In the Key of Marketing

Is it Time to Reconsider Your Rent/Buy Relationships?

[fa icon="calendar"] Apr 10, 2018 10:00:00 AM / by Matt Jacoby

Is it Time to Reconsider Your Rent/Buy Relationships?

In a music retail environment with aggressive competition, many companies are rethinking their traditional strategies for renting and selling instruments. The past 5 years have been especially brutal for U.S. brick-and-mortar music retailers, which have lost about 2.4% of their business to online sellers and worldwide imports.

How can music retailers stand out from the crowd and improve the bottom line? The answer lies in relationship building with existing and potential customers. Here are some things to think about.

 

Courting and Keeping Renters

Which would you rather have: a music instrument buyer, or a rental customer? Traditionally, most music retailers would prefer buyers. After all, they tend to be serious, loyal musicians with lot of money to spend. Right?


Not so fast. Rental relationships are actually better for music retailers in the long term. While a beginner’s violin might cost somewhere between $200 and $500 to purchase, a rental agreement for a child’s violin typically brings in $20 to $40 per month. Within a year’s time, a rental customer can become more valuable than a buyer, at least in pure dollar terms.


In terms of customer loyalty, renters also offer more opportunity. An instrument buyer might only consider a new purchase every few years, so they’ll enter your store infrequently unless you give them a reason to come more often.


But a renter usually re-ups a contract repeatedly. Each renewal is another point of contact for your company. Renters also tend to be less knowledgeable about their instruments and visit music stores more often for advice and repairs.

The key for music retailers - and it’s not an easy task - is to make renting a pleasure. For the customer, buying is intimidating but exhilarating. Renting, on the other hand, usually feels like an unpleasant second choice to buying. It’s time to find new ways to freshen up the rental experience.

 

4 New Approaches to Rental Customer Relationships

Approach #1: Rental Credits— Rent-to-buy plans, which are widespread in the music retail industry, put rental money - or a portion of it - toward an eventual purchase. It’s time for a fresh twist on this classic concept, to add more excitement to the experience.

Email your renters monthly with their exact rental credit amount. Give ideas for things they could use their credit on, like repairs, upgrades, sheet music, and more. This encourages frequent trips to the shop and lifelong relationships with every rental customer.

 

Approach #2: Better Loyalty Programs — It’s a shame that so many loyalty programs actually have the opposite of the intended effect. Instead of making customers feel more welcome, they often make them feel irritated and put off.

Best Buy, for example, received heavy criticism several years ago for a rewards program intended to attract electronics buyers. Advertised as free, the program actually charged a fee for participation. Customers were seeing savings of $5 on a $250 purchase. What a letdown.

Music retailers, unfortunately, often follow the same thinking. Their loyalty programs feel like exclusive clubs without major rewards. And for renters, it feels like they’re not real musicians unless they buy an instrument.

Try offering a true rental-focused rewards program, with a decreasing scale of fees based on months/years of renting. For your retail shop this shouldn’t be a loss, but an opportunity for better relationships and repeat business.

Instead of simply decreasing the rental fee over time, offer to put the $25 savings toward something in the shop, like strings or sheet music. The result is both more rental loyalty and more merchandise sales.

 

Approach #3: Welcome Online Rentals— So far, most traditional music shops still don’t offer online rentals. But they should, according to the National Association of Music Merchants (NAMM). While retailers prefer that people come to the store, but the reality is that about one-third just never will.

In fact, during a 2017 NAMM panel discussion, Peter Sides of Robert M. Sides Family Music Centers said 29% of their rental sales are now done completely online. His family music business might have initially been skeptical about online sales, but now they’re a major part of the company’s long-term strategy.

 

Approach #4: Explore Online and In-Store Events— School instrument rental night, where local music retailers gather to attract new renters, happens at almost every U.S. school. But many parents don’t attend these events due to time and scheduling issues. Instead, move these events online. Offer limited-time deals and custom promo codes by school.

Play dates are another innovative concept in music rental. Bring private instructors and teachers to your location, and set up stations to try out instruments. Advertise the event to local parents, grandparents, beginners, bands, and educators. Music shops that make the effort to reach out to the community can see a significant increase in event-related rentals.

For more helpful tips like these, download our ebook How To Reach New Music Retail Audiences. It’s packed with tips for music retailers in search of new customers and revenue.

 

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Topics: Strategy, Music Merchant Marketing

Matt Jacoby

Written by Matt Jacoby

Matt is the Chief Percussion Officer and VP of Cadence Strategy at Octave Media. When he's not helping music merchants develop an automated system to increase website sales, he enjoys spending time with his wife and two little men.