competition.

Who sells these instruments and why do I need to know?

In his guest editorial last month in MMR magazine Brian Crewe solicited opinions for forming a national Home Organ Dealer Association, HODA. I applaud Mr. Crewe for both his idea and his effort, yet I believe there is a more practical solution.

            Because the majority of the dealers and suppliers are already NAMM members why not lobby NAMM to create a new dealer category called Home Electronic Keyboard Dealers (or HEKD). By definition these stores would derive 75 percent or more of their sales from home organs, digital pianos and portable keyboards. In short this group would be the dealers who are following the creative selling doctrine of the organ business and would include those who market a different product, like digital ensembles.

My vision for such a group would be as follows:

• Collect vital business data so members could measure themselves against industry averages.
• Collectively promote music as a hobby on a national level (something like the dairy industry did with Got Milk? or Save The Music).
• Provide a secure, members-only forum on the internet where dealers and manufacturers could exchange promotional ideas and generally vent to one another. (NAMM already has a general forum available on its website, NAMM.com)
• Formulate some strategy for trade-ins that preferably would include some sort of blue book that is considered the industry standard. (My banker always asks the value of the pre-owned merchandise in my warehouse, I doubt I’m the first who had to answer that question.)

Is their really no measurable market demand curve?

Retailers and manufacturers of Home Organs claim there is no set demand curve for the products they market. The products are marketed in such a manner that the dealer creates the demand thus controlling the value to the customer.

Here are some statistics I’ve discovered in my experience selling organs at the retail level. They are indicative of what I have found in successful organ stores. My data is the result of my curiosity in asking owners, managers and salespeople, “How’s business?”

• Unit sales are divided equally between first-time purchasers and step-up purchases.
• The 80/20 rule of selling applies to unit sales as follows: 80 percent of sales dollars are generated by the step up sales, while 20 percent are from first time purchasers.
• Fiscally healthy organ stores focus on unit sales and average unit sales in addition to carefully tracking attendance of lesson program and total database numbers. 
• Successful dealers with a strong class lesson program realize today’s first-time buyer is tomorrow’s high-end customer.
• The most price sensitive consumer purchase is the first sale because the consumer has yet to believe they can play an instrument.

Overall the successful store can be viewed as one that consistently feeds new students into an effective lesson program where students are fulfilling their desire to play music and enjoying the associated benefits. Most successful dealers admit the first sale is the most challenging.

Manufacturers build a wide array of instruments, which for our purposes fall into one of two categories. Either the instrument is retailed as a first-time purchase or it is a step-up purchase. The ideology differs drastically for each of these product groups.

Manufacturers understand the power of brand recognition in the organ business. These companies realize if someone begins with their particular brand of instrument they are more likely to upgrade to a better model in their product line. Especially if the dealer adopts that same manufacturer’s formal lesson program. This initial purchase is critical to establishing brand recognition.

Most successful organ dealers have grown their business by following the manufacturer’s program to the letter. For those dealers considering entering the retail home organ market these plans offer your best chance for success.

Both dealers and manufacturers agree the first-time purchase is the most critical, however conflict lies in where marketing dollars are allocated at the wholesale level and what is considered success.

At winter NAMM last year I witnessed a senior manager of an organ manufacturer praise a rep for the number of new dealers he had opened during the show. Growing the dealer base in an industry with very little market penetration is a no-brainer. The next part of their conversation told me the story. “Let’s get Mr. Bigshot Top Artist out there right away.” Ask any manufacturer about dealer support and they will customarily discuss an artist program, a lesson program and sales training; all are legitimately important functions to foster good sell-through and step-up business. These functions will also lead to greater branding at the retail level. Very little focus is geared to the first-time customer.

Ask any wholesale rep about his last successful dealer promotion and he will invariably tell you a story of epic proportions. It seems all retail prospects who attended the promotion upgraded from every other brand manufactured for his company’s flagship model and those consumers gladly paid top dollar for the privilege. Just once I’d like to hear, “I brought in Mr. Bigshot artist and we front pumped for six hours. Didn’t get any deals, but we signed up a few students and got a great lead.”

