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Author: David

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Did you know that 20% of your carpeting is likely to get 80% of the wear? If you did, you’re probably familiar with what’s commonly known as the Pareto Principle.

It’s named after the Italian economist Vilfredo Pareto, who in 1897 found a consistent mathematical relationship between the proportion of people living in England and the amount of income or wealth this group enjoyed. He found that 20% of the population enjoyed 80% of the wealth!

This principle has since been expanded to this:

The minority of causes, inputs or effort usually lead to a majority of results, outputs or rewards.

In other words, 80% of what you achieve comes from 20% of the time spent. And 20% of customers produce 80% of the revenue; 80% of what we accomplish comes from 20% of our time and so on.

The reason it’s so valuable is that it’s counterintuitive. It’s not what we expect.

It’s strange how business seems to be governed my unwritten rules. I’ve recently discovered one of my own.

I’ve recently checked my database of unconverted leads for the past few months. That is, prospects who have asked for an in-home quotation but have not gone ahead. It’s brought up an unusual principle that I’ve called ‘The Principle of the Inverse Appointment Time’

I discovered that in the last few months I have only eight in-home quotes that have not turned into jobs. Of those eight, I noticed a similarity that I’ve turned into this rule:

“The more impatient they are to get a quote, the least intention they have of getting the job done.”

Of those eight quotes, SIX told me there were in a hurry to have the work done and I needed to provide a quote as soon as possible. In nearly all of these cases, I changed my schedule to provide a quote quickly. Once in the home, it seemed that the urgency had dissipated.

Now, we always qualify our prospects. In fact we try to DISQUALIFY them to be absolutely sure that we are not wasting our time with people who don’t want our level of service or can’t afford it. And yet six have fallen through the net! (Interestingly that’s 75% - almost following the 80/20 rule).

There’s always going to be time wasted with prospects that will not go ahead. So how can this be kept to a minimum? Well, now I follow the rule: “The more impatient they are to get a quote the least intention they have of getting the job done.”

I only want to visit homeowners who are pre-interested, pre-qualified, pre-educated and pre-disposed to using me. If they’re NOT, I spend time to make sure they are…before I visit.

If they want me to quote in a hurry, I direct them to my website and ask them to come back to me if they are (pre)interested (and now pre-educated). This also is counterintuitive. They expect me to drop everything and come round immediately. Do I lose a few? Probably. But I sure save a lot of time in relation to the inconvenience and frustration caused.

Probably around 80%.

 

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The beauty of direct response marketing is that it produces a result. Your campaign is either profitable or it’s not. You know exactly whether a mailshot or advert has worked.

But do you test? That is, test one advert with a different headline or offer against another.

Just recently I decided to run an unusual test with an offer to my existing clients.

A while ago, I sent an offer to 750 of my newsletter subscribers. The offer was that there was going to be a price increase but if they booked now (even if the job was a few months ahead), they could benefit from the current price.

I had quite a number of responses.

Now, what if I sent a different offer to some of those who hadn't responded? Well, surely they had all seen the offer of the price increase and those that wanted carpets cleaning took advantage?

Just two weeks later I sent a different (inferior) offer on a postcard to just 49 of those that hadn't responded. The result? A further FOUR jobs booked in with a total value of £784.30 at the new increased price.  And all this for a total outlay of under £30!  That’s a return on investment of over 25 to 1.

Imagine that. Customers who have already received a better offer just two weeks earlier paid MORE money to have their carpets cleaned.

Did I think it would work? Not really. But I'm glad that I tested it.

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I recently needed a new tyre for my car. As it was only the spare, I decided to save some money and buy a part-worn tyre. After all, I may never use it. I wanted a Michelin preferably as they last longer. They cost around £90 but only £21 for part-worn which would do the job.

Here’s my phone conversation with the local part-worn tyre dealer:

Me: “Have you got a part worn 205/55/16?”

Him: “Oh yeah, loads of them”

Me; “Have you got something decent, like a Michelin?”

Him: “Dunno mate. Can’t really look” (sounding disinterested)

Me: “OK. So is it best that I come up?”

Him: “Yeah” (sounding like he’s busy with something else)

I decide to go to the dealer immediately. I enter the workshop. Plenty of staff ignore me. Finally a man approaches and asks “Are you being seen to?” He tells someone to see to me.

