Clean It Up
UK Floor Cleaning Forum => Carpet Cleaning Forum => Topic started by: Mike Halliday on December 04, 2011, 01:25:47 pm
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Do you think customer loyalty is influenced by how much you charge?
If you are cheap will they look for cheaper next time? Or if you are higher priced will they again look for lower price next time.
I'm higher priced and I have to admit I need to advertise all the time other wise the phone would never ring, people say once you've been going a long time then you get a steady stream of recommends and returning customers, but I don't.
I do a good job but still I don't see the majority of my customers returning, I know I have 4 companies aggressively advertising in my area who poach away my customers.
I spend about £800 a month on advertising which does bring in a lot of work but most of my work is new customers
Do you think that the companies who are lower priced have more customer loyalty?
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I'm probably mid priced and would say after only a few years trading 50% of my work is repeat or recommendations. I spend approx £350 per month advertising.
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That's an interesting question.............the one about lower priced service having more loyal customers !
I've always been lower to middle pricewise and in spite of NOT ADVERTISING for at least 12 years I still get regular customers using me and ,,,,,,,,,,,,If I left cards or leaflets would probably have at least double maybe treble the number of repeats.
I'm hard to find but still get people taking a lot of effort to get in touch. I don't believe it's all about cost - everyone knows I increase prices slightly each year - but I DO STRIKE A STRONG RAPPORT with most of my customers and this has given me loads of referrals to relatives, neighbours, work colleagues.
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Knowing your figures is very important but i think there are 2 ways of looking at this 1 is how much you spend 2 what % of your turnover is advertising.
£800 a month is loads if you are grossing £3000 a month but £1000 a month on ads is better if you are doing £2000000000 a month, ok over exaggerated but it shows the point.
Merging topics but my tm and van fuel bill costs me more than my advertising and that pales into insignificance compared to what the 'family' spends not naming one person especially........WIFE !
Shaun
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Mike...you state you are high priced...why... what is the reason for this.? Is it just greed or are your commitments high. You also state that you dont have many returning customers. Why is this? Perhaps you are pricing to high. Perhaps to keep your cusrtomers you could give them a small discount and get them to book in advance. Just a small sugestion thats all.
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No Mike
I think price is only one aspect of clients decision making process and that if they are happy they will return to you regularly or they will return to you not exactly because they are happy but because they realise they might need to try out an awful lot of other cc's (and have bad experiences) before they find one of your quality but who is cheaper.
I have had quite a few clients who use me regularly but have "winged"/indicated they wished the price was cheaper. Having confronted them in a nice way about it I find it normally clear the air. Something along the lines of "well, madam. If you want my quality you'll just have to pay my prices" ;D Can't say I've ever lost one of these clients as a result.
But don't forget Pareto's Law. As such I only really concentrate on looking after my top 20% of clients. The rest only get my full attention when they get in touch with me.
Rog
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Monty I'm not greedy I just have a large cocaine habit and my spend on Thai ladyboy prostitutes is quite large :D
seriously when i say my prices are on the higher than average side.....
Carpets Price
Dining Room £60.00
Lounge £70.00
Through Lounge £85.00
Bedroom Double £70.00
Bedroom Single £55.00
Hall, Stairs & Landing £69.00
but i have a special offer on at the moment 2nd room half price.... so my prices are not extortionate
its an interesting point about where 'high' prices come from, my prices are based on what I want to earn for what I do
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Do you target your previous customers with reminders as last time I was talking to you I think you didnt.
I too have the same problem as we all do to an extent. I often here I lost your card and only found you again by chance as your pic is in your YP ad. Customers will forget your work, your name, your bus name but most will remember your face.
Ive used a plasterer three times over the last 8 years. I can never remember his name, where he lives, I loss his card but my bro knows his son and thats how Ive got his number each time.
Mark
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Mark I don't target past customer but only because in the past i have done and found it cost just as much as finding new customers, so I thought use my money on finding new customer and let the old customers just naturally come back (which some do... maybe 20%)
I used to spend ages writing postcard buying stamps and the postcards but like I said when i looked at the figures it was nearly as expensive as finding new customers.
i keep hear these gurus say......' it cost 9 times more to find a new customer than keep an old one' bollox!!!
