A Guest Editorial by Shelley Herman,

Over the past 40 years, as an employee of consumer an professional audio supply houses and manufacturers, I have expressed the thoughts that follow verbally. However, the legal departments of those firms told me that as an employee of a firm engaged in commerce, if I were to write a letter to this effect, or publish it in a magazine, that action could be construed as restraint of trade.

Now that I am an independent consultant, I can say what I want. Just one of those perks of being "self-unemployed"! What I have to say is sensible advice to both dealers and customers in the pro-audio business who would like to remain and thrive. Fast-buck artists and bean counters couldn't care less about the future of this business.

For several years, customers with aggressive purchasing departments have been conducting telephone auctions with dealers to see how little they can pay for each piece of equipment. They send their technical staff to examine a piece of equipment on the local showroom floor. Those with even more arrogance will ask a nearby dealer to send a piece of equipment over for examination, with the dealer spending his money to have it in stock and for shipping. When the customers have decided what they want, they use their 800 number to call everyone in the country and then buy from the mail-order house that has the lowest price. The mail-order house is able to maintain these lower prices because they don't have to stock or display any merchandise, they don't have to hire competent people to service customers, they don't have to maintain a showroom in the "high rent district" and they don't have to have a service department to repair the merchandise if it becomes defective.

On the other hand, some dealers lower their price, trying to buy the loyalty of customers and state that they will "beat any deal in town", only to discover they're indeed making more sales and losing money on every sale!

In my former life as a pro-audio salesman, I discovered it was impossible to get the price low enough. I was once asked to bid on an item for a film studio. Our business with that studio had fallen off to nothing in previous months, and I was determined to find out why. The studio wanted only one, rather inexpensive but esoteric item, whose path I knew I could trace. I bid the item at cost plus five percent, just to see what would happen.

Sure enough, I found out who underbid me, just because this particular company couldn't stand to lose even one sale. At five percent over cost, the seller lost about 18 percent on the deal! Someone had to prove that they were the cheapest house in town. This is stupidity! Everyone's in business to make money. If a dealer stops making a profit, his business will cease to exist.

Each time the price drops a little more, it cheapens the product in the customer's eyes. Every manufacturer spends a lot of time, effort, energy and money to build a reputation of quality, reliability and class. He doesn't want that reputation to be torn to bits by allowing his product to become the industry football.

Stop and recall those product brands that have the best reputations, the products that have the highest resale value. Those companies have sales policies that are careful about the dealer chosen, taking care to se that there are not too many dealers in any one area, and that those that have been selected hire competent sales personnel, stock sufficient merchandise and aren't known primarily as a lowest-prices-in-town establishment.

Many businesses that buy or sell pro-audio equipment are being operated by managers who are completely bottom-line oriented, shortsighted and perhaps only in this business as a stepping stone to another career. They don't know, or perhaps don't care, what happens to this business in the next decade, only what the profit and loss statement says about the last quarter! They will probably be in some other business as a "professional manager" by then!

Today, consumer stereo equipment is sold in discount houses by order takers (I won't malign the sales profession by calling them salesmen) who haven't the vaguest notion of how the equipment works, or even how to hook it together. It wasn't always that way. Twenty-five years ago, hi-fi dealers were small entrepreneurs, just as pro-audio dealers are today. They hired competent salesmen who knew the equipment, could explain how to install it and even go to the customers' home and hook it up. Now, the manufacturers can just sit back and allow the dealers to beat each other to death, because another dealer is just around the corner.

However, in the pro-sound industry, that option is not available. The business is too small to support the mass-marketing techniques of hi-fi. The manufacturers must keep their dealers in business as it takes a lot of time, effort and money to establish a new dealer. Each time a dealer goes out of business, the manufacturer is sure to suffer a financial loss. By the way, don't think that one dealer can drive everyone out of the business and be "the only game in town". That's been tried and doesn't work. Single dealerships certainly are not to the customers advantage. If the dealer is successful and has the market all to himself, he can charge whatever price he wants.

If he wants to take a month to deliver or service a piece, where else is the customer going to go?

For purchasers who conduct these low-ball auctions, imagine what will be lost if they continue to do business this way. In the short run, they may save a few percent on the purchase price of the item, but where will they go when the item needs repair? Who will they call when they need help in connection or operation? Have they got the effrontery to ask the dealer they just bypassed for a half a percent to tell them how to hook it up? They probably do! The next time these purchasers call that same dealer and ask him to send over the latest toy, if he's polite, he'll decline. Most will just tell them where to go.

Pro-audio is a small industry, probably fewer than 30,000 people in the whole country, and anyone who wants to make it their lifetime career will always have to deal with the same people. These relationships are not the same as buying or selling home appliances, but are professional relationships that businesses depend on for survival. Bridges cannot be burned in an industry this small.

It's time for us to start treating each other like ladies and gentlemen and conduct our business as a profession, not a swap meet!