A man approaches with his mobile phone in hand and walks past me. I ask him if it was him he was talking to? Apparently it was.

I ask him if he has a part worn tyre preferably a good make like a Michelin. He asks the boss who says while walking away “Dunno mate… we’ve got loads up there but haven’t had a chance to sort them yet? You need to come back later”

I ask him what he’s got that’s decent? He replies “I think there’s a couple of Goodyears up there.” We walk to the back of the workshop. “There’s one here and here. But these haven’t been tested yet so you can’t have one”

I ask him what he has actually got. He walks through a mound of dirty tyres to find THREE tyres my size. I ask him what they’re like. “Well, you’d be better coming back later” he replies.

With that I walk out.

I return two days later as I was in the area. I walk into the workshop to find the staff all seemingly busy. The same man comes out towards me and…walks right past without even a look. Doesn’t even say “I’ll be with you in a minute.” I decide that I’ve had enough and leave.

Now why can they get away with an attitude and service like this?

Because of the business they are in… the CHEAPEST PRICE COMMODITY business! After all, a Michelin is a Michelin is a Michelin! And they are the cheapest, because they are selling part-worn tyres. If I want one at this price, there’s nowhere else to go. I have to stand in line and accept it.

Now… do you imagine that in our industry customers are treated any differently? There are people who have to tolerate the same kind of service because all they want to spend is £20 cleaning their front room carpet. And have you heard of the ‘half-price’ cleaners actually NOT turning up at all! Usually giving the customer an excuse that their van has broken down, when really they couldn’t get enough jobs in the area to make it viable. That’s what people have to put up with when they want the cheapest price.

But there are plenty of people who will not accept this and will gladly pay for a higher standard of service.

That’s why you don’t want to be in the price business or the commodity business. As it happens, I was not a prospect for new tyres in this category. I only wanted a part worn tyre for around £20 as a spare. If I wanted the ‘cheapest price commodity’ I had to put up with poor service. But if I wanted the ‘quality and service’ of a new Michelin tyre, I wouldn’t have stood for all of this. And I’m pretty sure that the company would be out of business very quickly.

The lesson for us: The worst thing you could do is to try to compete on price with a business like this. You simply don’t have to. It’s sometimes very difficult for carpet cleaners to realise that there are customers you don’t want.

There are different markets in our industry. Just like Kia, Ford and Mercedes buyers. They have different values, wants and priorities. There are people who want to pay £20 for a room and are prepared to put up with service like the above because they only want to pay £20. But there are also many people who want high quality and are prepared to pay for it. And would not tolerate bad service, no matter how cheap it is.

Target these and you don’t need to worry about half price carpet cleaners.

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In the amped-up war of commerce and 75-cent pizza on 6th Avenue in Midtown, a perilous moment is approaching. Circumstances suggest that ravenous New Yorkers might soon witness 50-cent pizza, 25-cent pizza or yes, free pizza.

So began an article in the New York Times of 30th March in 2012.

But what has this got to do with carpet cleaners? Well, there’s a very important lesson about pricing here. One that transfers very nicely to our business.

Apparently a price war had developed between competing pizza parlours in New York. A year earlier, pizza was selling for $1.50 a slice at 6th Avenue Pizza. Then a Joey Pepperoni’s Pizza opened nearby offering pizza for $1. So 6th Avenue Pizza dropped its price to $1 too.

All was good until October, when a third player entered the drama.

A 2 Bros. Pizza, part of an enlarging New York chain of 11 shops that sell slices for a dollar, opened virtually next door to 6th Avenue Pizza.

Price stability at a dollar persisted until mid March when both 2 Bros. and 6th Avenue Pizza began selling pizza for the eye-catching price of 75 cents a slice!

The primary owner of 6th Avenue Pizza is Ramanlal Patel 68, who also has a few businesses in Atlanta and holds property in India. His nephew, Bravin Patel 45, oversees the establishment. He and his manager, Mohid Kumar 49, were there the other day complaining about 75-cent pizza. They said that 2 Bros. was trying to drive them out of business, that 2 Bros. unprovoked, slashed the price to 75 cents forcing them to follow and that the property in India had to be sold to keep the place going. “We’re angry,” Bravin Patel said. Mr. Kumar said he was contemplating checking with a lawyer to see if there might be a city law that somehow prohibits a business from selling pizza at outlandishly cheap prices.