There is tremendous opportunity at the wholesale level for the company whose reps teach dealers the organ business and assist in marketing the first-time buyer. If an organ manufacturer is focused on achieving brand awareness beginning with the first purchase then it should shift its marketing resources to that area. If these manufacturers are concerned with losing sales to used organs and inexpensive portable keyboards then they should look to the digital piano market. Manufacturers of digital pianos are taking used pianos out of competition by lowering the wholesales and offering the consumer a new alternative that is price comparable to those used products.

The Truth About Pre-Owned Organs

Organs are manufactured in lines to attract the step-up customer. Each manufacturer determines how many organs are necessary in their line and usually attempts to get the dealers to stock them all.

            Most dealers cherry pick.

            And so begins the greatest single challenge facing the organ business.

            The overall consensus from the manufacturer’s perspective included in last month’s MMR article was that dealers need to junk used organs. A few manufacturer’s suggested seeding the market. The worn out 1962 no-automatic-anything model is basically worthless in all retail stores, but the three-month-old mid-range organ  bought with hard earned front pump dollars certainly has its place in the retail inventory mix.

            Organs are manufactured to be purchased, played and traded in. Consumers tell organ people everyday, “This is the last one I’ll ever buy.” But rarely is this the case if they continue lessons and are exposed to something a little better.

History notes Ford Motor Company faced a great challenge in the early days of the automobile industry . It seems after a number of years producing the Model T there were enough used models in the market to damper sales of new Model T’s. The answer in the auto industry came through making slight changes on a yearly basis to differentiate the new model from the previous model. It appears some people just like to own the latest, greatest thing.

The PC I’m using to input this article was purchased six months ago at one-third the price of the unit I replaced. It’s infinitely more powerful and I think it’s cool. I gave the old PC away. Seems like no one wants a four-year-old PC.

In both instances the industry sets the standard for used market value by controlling the price of replacement products. Why then do manufacturers in our industry not lead the used market instead of following it?

The $64,000 Question

            “… I don’t believe that the home organ industry suffers from an ‘integrity crisis’ any more than the acoustic piano, digital piano, or any other industry segment does.”

A Manufacturer’s Representative

            Nowhere in our industry is there such a disparity in retail pricing as is found in the home organ segment. There is no possible explanation for an instrument that carries an asking price of $25,000 in one market area and $75,000 in another market area.

            Successful home organ retailing requires truly creative selling. Through focused effort the home organ retailer cultivates and grows his local market. Current industry practices allow the dealer to set his pricing schedule to ensure healthy margins.

Home organ purchases at the retail level are emotional purchases. Home organ sales at the wholesale level are rational purchases. Dealers understand actual retail price potential and are not willing to sacrifice margin.

            That being said: THERE IS NO SUCH THING AS A $64,000 HOME ORGAN. Meaning, if a manufacturer produced an instrument that should retail for $64,000 and carried a wholesale price that reflects actual industry margins, then no dealers would buy it.

            There is no such thing as MSRP for home organs. This can be both a blessing and a curse to our industry segment. Manufacturers claim pricing is handled at the retail level, however there are many components that factor into the final asking price of an organ. For purposes of semantics in this article call MSRP or List Price, ACCEPTABLE PRICE.

            The Ancott Book lists virtually every home organ available in today’s market with a suggested retail price whose margin reflects market segment trends. On the whole, home organs in this book carry a XX percent gross margin. Most music products retailers would consider that an ACCEPTABLE PRICE. For those readers who are not yet marketing home organs, this should paint a clear picture of why this is a profitable niche in our industry.

            Because the home organ business relies on repeat business, the pricing dilemma is a question of how to handle trade-ins. The last decade gave birth to a trend. Some dealers raised their asking prices to allow more room for trade negotiation. This pricing strategy has spawned the single most difficult integrity crisis to the home organ business.

            It is most curious that while the same model instrument can have wildly varying asking prices from dealer to dealer, the net sale and adjusted gross margin end up basically in the same ballpark. This means that although an organ is touted as $25,000 in one store and $75,000 in another, given the same trade it sells for approximately the same net price (after trade) in both stores. The difference lies in the trade allowance.

