Music Business

Sales Of Recording Gear Soaring During COVID-19. Just Ask Sweetwater CEO

Concerts may be cancelled, but that doesn’t people have stopped making music. In fact, the reverse seems to be true, with sales of recording gear spiking in the wake of the recent pandemic. Here, George Howard explores this recent purchasing spree.

Guest post by George Howard. This article originally appeared on Forbes

“We happen to sell music instruments, but we’re in the business of fulfilling people’s dreams.” — Chuck Surack, CEO and Founder of Sweetwater

One of the ways I demonstrate the models my consulting company has devised is to ask clients a simple question: “Why do music instruments stores have mirrors?” The answer, of course, is that when someone buys a guitar, they are not only buying a piece of wood with metal strings, but also a tool to help them become a more idealized version of themselves. Thus, how they look holding the guitar is — to a certain degree — as important as how the guitar sounds. When holding their guitar, they are gazing into what we at GHS refer to as the Mirror of Desire.

The clarity of the image reflected back at a customer is what separates successful firms from also-rans. Brands whose “Mirror” provides the customer with a reflection of themselves attaining a higher level of self actualization while using the brand’s offering tend to be very durable, even in times of economic downturn.

It comes as no huge surprise then that during the COVID-19-imposed quarantine, those who are priviliged enough to have the time and bandwidth to strive for self-actualization are turning to acts of creation and purchasing the tools to achieve this job to be done.

Specifically, Sweetwater — the largest online retailer of musical instruments and pro audio equipment in the United States — has seen Black Friday like sales over these past weeks: Double the number of daily visitors to their site and 5000 new customers a day. This has resulted in a 253% increase in the sale of USB microphones — likely related to the rise in people desiring to create not only music, but also podcasts, and, generally, improve the fidelity of their Zoom calls — and sales of audio recorders, interfaces, and patchbays all up between 23% to 48%.

I spoke with Sweetwater’s CEO and Founder, Chuck Surack to explore not only this rise in sales during this time, but how he has managed to grow Sweetwater — which began as a 4-track recording studio in the back of his VW bus in 1979 — to a now nearly billion dollar company.

We spoke for roughly an hour, but he ultimately answered the question with a single comment: “I’ve spent the last six weeks out in the warehouse packing boxes myself.” Remember, this is the CEO of an approximately billion dollar business…packing boxes.

As an entrepreneur, academic and business operator myself for many decades, there are only three things that I know for certain have a direct relationship to the success (or failure) of a business:

  • A “purpose not product” mantra
  • Staying close to your customers
  • Increasing and maintaining your Net Promoter Score

Mr. Surack’s quote at the top of this article — “We happen to sell music instrument, but we’re in the business of fulfilling people’s dreams” — is the essence of a “Purpose Not Product” approach. This approach allows firms to avoid the perils of commoditization and race-to-the-bottom pricing by engendering fierce loyalty amongst customers to the brand’s Purpose rather than a specific product.

With respect to staying close to customers — and thus avoiding the Innovator’s Dilemma thinking that causes so many leaders to believe they know what their customers want, only to watch a competitor steal their market out from under them — Mr. Surack said of his time spent packing boxes, “When you pack the boxes, you can almost read what’s going through people’s heads based on what they’re ordering; you think: ‘He’s starting a podcast.’”

In terms of increasing and maintaining Net Promoter Score — NPS, in (very) short, is the percentage of customers likely to tell their friends about a product or service — both the longevity of Sweetwater and the continuous growth speak to this. There are now over 5,000 physical music stores across the US and, of course, Amazon AMZN and any number of other online retailers, yet Sweetwater has grown 18% year over year. This only happens when a firm has a high NPS.

One of the ways Sweetwater achieves this high NPS is their key differentiator of pairing every customer with a dedicated “sales engineer.” For a product like recording gear, that can be complicated to operate, this seemingly small distinction clearly makes a huge difference. In the same way that Zappos and others had to overcome customer hesitation related to the inability to try on shoes before they purchased online, Sweetwater had to do the same with respect to customer’s concerns regarding consistent and ongoing support related to the use of complex audio gear. The continuity of having a dedicated sales rep obviates this concern and has become a key unique selling proposition that has raised Sweetwater’s NPS.

This type of support requires both loyal and well-trained employees. To address this, Mr. Surack created Sweetwater University, which provides 300 classes for Sweetwater employees in order to train them in answering customer questions. In terms of employee retention, Mr. Surack — like myself, a proponent of a continuous improvement management philosophy known as Kaizen — states that all of the employees are “empowered to do their job as if they ran the company,” and encourages them not to over-plan, but rather to deploy quickly, learn, refine, and redeploy; this is the essence of Kaizen or the Deming Cycle approach to management.

As I’ve written of late, the job to be done of music is shifting rapidly as a result of COVID-19, and I strongly believe that innovations will emerge during this time, but that these innovations will come — as they always do — not from the mainstream or the incumbents, but from the creators who are hustling and unencumbered by past biases or constructs…and, perhaps, using gear sold and supported by Sweetwater.Follow me on Twitter or LinkedIn. Check out my website

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