At the St. Marks Place office of 2 Bros., its owners, the Halali brothers Eli, 29, and Oren, 27, say they had simply matched the price of 6th Avenue Pizza at 75 cents, and that’s where everything sits. “We don’t sell pizza at 75 cents,” Eli Halali said. “But if they think they’re going to sit next to us and sell at 75 cents, they've got another think coming.”

It appears that 6th Avenue Pizza lowered their prices first. But why?

“He was taking away our customers,” Mr. Kumar said. “How were we going to pay our rent?”

For his part, Eli Halali made it clear that 75 cents was a temporary price point. He said he could not make money at that level and eventually would return to $1. He said that if 6th Avenue Pizza went back to $1 he would as well.

If it didn't he said, it had better watch out.

His father, Joshua Halali, who acts as a consultant to 2 Bros. said, “I suggested to my children to go to 50 cents.” Oren Halali said, “We might go to free pizza soon.”

Eli Halali said: “We have enough power to wait them out. They’re not going to make a fool of us.”

Meanwhile, Mr. Patel remains intransigent. “We’re going lower.”

“We may go to 50 cents,” Mr. Kumar said. Of his next-door rival, he said: “I want to hit him. I want to beat him.”

As for Joey Pepperoni’s, Met Zade, one of the owners, said: “I can tell you we’re absolutely not dropping our price. For $1 a slice, you can still make a profit. For $1, an owner can still sit down and eat. At 75 cents, you’d be a mouse on a wheel.”

While the pizza parlours insult one another, the eating public couldn't be happier.

What are the clear lessons for us as carpet cleaners?

Many, many carpet cleaners think that customers are only concerned about price. And that the only way to win business is to be the cheapest. In the long term, the lowest price seldom wins. There’s always someone who will come in cheaper.

Look at some of the comments above:

  • “For $1 a slice, you can still make a profit. At 75 cents, you’d be a mouse on a wheel.”
  • “I suggested to … go to 50 cents.” “We might go to free pizza soon.”
  • “He was taking away our customers.”
  • “the property in India had to be sold to keep the place going”

Isn't that the situation with so many carpet cleaners? …slowly going broke but not realizing it. Business is all about margins and profit. No profit = no business!

The solution? Find and keep customers who are not concerned with only the cheapest price! Seek out high-quality seekers, maintain a relationship with them…and charge a premium price for extraordinary service.

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I’m always interested in seeing how successful businesses market themselves to see if there’s any lessons to be learned. I’ve usually found that the larger the organisation, the worse the marketing and customer experience. However, a while ago I found an exception.

I went to the Yucatan Peninsular in Mexico for two weeks, staying at a fairly large RIU hotel. I have to say, I was very impressed with this hotel chain and how even the little things that affect customer satisfaction are not left to chance.

So let me relate just four of the ‘lessons’ I learned.

Firstly, I was amazed at the All-Inclusive restaurant. No queues. No waiting for drinks. Everything running smoothly. How could this be, I wondered?

So I took the free ‘Kitchen Tour’ on Sunday at 12pm. Now this really should be called ‘The Free Marketing, Advertising and Branding Tour’ because that’s really what it was. It’s purpose was to show us exactly how RIU have the customers' experience in mind. The end result was to change or improve our perception of the RIU brand (which of course is all in OUR minds). Hopefully we’d choose RIU next time.

The tour was carefully choreographed. They saw exactly what they wanted us to see in the order in which they wanted us to see it. But a key word that was repeatedly used was “Organisation” (in FIVE different languages!). It couldn’t be stressed enough. They wanted us to see that customers were happy, not by chance but because they had systems in place that ensured it. I was really impressed. I had no idea. Everything done at a set time and in a set way.

It was explained that they cater for a possibility of 600 hungry guests at 1pm every day. And that one hour later a further few hundred could arrive. And all had to be seated, drinks ordered and delivered and food cooked, ready and waiting immediately. And this they did!

Later, I joined the tour of the next door RIU hotel. This time one that is referred to as a ‘Palace.’ The reality was that it was hoped the next time we would ‘upgrade’ to this hotel. What better way than showing it to us? Again, everything choreographed.