            The used organ market has grown far beyond the limits of our industry. At any given moment a consumer can browse through thousands of ads for used organs on the internet. While most involved in the organ business believe there is no measurable demand curve for organs, they should take a careful look to cyberspace. Those dealers who turn a blind eye to this arena are ignoring a competitor more fierce than the store down the street. Those manufacturers who ignore the dynamics of the used market are ignoring an erosion of their market share.

            Every instrument is manufactured with the end consumer in mind. Part of the process of bringing something to market most certainly includes a good idea of what the acceptable retail price should be. As a dealer I am personally offended when a manufacturer speaks of the “apparent value” of an instrument. I am equally offended when I am told, “Do you know what they sell these for in __________?” As a dealer I would much prefer to know  the intended acceptable price and how much I will  pay wholesale. From that point it’s my responsibility to make the sales.

Manufacturers skirt the acceptable price issue like a Washington DC politician debating campaign finance reform, yet they obviously share wholesale pricing guidelines with the trade press, the Ancott Associates and each other. If the home organ business is going to improve its integrity as a market segment, then the manufacturers need to take the lead. When a manufacturer will not quote a retail price range to an end consumer, what signal does that send to the consumer? When a manufacturer’s representative is present at a promotion where an instrument is retailed at twice the acceptable retail price, does that not set the retail price?

The Future of The Home Organ Business

            The home organ segment of our industry is at a crossroad. Demographics show the potential for growth could be exponential. The population is aging and average life expectancy is increasing, meaning these consumers will be retired longer and will retire with more discretionary dollars. Science shows the positive effects of making music, and current technology allows students to sound better. Yet with all these components in place the market segment is fragile enough to be torn apart by the predatory pricing policies frequently employed by both retailers and manufacturers.

            It is only a matter of time until the home organ consumer awakens as our sleeping giant. If all parties involved do not conduct themselves ethically, as well as professionally, then the entire market segment will suffer.

            As a member of NAYMM I have a long career ahead of me dedicated to growing my business, and as a steward of our industry. I enjoy the home organ business and implore everyone currently involved in marketing home organs at any level to seed the market for the next generation.

Everyone employed in the sale of home organs should market their instruments understanding these instruments will come back into the market in the future. Instruments marketed following a less than ethical marketing strategy will haunt not only the selling company but the industry as a whole.

I began my career delivering Lowrey organs in the summer of 1984. From the day I started I was told, “You missed it.”

Industry data shows I missed the heyday of the organ business by about five years. Being a delivery guy was a good entry into the music business. It paid better than the burger- flipping minimum wage jobs many of my classmates were getting that summer. As I transitioned into a commissioned sales position I learned that sales could be both a noble and profitable profession.

Organ sales had begun their decline before I joined the industry, but during my early years in sales it was still possible to earn very good money selling organs. More importantly the skill set necessary to become good in the market segment prepared our salespeople to excel in sales of any other product and/or service. One of our rookie salesmen went on to become one of the top pager salesmen in the country after just one year of sales training in the music business. Twenty years ago a majority of executives in our industry had organ selling experience listed on their resumes.

As the years have passed and most of the manufacturers of home organs have either closed, been sold, or changed directions, there has remained a small (shrinking) group of dealers who continue to promote and sell these instruments. I can’t count the number of times someone has remarked to me, “You’re still selling those things!”

Over the last five years I have represented both Lowrey and Roland Atelier organs. When I went in business in 1993 there were four organ stores in my town. Now I’m basically the last organ store in New Jersey. Twenty years ago it would have been impossible to represent the top two brands. Today there is such little demand that Roland has joined the list of “used to” manufacturers: “We used to build organs.”

There is much to be learned from organ salespeople. The following concepts are critical for all marketers of musical instruments.

In our country there are more people who don’t play music than those who do. Everyone involved in our industry is best served by growing the market. Making more musicians makes more potential customers. In all segments of the music products business there is a simple formula that states. Students X Inventory = SALES … or as I teach my staff P X P = P… Product X People = Profit.