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my prices are based on how long i think it takes me to do a job. What people have to bare in mind though is some people can still do a really good job in a short time. I am highly motivated and crack on with jobs. I hear all this about people earning 100+ per hour and are charging a fortune for works. I do not charge allot... i go for lower prices and take a small profit,... but lots more of them. I actually find that my hourly rate is more than £100 aswell but perhaps I have to clean allot more carpet for that to maintain its self, but looking on the bright side i get in allot more doors and therefore get far many more recommendations.
You say you charge high and have to spend £800 per month on advertising. That puts me £800 in front of you every month as I do not spand anything on advertising. My advertising is my work and for me it works a treat. Not everyone will agree but that is how choose to run by business and it works for me and I NEVER have a shortage of work. Infact I am having to turn work away as cannot fit them in. I have just purchased my 2nd truckmount so will be able to keep up with the demand better in the next coming year.
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Mark I don't target past customer but only because in the past i have done and found it cost just as much as finding new customers, so I thought use my money on finding new customer and let the old customers just naturally come back (which some do... maybe 20%)
I used to spend ages writing postcard buying stamps and the postcards but like I said when i looked at the figures it was nearly as expensive as finding new customers.
i keep hear these gurus say......' it cost 9 times more to find a new customer than keep an old one' bollox!!!
Mike,
You're joking? You must be, either that or you're not good at Maths. Past customers are a gold mine and the backbone of any successful business. I've always wondered why you seem to spend so much on advertising when you're running a second generation business.
With email it costs next to nothing to keep in touch with past customers, even a stamp it worth it.
Simon
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Simon you are dead right with email it cost nothing this is why I am really working hard on collecting emails but this is a recent thing I've only been web savvy for 3-4 years give it a few years and things will change but at the moment this is how its working for me
Monty sorry mate just going to have my tea i'll respond to your post later
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You charge lower prices than Mike but are on
£100 per hour..............doubt Mike is on £100
per hour even with his prices.......lol.
John
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Monty ( I'm back full of yorkshire pub and silver side)
you are exactly what I mean, is it better to be lower priced but have a zero advertising spend so everything is profit or spend the money to find the higher paying customers.
we both can earn £100 an hour but is it better to do 7 rooms of carpet cleaning in that hour or 2 considering you probably do twice the customers than me so have twice the people who can recommend you or return for more cleaning
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At last somebody probably understands the NEW business world. Peoples spend has changed and you have to accomodate it, its not rocket science ;D
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I'm interested in how Monte/Mick works as to get the said hourly rate at lower prices means I'd have to work faster so if Monte/Mick is half my price then he must work twice as fast it's a very interesting point as a settee and chairs will take the same amount of time to move if Monte/Mick is moving them or me.
Shaun
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Mike,
£800 a month? That's a staggering amount of money for an established company to be spending. Gosh, we spend way less than £100, but we make sure we keep in touch with past customers which is way cheaper than trying to get new ones.
Even if you're using stamps for postcards or letters, the people you are most likely to do business with again is the people you have already done business with, because they like your work and trust you - hopefully. Email has made that cheaper to do but even so a stamp and a postcard is only 50p and the benefits so rewarding.
Simon
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Mike,
I would be seriously worried if I didnt have lots of returning customers, something must be wrong.
Our prices arent far off yours but I would say around 70% of our work is repeat customers, I dont even remember to send reminders out to them often but they still come back.
I still spend on advertising and thats what grows the business, enough so that it keeps three of us in work now.
In my opinion it would be a serious mistake not to market to your existing customer base, every business does it as its people already familiar with your work.
If I send out 100 letters I know i will get 3 or 4 phone calls the following week from those clients, which has got to be a better return than trying to find new ones.
I'm sure one of the big reasons people get us back is that we try and make friends with them rather than just rushing in and doing the job and out again, that starts on the quote as I tend to go and quote nearly every job, even existing clients as it gives me a chance for a chat and really asses their needs etc.