So…the lessons?

Lesson 1: Your customers don’t know what you do unless you tell them. I had no idea that everything behind the scenes was so organised. Nothing left to chance. Customer satisfaction an absolute priority. My view of this large hotel chain has been positively changed.

Now…do your customers know exactly what it is that you do that other cleaners don’t do? Do they know why you vacuum the carpet before you clean them, something that most of your competitors don’t do? Are they aware of how much training you’ve undertaken? Do they know that you are National Carpet Cleaners Association (NCCA in the UK) members and why it’s important?

Lesson 2: The importance of a set way of doing EVERY activity in your business. In other words, to quote Michael Gerber of ‘The E-Myth’ “this is how we do it here.” The customer gets the best experience possible because we’ve worked out what that is and then written it down in our Operations Manual. It’s done that way every time.

Lesson 3: Always up-sell. And demonstrate if possible. What better way to show how carpet protector works than to SHOW it? If you added protector to only 30 percent of jobs… well maybe you could go to the Yucatan Peninsula next year.

Lesson 4: Remember, everything you do affects your BRAND, an over-used buzz word today. But put simply, a brand is a collection of perceptions in the mind of the consumer. So even being just systematic and organised can increase your ‘brand value’ in their minds. In real terms, they are more likely to use you again and refer you!

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I wrote recently about my visit to a local travel agent. It was a lesson in how NOT to sell a holiday. You may recall, amongst other things, the advisor assumed I wouldn’t pay the quoted price and so I was immediately offered a discounted price WITHOUT even asking.

If anyone’s been to Egypt, one thing you can say for sure is that although you may be hassled in the shops, they certainly know how to SELL.

I remember going on a Nile cruise a few years ago and amongst the ‘trips’ was a visit to a perfume factory. By the way, there was no choice about this. It was part of our visit to Karnak temple. There I witnessed a masterclass in selling. Again, there are some good lessons for us as carpet cleaners. Now, this was not just an education in perfume…it was a SALES meeting. Here are four lessons I learned.

1. Use Joint Ventures

Firstly, how did we just happen to end up at the perfume factory? Well, no doubt this was a ‘Joint Venture’. The tour guide would have made an arrangement to ‘deliver’ a coach load of prospective customers to the factory door. And no doubt taken a share of the profits. This is an excellent low cost, no-risk way of getting customers for the factory. There’s no expensive advertising, in fact no work at all other than divvying up the profits at the end. Even if the factory paid as much as 50% of the profit – it’s 50% for them that they wouldn’t have had. And a tremendous incentive for the tour guide! A win-win.

Now, who could give YOU access to their customers for a share of the profits (that they wouldn’t have had!). Ask yourself: Who services the same type of customers as you do? Could you give these customers a preferential offer that would induce them to use you for the first time? Even if you paid a high percentage of the sale to the other business, you would have gained a new customer and made a small profit on the first sale. When they use you again or refer you…there’s a much greater profit.

2. Use a Structured Approach

Nothing was left to chance…an initial ‘trust and rapport’ building cup of herbal tea, passing out order forms at the beginning to ‘assume’ the sale and demonstrations of the products were all clearly scripted.

Are your in-home quotes fully scripted? (I like to use the term ‘choreographed’ – like actors on a stage, nothing happens by chance). For example, are you demonstrating how protector works (tissue in a glass?) not just explaining it? Could you even clean a very small area to show just how soiled the carpet is?

3. Use Education Based Marketing

This is often a very under-used method of persuasion. I was thoroughly educated in the process of perfume making. By the time they had finished, I trusted that they knew what they were doing. I also knew about the ‘extravagant’ mark-up by the well known brands.

Do you educate your customers? You know, the ones who think that all carpet cleaning is the same? For example, do you tell them about the importance of vacuuming first because 79% of soil in a carpet is ‘dry’ and will vacuum out. Educate them as to why this and every other part of your process is so important.

4. Packaging

Yes, they offered three packages (4 bottles in a pack vs 6 vs 8 in a ‘fancy’ box), even throwing in a ‘bonus’ on the most expensive package.

Do you have different packages? If not, at least put together a high-priced top quality package and offer both. There are some customers who just want the BEST and are prepared to pay for it.