It’s okay to earn a profit. The margins on home organs were strong enough at both the wholesale and retail level to ensure the longevity of the companies involved in marketing these products. The introduction of MAP and the race to sell at shrinking margins has done a terrible disservice to our industry.

As an industry we need to teach people how to operate and grow our businesses. As a rookie I learned not only from the people who owned and managed the company I worked for, but also from a cadre of industry professionals who taught me the industry could afford me a decent living and more fun that I could imagine. Over the last fifteen years the relationship between manufacturers and retailers has changed dramatically and as the dinosaur I profess to be, I’ll say it has not changed for the better.

I was first published in MMR Magazine in November 2000. My guest editorial: ‘Home Organ Retail and the $64,000 Question’ was a call for everyone involved in selling home organs at both the retail

and wholesale level to step up their game. Fifteen years later as one of the last organ salesmen, I feel like the last dinosaur with his foot stuck in the tar pit. (If anyone wants to read that article e-mail me and I’ll send it to you: jeffmazza@royalmusic.com).

I was moved to write that article because I thought my niche of the music products industry was at a crossroads. It was, and as an industry segment we didn’t follow the best course.

The music business is very simple:
• Teach someone to play.
• Let them try nice instruments.
• Encourage them both to play and to purchase.
• Understand the lifetime value of this customer.
• Don’t do anything stupid to make them leave you or the hobby of making music.

In my November 2000 article I posed the question, “What constitutes an organ sale?” At the time I hypothesized… “It may be time for us as an industry niche to reclassify product categories by marketing method. From NAMM we can follow trends of product categories and unit sales. Yet we cannot track to whom these instruments were sold. If a dealer markets a digital ensemble to an over 60-year-old consumer and includes a comprehensive class lesson package with purchase, that seems like an organ sale to me. If organ retailers don’t view that as an organ sale they certainly should view it as competition.”

The trend line for home organ sales over the last 20 years is abysmal. However, the demographics show an unprecedented upside potential for those who want to market home hobbyist musicians. Any manufacturer of a keyboard product with auto accompaniment features is essentially in the home organ business on some level and needs to understand the dynamics involved in selling their products through various marketing channels.

At 2,800 words my last article was an industry warning that went ignored. After thirty years on the retail sales floor and having earned every dollar through the sale of electronic keyboard instruments (organs, digital pianos and portable keyboards) I have decided to form an industry think tank in hopes of shaping the marketing strategies of those involved in the sales of the aforementioned keyboards. I envision a three-tiered group with a tier for senior management of manufacturers and perhaps dealer principles, another tier for manufacturer’s reps, and finally a group for retail salespeople. My experience shows as an industry we are losing high quality potential people to other, more lucrative, less stagnant industries. The industry as a whole must grow to attract and retain its talent. This think tank could be the impetus of that growth.

It has been said, “If you’re not getting better, you’re getting worse.” Frustrated by the lack of growth in our industry, I want to meet with other industry thought leaders and plot a course for growth.

Anyone interested in participating in this think-tank may e-mail me jeffmazza@royalmusic.com or call my store (732) 240- 2332. I intend to host the inaugural meeting this winter. 

Originally published in MMR Magazine … In The Trenches November 2016

To paraphrase …

Retailers, manufacturers and the rest of the music products industry, lend me your ears.

I have come to bury home organ retail, not to praise it.

I speak not to disprove what happened,
But here I am to speak what I do know.

Twice I have pontificated on the state of the home organ business. For brevity I will avoid restating what I previously published. Home Organ Retail: The $64,000 Question MMR Magazine October 2000 and The Last Dinosaur MMR Magazine November 2016.

Today I eulogize the home organ segment of the music products industry and explore the lessons learned by the deterioration of this once profitable market niche.

Our industry is stagnant due to a multitude of factors both within and from outside pressures.

