Cash For Clunkers - Meet The AV Business

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Today my gardener, Alfredo, showed up in the morning in a brand new, bright blue Toyota truck. I am not sure what was gleaming more - Alfredo's proud smile or the wax job on his new ride. Alfredo and his family are possibly the hardest working people I know. Seven days a week, they work and always with a joke or a smile. Right before he left my house, I asked him if he used the federal "cash for clunkers" program to buy the car and he pointed his thumb sky high. His old truck was a nightmare. Dinged, dented, rarely ever washed and taken south of the border plenty of times on trips to Alfredo's ranch in Oaxaca, Mexico. Fuel efficiency wasn't the old truck's best attribute and the dozens of sharpened garden tools resting dangerously on the dashboard could (in the words of Dirty Harry) "take a man's head clean off" in the event of just a quick stop in traffic. A new truck was a good idea for a number of strong reasons.

After Alfredo left today, I thought back to my days at Cello Music and Film Los Angeles working with Mark Levinson and Joe Cali and our cash for clunkers program. I am about to really date myself here but this was an era before eBay, Audiogon and even the commercial Internet yet we had our own very effective trade-in program that back then worked like a charm. Clients who owned Krell, Mark Levinson, Audio Research, THEIL, Wilson Audio, Goldmund and or any number of other A-list components would get anywhere from 75 to 100 percent of their original invoice price back towards a retail Cello purchase back in the day. We had a very kind, hippie buddy named Joel who would drive over and pick up gear for which he would then resell mostly to Asia. Note: these were the days before companies played tricks with computers and the AC voltage so it wasn't that hard to send a container in a ship to Japan loaded with audiophile gear. He made money. We made money and the client left happy. It was a win-win-win.

Our cash for clunkers program at Cello made people feel good about their other audiophile purchases and even better about their Cello purchases. If they bought Cello at retail prices they also got a very long warranty as well as a one-year 100 percent trade-up program for items of higher value. If you bought a $7,500 Cello Duet 350 amp (I still love that amp) but wanted Cello Performance II Class-A monoblock amps - you got your $7,500 back towards the purchase. No questions asked. No problems. Our Hollywood as well as our International clients simply loved this program. It built incredible brand and retailer loyalty. It made their lives easier and it made it more simple for me to keep selling to clients who were inclined to buy. Hell, I even sold MartinLogan in that store then and did the same trade up program there and I bet we took 80 percent of the MartinLogans we sold back for much more expensive Cello speakers at one point or another. The program just worked.

Giving people a fair trade up program works as proven by the federal "cash for clunkers" program. In a mere four days Americans dumped enough crappy-ass, fuel-sucking cars and trucks that we blasted through $1,000,000,000 in bailout money. Congress smartly coughed up another $2,000,000,000 from the TARP program so people like Alfredo could get in on buying a new ride. CNN is reporting that in some parts of the country that dealers are actually running out of cars to sell. That's very good news for a change. News that will positively effect the economy in the months to come. It will put people back to work and hopefully will be worth the stimulus money because God knows we are borrowing like mad to rekindle this economy - and fast. I think its working. In fact I know its working.

Two weekends ago I was in a very high end dealer in Las Vegas and they like a GM or Ford dealer are loaded with inventory with nobody to buy it. They aren't going out of business as they are well funded but in "the empty city" (as they are calling the foreclosure-rich town of Las Vegas these days) there just aren't enough people buying what they have to sell. Want a last year's 50 inch Runco at $0.15 on the dollar - call my friend Craig Pease? Want a $500,000 pair of CAT speakers painted in Ferrari Rosa Forte from a demo at Bellagio for truly pennies on the dollar - call Craig. Theta Casablanca? Runco projectors? Revel GEM speakers, Lexicon universal DVD-Audio/SACD players, Lexicon preamps, Krell stereo power amps, Krell CD players and more. Just call Craig because he's moving it all to get ready for the future. A 1080p, 3D, high definition wireless future - and he needs new gear in the showroom with its 11 active demonstration rooms. If you think about it, its not that different that a GM dealer blowing out cars on EBay other than the fact that the AV business isn't getting a government bailout but if you had to hear the lip service that AV manufacturers give towards "dealer support" you'd see how you could get an extra five percent off a nice big new order to help offset the trade-in costs. Everybody wins and everything moves forward for the first time in over a year in the world of specialty audio-video.

What is selling at Creative Home Theatre (I hate it when companies spell home theater wrong - maybe they could open a home theater shoppe or move to England!!!!) is Anthem AV preamps, 1080p plasmas, Paradigm Signature speakers and Transparent cables. Why? The value is there and if you want to make a big enough purchase - Craig will pay you fairly for your trade which is rare these days. Not everybody sells well on eBay. Not everybody wants to go on Audiogon.com and even for those who do - the prices are lower than ever on used gear yet in the world of home theater there are new Blu-ray players, AV preamps with Dolby TrueHD and DTS Master Audio and other HD goodies that consumers really want. Why not make your old AV receiver somebody else's problem while getting a bad-ass new one from Integra or an AV preamp from Anthem of Classe?

Just like with Alfredo and his truck - when the deal is good enough - people will take action. Audiophile dealers and home theater stores should apply the lessons from aggressive trade in programs like "Cash For Clunkers", the California incentive for hybrid cars from a few years ago or even my old Cello example. Of course AV dealers aren't funded by TARP money but they can still over-pay for a trade-in product in the right deal - especially if their vendors really mean it when they go on and on about "dealer support". The good news is that if your local dealer won't give you a killer trade-in I bet Craig will. He might also set you up with a suite at The Mandalay Bay and get you the VIP treatment on a little Vegas getaway. While your wife is off playing Wheel of Fortune slots - you can get your system completely tuned up while getting a top dollar trade in as well as a fair deal. Welcome to the new economy.



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