Many of my fellow travellers left the factory with boxes of perfume. A testament to a highly efficient, structured, educational, choreographed SALES meeting.

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What a great business we’re in!

Over the past few years, I’ve made my own business a ‘lifestyle’ business. I have no staff (whereas previously I’ve had up to five), work a maximum of three days and take at least four holidays abroad every year. And I don’t ‘phone home’ to check the answerphone every few hours!

All this has been possible by effective marketing. Selling to the ‘right’ customers at the ‘right’ PRICE. And giving them ‘best value’.

So just the other day I thought about booking my first holiday for next year. I checked online to see what sort of price I would have to pay. Then I went into a high street travel agent to see if they could perhaps do a better deal.

The education in ‘pricing’ was invaluable.

There are at least four lessons that easily translate to our business of carpet cleaning.

Here they are:

The lady I spoke to immediately informed me that she was not a sales advisor but in fact was ‘cabin crew’. She was pregnant and so the travel agent was simply making use of her as cheap labour in the shop. After taking note of all my requirements, a total price came up on the computer screen. The very first thing that she did was to immediately say that she could discount the price as it seemed a bit high. As it happens the price was in the region of another quote I had.

LESSON 1. Make sure that everyone involved in selling has some sort of sales training and understands the psychology of the buyer. Otherwise they will react to price exactly as the cabin crew lady did here. And what impression did it give? That I was being overcharged to begin with!

LESSON 2. Don’t capitulate on price. People are buying value NOT price. People don’t buy a Mercedes just to get from A to B. Yet, Mercedes dealers don’t discount to compete with Vauxhall or Ford. There’s always more involved that gives them greater value. I always recommend using a computer program to come up with the costs so that it’s very hard to change the price. Many times my computer has produced a price that I thought the customer would never pay, only to be surprised. Customers can sense if we’re uneasy about our price and will then try to negotiate. I’ve repeatedly found that customers take the view that “the laptop has spoken” when it comes to price and simply accept it as “the price”. Which of course, it is. And of course, if we provide a high quality service target Mercedes customers NOT Ford customers.

LESSON 3. If they want to change the price…you change the package. The price I was originally quoted for was All Inclusive and for a Water Villa over the sea. (Can you guess where I’m going yet?). So…could I drop down to Half Board or have a plain old bungalow by the waters edge instead of over water? If your customers want to change the price, get them to ‘empty the room of all furniture’ for example.

LESSON 4. Don’t discount…add value. Could she have added something to my holiday that costs them very little but has high perceived value to me? For example, how about pre-booked seats on the plane or late check out or something else that costs them very little?

Of course, if your clients are only concerned about price…it may be better to sack them and get clients that will pay more for a quality service. She asked me how much I was expecting to pay. I gave an artificially low price...about a thousand pounds less! (Don’t all buyers do this?) She then tried her best to see how low she could get the price. Instead she should have just ‘sacked’ me.

We mustn't be timid in explaining our prices to prospects. We must be able to confidently justify our charges compared to other cleaners. And do this in a way that our prospects perceive as ‘best value’ for them.

 

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Need a new van? How about some new equipment? With the banks unhelpful at the moment, have you thought about asking your customers to help out? Now, you’re probably thinking…why on earth would total strangers lend me money when they don’t know me?

Well, that’s an interesting question that I put to the test a while ago. I asked my customers for money and they simply sent it. Let me explain.

I had a large tax bill coming up in a month or two. I had the cash available in  the bank but I didn't want to use it for a particular reason that I won't mention here.

So I told this story to my customers and offered them ‘Cleaning Bonds’ at a preferential rate if they were going to have their carpets cleaned later this year. And they sent me hundreds of pounds! They included notes with their cheques…“Hope this helps”…and “Sorry to hear that you are in trouble.” This is the power of ‘Relationship Marketing.’

Some years ago I heard one of the bosses at Tesco’s announce about relationship marketing… “But our customers don’t want a relationship with us!” I beg to differ. I think they do. Not in the “lets have them round to dinner” sort of relationship. But in the matter of trust.

This is particularly important in our business. After all, the checkout girls at Tesco are not in their customers’ bedrooms like we are! Our customers have to have a relationship of trust with us.

So how do we build it?