During my years as a NAMM member I have often attributed the lack of industry growth to poor focus at NAMM’s level. Experience has taught me it is not the job of a trade association to grow the industry. Their job to help us connect so that we can communicate with like-minded professionals and collaboratively grow our businesses. (The best way to begin this process is to attend The NAMM Show.)

What really matters?

Thirty years ago the high school closest to my store had 1600 students with 200 of them playing instruments in the marching band. Today that school has over 2500 students and fields a band of 80 players. I offer this example not as a school music dealer, but as an indication that music plays less of a role in people’s lives.

As an industry we need to encourage more people to play music. It is the responsibility of everyone, at every level.

What business are we in?

Any successful home organ retailer was in a hobby business. The most successful dealers promoted the hobby of playing music. The brands they stocked and sold were less important than developing music as a daily habit. The organ in home-organ retail was a vehicle for sales, not the impetus. Ironically, most manufacturers never understood this dynamic, which is one the reasons for their demise.

Who can you help?

Zig Ziglar famously said, “You can have everything in life you want, if you will just help enough other people get what they want.” Manufacturers and distributors could dramatically improve the stability and profitability of their companies if they focused on helping the dealer network grow their businesses. The caveat is the manufacturer must have people capable of teaching a dealer how to be successful. I said in my 2016 article I believe our industry suffers from a talent drain. I shared how I owed my career to a cadre of industry professionals who taught me, mentored me and showed me I could be successful.

When I opened Royal Music in 1993 I would often see not just my reps, but the reps for competing brands. My store was the fourth piano and organ store in my town; today I’m the last. While I was never a Baldwin dealer, I usually saw the rep once or twice a year. It’s a small industry and it’s important to know who’s doing what with whom. Over the last ten years or so I’m lucky to have seen a rep once or twice a year for a company whose products I carry. I’ve heard many excuses about the cost of sending someone into the stores. I’m still curious why Gibson purchased an iconic brand, Baldwin, and then allowed it to wither away. It’s akin to buying a farm that’s been seeded and then not watering its plants. And the industry wonders where Gibson went wrong.

What are the metrics?

In my 2000 article I highlighted the need for better data to manage our businesses. It is shameful that companies routinely invest a lot of money in R&D and manufacturing based upon faulty data. With erroneous average sales data, the organ manufacturer built and marketed instruments into improper price points. Accurate data is a product of good communication. When there is a disconnect in the supply chain assumptions will be made.

Who do I compete with?

Home organ manufacturers faced a critical challenge competing with their own used products. From the trade news it seems there are similar challenges in the guitar market. While not a guitar retailer, I am sure there is a balance managing new and previously owned inventory.

In the early 90’s we taught a remote intro keyboard course at a local senior center. We brought a lot of people into the hobby of making music. In the later 90’s the same center started offering computer classes. Those classes quickly overtook music as the most popular. I guess screen time isn’t just for millennials.

Let us learn from other industries

If we believe there is value in selling instruments to new musicians and growing our market, then we can learn a lot from other hobby industries. A review of the metrics for the golf industry shows not just the amount of gear that is sold, but also the participation in golf, as well as the number of courses being built.

Many people play only a few rounds per year, but consider themselves golfers. They talk about golf. They dress in golf attire. They might even spend a fair amount of money on gear, but they don’t golf much. They can buy clubs online, from a big box mass merchant, or at a pro shop / driving range. Each is a viable marketing channel for the club manufacturer, but none is a panacea. Regardless of where they get their clubs the industry is better served if they go golfing. (Even if it’s just burgers and beers at Top Golf.) What are we doing in our businesses that equates to Top Golf?

My October 2000 article was a warning to the organ manufacturers and retailers that the internet would become the great equalizer. It was. My November 2016 article was an attempt to form a think tank of like-minded industry professionals who wanted to improve personally, professionally, and hopefully leave the industry a little better than we found it when we arrived. Certain home organ wholesalers mistakenly assumed I was trying “to kill the business.” It takes a lot of chutzpah to watch a market segment shrink from 20,000 units a year to 2,000 and treat your dealer network like it’s the heyday. That is the arrogance of complacency.

originally published in MMR Magazine December 2018