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Adopting Insurance Methods 



Lumber and life insurance are not very closely related, strictly 

 speaking, but both of them are regarded by members of those 

 callings as unusually hard selling jiropositions, statements which 

 as a rule are capable of demonstration. It is for that reason that 

 the recent assertion of a large life insurance agency manager, 

 made in the presence of a member of the hardwood trade, attracted 

 attention. 



"My best customers are the people already on my books," 

 said the life insurance man. "You might think that once a man 

 had purchased insurance protection, he would be permanently out 

 of the market, at least for a long time to come. But, as a matter 

 of fact, we get a large proportion of our 'new business' from our 

 old policyholders, both directly and by means of leads to prospects 

 secured from the people we are already serving." 



The hardwood man had to admit that he had no definite system 

 for producing additional business from old customers, although 

 they were regularly solicited, eitlier by mail or through salesmen. 

 And as a matter of fact, he confessed, not a very impressive 

 proportion of his trade was developed from those who had been 

 buying previously, so that it required constant effort in the way 

 of digging up new sources of custom in order to keep the volume 

 of business up to the mark. 



"Your plan is a good one," he conceded, "and I think I'll 

 see how it can be worked in our business. ' ' 



He returned to his office, studied the proposition carefully and 

 then began the institution of a new system, designed simply for 

 the convenience of the selling department, and intended to give 

 information which had not been provided previously. 



Every customer who has dealings with that concern is now 

 made the subject of a card in an index system. It has nothing 

 to do with the bookkeeping or accounting department, but is used 

 exclusively for selling purposes. The record shows the amount of 

 lumber purchased, with the kind and price; the features of the 

 shipment, if any; the treatment of the shipment by the customer, 

 and whether there was any complaint as to the grade or the 

 delivery. In other words, each transaction is skeletonized, so 

 that at any time in the future it is possible to run through the 

 cards and see how business with each customer has been running. 



It was pretty hard to dig up much information as to business 

 more than six or eight months old — that is to say, in building the 

 index scheme entirely afresh. The ledgers and the correspondence 

 files had to be gone through to get all the facts. After the selling 

 file began to assume age and volume, however, it was easy to 

 maintain, and was of constantly increasing value. 



The system was indexed in three ways: first as to the names 

 of customers; next as to their location, and third as to the nature 

 of the purchases. In the latter division the "mixed car" file 

 proved particularly valuable, as reference to it enabled the con- 

 cern to move a lot of odds and ends of stock which were not 

 available for carload business. For example, the dealer found 

 that he had a lot of stock of that kind on his hands, some oak, 

 some ash, some poplar and some chestnut, and while there was a 

 good deal of it in the aggregate, it was badly broken as to 

 dimensions, grades and lengths. 



He referred to his "mixed car" file, which, as might have 

 been expected, consisted largely of planing-mill owners, who usu- 

 ally require a variegated shipment. By writing a dozen individual 

 and personal letters to people of this kind, who had bought lumber 

 previously and had been satisfied with it, and explaining that 

 the stock on hand was practically identical with the lumber 

 shipped previously, he was able to get several handsome orders 

 and to clean up his broken stocks in rapid-fire order. Furthermore, 

 he had the satisfaction of knowing that the lumber was well sold, 

 that it went to people who needed it, and that he would not have 

 to hold it in his yard awaiting sufficient receipts of the same kind 

 to make up sufficient quantities to sell in carload lots. 



In this connection it is probably true that the average hardwood 



—32— 



man is inclined to neglect the planing mill proprietor, chiefly be- 

 cause the latter buys only small lots of any one kind of lumber. 

 His business in the aggregate is heavy, and even though he may 

 be cutting up more pine and other soft woods than he does oak, 

 his acquaintance is worth cultivating, and his business worth 

 going after, particularly when, as suggested, his plant may be 

 the outlet for stock which could hardly be handled to advantage 

 in any other way. 



The advantage of the index developed frequently when a car 

 was rejected for one reason or another. Ordinarily a dealer resorts 

 to his memory to locate someone who is likely to be in the market 

 for lumber of that character, or else refers to some business 

 directory for suggestions. Most of the names secured in the 

 latter are usually of people who are comjjarative strangers, in a 

 business sense. Thus the advantage of being able to look up in 

 the house file the names of actual customers who were close at 

 hand, and could take over the lumber without much difficulty, was 

 considerable. 



The dealer who used the plan said that he often found frank- 

 ness to be the best possible plan in getting rid of a car which 

 had been turned down. 



"Frequently," he explained, "I do not even have to call in 

 a salesman, who may be busy several hundred miles away, to 

 move the car. I have often, after consulting the file, done a little 

 long distance telephoning, talking with people with whom I had 

 done business before. I have explained the delivery of the car, 

 and have frankly stated that the customer to whom it was billed 

 had not been able to use it. 



" 'Now, I can let you have this lumber at a low price in order 

 to avoid the expense of shipping it to some other point,' I suggest. 

 'If you can use it, it's a bargain.' 



"And usually I land the order, giving the customer a concession 

 in the price, and at the same time time saving mone.y which would 

 have been spent in railroad fare and hotel bills, car service 

 charges and other expenses which accrue when you have a high- 

 priced road man fooling around with a rejected car and trying 

 to find a buyer for it." 



A feature which this concern work'fed out to advantage was the 

 matter of freight charges, as well as the freight rate, applying on 

 a given shipment. Thus, when a customer was offered another 

 chance to buy, it was not with the statement, ' ' This car will cost 

 you $30 a thousand, f. o. b. our station," but, "We can deliver 

 you this lumber at $38 a thousand," or whatever the freight rate 

 happened to show was the correct price. "While variations in 

 weight caused the estimates to alter, one way or the other, in 

 a few instances, it was not sufficient to affect the sale, and the 

 buyer appreciated the convenience of iiurchasing the stock -on a 

 delivered price. He wasn't put to the mental discomfort of having 

 to figure the rate for himself, and he knew immediately whether 

 the delivered price was one that would make the purchase worth 

 while. This may seem a microscopic point, but it is just another 

 one of those little sales helps which combine to land business. 



One of the big things to be considered in operating a system 

 of this kind is that while staple items are comparatively easy to 

 sell, trouble comes in getting rid of the odd assortments. The 

 expense of doing business is reduced if these special lots, for 

 which there is a consumer somewhere but not everywhere, can 

 be moved expeditiously. This means, then, that the man who 

 can use a certain kind of lumber must be located, and that he 

 must be kept in touch with. If the lumberman goes to him each' 

 time with an offering of stock which the consumer can use, and 

 which the lumberman knows he can use, from past experience, 

 there ought not to be much friction generated in accomplishing 

 a sale. Both people concerned are benefited; whereas if the lum- 

 berman adopts either of the alternatives of allowing the odd stufif 

 to pile up on the yard or attempting to sell it to the general 