First of all, it must be genuine. We must genuinely put their interests ahead of our own. Marketer Jay Abraham calls this a Strategy of Pre-Eminence. We would NEVER do anything to them that we wouldn’t want done to ourselves. Including sub-standard work, including ripping them off in any way. We must be their ‘trusted adviser’ in the matter of cleaning their carpets and upholstery.

How does this come about?  Send ‘Thank You’ cards and letters after each job for example. Many years ago when I bought my first mobile phone (you know, the sort that was the size of a small suitcase), as soon as I had signed the contract, the salesman said “Thank you very much” I was staggered. In fact I can still recall how I felt to this day.

Now, why was this so amazing?

Simply this: No-one had ever thanked me for giving them business before. Yet just that simple act had such a profound effect on me that I can still remember it! And I still feel good toward him to this day. This is ‘relationship marketing’. It’s not a sales gimmick but is built on genuine care.

And how about special client offers not available to anyone else? Or regular communication with a monthly newsletter. Not filled with ‘image building puffery’ but genuine information to help your customers that will cause them to bond to you.

All of this builds a genuine relationship with your customers…and who knows when you might need a short-term loan?

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In an earlier post I related my experience with a carpet cleaner who just wanted more people to phone him. But you may recall that he was giving prospects no good reason to call him rather than his competitors. In other words, he had no ‘Unique Selling Proposition’ as it’s called. Or as I sometimes prefer to call it a ‘Unique Buying Advantage.’

It’s very difficult for carpet cleaners to have an objective look at their own businesses and see what the customer sees. So I thought it would be helpful to consider myself as the prospect for a change.

Here’s my recent experience trying to find an optician for an eye test:

Now my perception of an eye test is very similar to my prospective clients’ view of carpet cleaning. ie: it’s all the same. So I wondered…why should I choose one optician over another?

I thought the best thing to do is to ask them. So I visited three of my local opticians, asked about their charges and then the all-important question….”Why should I come to you rather than a competitor?

The answers I received were nothing short of amazing!. Here’s the gist of them. While reading this, think of what’s going through the mind of someone calling YOU to ask about your service. Here are the three questions I asked each of them. YOUR prospects are also thinking these questions even if they don’t ask them.

Are all eye tests (carpet cleaners) the same?

Why should I use you?

Do you do anything that others don’t do?

 

Optician 1. Cost £27.50. 

Why should I use you… “because we’re great” (yes that really was their answer!). They went on to explain that other optician’s eye tests lasted “five minutes” and that “we are more thorough blah blah blah”

Optician 2. £20

In answer to the question: Why should I use you…I was told “I don’t know what the opticians do” and unbelievably…”some of our opticians are better and more thorough”

The young lady then asked me what glasses I might be interested in before even knowing if I needed them. Prescription BFORE the diagnosis!  I was finally given the helpful advice that I'm sure would have her employer cringing... “It’s your choice where you go”. Hardly a Selling Proposition let alone 'Unique'.

Optician 3. Cost £25 plus £20 for a Retinal Scan

Why should I choose you?…”We’re like independent grocer compared to Tesco”  (I didn’t think it appropriate to tell her I happen to like Tesco but still NO compelling reason to choose her). But at last…a difference…“we charge £20 for a retinal scan but it’s larger than our competitors so you can see more detail”. She handed me a leaflet about it from the reception desk but then realised it was out of date. So she continued…“Our test is more extensive…we spend longer on the eye test...”

Now which of these would you have chosen? Maybe the lowest price? After all, they’re all the SAME aren’t they? Or should I choose the one who gave a retinal scan that others didn’t? But is it really important? Remember a confused mind always says NO! And that’s what I’ve said up till today…“NO!”. I’ve done nothing about my eye test even though I’m what a salesman would call a “hot prospect.” No-one can give me a good reason to choose them. And remember…fear of making a mistake is also very powerful at putting off a decision.

Lesson for us: Make sure you are able to give prospects a compelling reason to discriminate in your favour. Most of the opticians simply said that they are “more thorough” but weren’t able to ‘dimensionalize’ this. There must be a specific reason to choose YOU, not just “good service” or “we’re more thorough.” It must also be different from all your competitors.

So list everything you do that’s different to your competitors. Make sure it’s important to the marketplace (in other words customers really do want it). And then put it into your sales pitch, on your web-site, business card and everything that your prospective customer sees.