Pure Monstrosity re: Monster tm cables

NEW YORK - TO ENCOURAGE audio salesmen to push its costly stereo cables, 12 times a year Monster Cable flies a dozen or so top producers from stores around the country to all-expenses-paid weekends at places like the Napa Valley, Hawaii and Germany.

Founder, chairman and sole owner Noel Lee even lets the star salespeople zoom around in his 13 sports cars, including a $200,000 Ferrari.

Lee needs good salespeople because his product requires lots and lots of selling. Buy a $400 stereo from the Good Guys in California and chances are you'll also walk out with $50 worth of Monster cables. Buy a $1,000 Marantz amplifier from Ken Crane's Home Entertainment in California and you'll get sold on a $100 connecting cable.

Do you really need that fancy wiring? That depends on how well you hear. Some say heavy-gauge, rubber-coated lamp wire at 25 cents per foot affords nearly as much fidelity for audio signals as the gold-tipped, electromagnetically shielded cable Lee sells for between $3 and $125 per foot. Chances are most will never tell the difference. In short, it is a product where most of the value is in the mind of the buyer. Thus, Lee lavishes attention on the people who move his goods.

Unlike Kimber Kable and Straight Wire, which do minimal sales staff training and rely almost exclusively on print advertising, Monster Cable puts $13 million a year, 15% of sales, into training and incentive programs. These are aimed at convincing store owners and appliance salesmen that it pays them to push Lee's products.

Salespeople get fancy trips. Store owners get fancy markups. Most of the customers, after all, come to the store armed with competing price quots on the CD changers and the amplifiers. The wires, in contrast, are an afterthought and don't have to be competitively priced. Monster's cables typically yield a 45% gross margin, while the more visible audio and video components hover around 30%.

Cables are to a stereo store what undercoating is to a car dealer. At Ken Crane's, a chain of eight stores based in Hawthorne, Calif., Monster accounts for 2% of retail sales volume but 30% of gross profit.

Lee, a short, crisp 50-year-old with a mechanical engineering degree from California Polytechnic State University, started this firm in 1977.

He's since built it to expected sales of $90 million for 1998, more volume than almost all of Monster's competitors combined. Lee probably nets 10% pretax.

The huge sales and training budget covers more than junkets for the retailers. Sales personnel are taught things like this: Cheap cables pick up electronic noise from telephones, televisions, hair dryers or the audio equipment itself. Premium cables deliver more signal. What they don't say is that you can solve some of the interference problem by draping your wires away from sources of interference.

After Lee gets through training a store's staff, no customer can leave the store without becoming cable-conscious. In a Good Guys shop near San Francisco, Monster cables visibly hook up every active product display. The Monster name is printed on canopies above the sales racks, and its packages are lined up like invading army troops on the shelves.

Every month Lee sends out the numbers to each store that agrees to his aggressive sales strategy, tracking the performance of each salesman and a store's overall performance rank among competing retailers. The rankings are based not on dollar volume but on the percentage of customers who go out of the store with a Monster product. It's from this list Lee selects the winners of his all-expenses-paid weekends.

Early in the program, one Midwest salesman almost totaled a Ferrari by driving it off a cliff, but was saved from the Pacific Ocean by construction netting. For Lee, it was just another cost of doing business.

It takes sizzle to sell sizzle.

(from Forbes Magazine)