Fortunately for me I can spend more time marketing etc as 2 others do most of the cleaning, but since i have ive found a marked improvement in jobs booked and job ticket price,
Most of all though i think people buy YOU as a person and requires a bit of time but that must be the all important thing.
Regards
Steve
P.S. i still find snail mail more effective than email
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Hi Shaun,
It only take the same amount of time to clean a sofa and chairs if you are working on your own !!!! ;)
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simon its not the cost of stamps but the cost of time which is where I beleive people get their false cost of keeping in touch with past customers,
I put a price on my time as though I was working...... me spending 2 hours a week writing postcards cost me the same as i earn when I clean a T/L & stair & a bedroom as they take the same amount of time.
My advertising cost me a morning work and keeps 2 of us going 5 and a half days a week at high prices
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Sorry, Mike, I think you're disconnected from reality or you've got a customer retention problem because what little time we commit to keeping in touch with customers yields us thousands in sales.
You keep saying your prices are high, do they include vat or plus vat?
Simon
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no I'm not vat reg'd, i do believe i have a customer retention problem which is one of the reasons for this post to see if it is high price issue or do low priced companies suffer the same problem.
to be honest I believe its the point i made in my first post other companies aggressively target what is the affluent areas which i cover
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Biggest problem I have is remembering customers, when they call they can sometimes say, "it's mrs smith you cleaned my suite last year can I have it done again" and can I remember who they are? Can I hell but they just go in the book! I bet Mick is having some amnesia problems because I've worked with him and he cleans very well and is always on time and polite there's nothing wrong with his application (may be rumblings of an old man) perhaps a little kitchen sink marketing wouldn't go amiss.
Shaun
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Amnesia Mick or Mike ???? ???
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When I reread my post it did look confusing Monte/Mick = Mick Bulous = Monte Rooney hopefully this clarifies everything.
Shaun
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Mike,
You keep,saying your prices are high, I don't think they are and I don't think there is a link between price and customer loyalty. The defining factor in customer loyalty is quality and to look for reasons other than that when you've got a customer retention problem is in my view folly. I'm not suggesting you do a bad job but if you can't retain your customers at an economic price and £800 per month (against maximum below vat threshold sales off £5,800) seems a more attractive proposition then you do have something of a conundrum on your hands.
Simon
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A difficult one to figure out Mike, your prices are not unreasonably high by any means, broadly in line with my own prices although I deal in Euros whereas yours are Pound Sterling, but more or less near enough. Most of my customers are repeats, some going back twenty years and I gets loads of referrals all the time.
My advertising spend would be around £50 per week at most and I make no big effort to keep in touch with any of my customers, they just ring me when they need me again.
The only difference that I detect Mike is this, my customer base is largely rural, farmers,and small towns and villages whereas I think you live and operate in a large City with a higher concentration of opposition. But then on the other hand you must have a vast population of potential customers. But having said that you appear to me to be one of the most succesful cleaners on these boards so you are certainly doing something right.
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to be straight i don't believe my prices are high...... my use of the terms 'high: or 'higher prices' is relative to my area which i'm one of the most expensive (on average suite are still under a £100 and L/R £35) and of prices mentioned on this forum ( eg Monty who does 3 rooms for £45)
it is a conundrum, without blowing my own trumpet I do a good job, I'm a nice guy, technically I'm very proficient and run a professional set-up.
do you think its becuase I'm a transvestite and tend to work as my alto-ego' Michelle' ?
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I know some would pay extra for that :)
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Mike do you do the simple things like leaving a spotter with your name on it with every customer(sometimes more for family friends if it might get more work as it works out well for me.)I personally get more referals from higher priced jobs but there again i do alot of one off types eg rental move out.................Alan
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To my paying customer............I'm that really nice, polite gentleman who is always on time, is perfectly willing to put himself out to pop into a neighbour to give a quote, does a little mat at the door ( or similar ) and refuses payment, and tries to keep his prices as low as possible ( or so he says )
Some will pounce on this and suggest ................That's not how to run a business. Or, Bl**dy fool working for nothing, etc, etc.
I don't set out to be Mr Popular but how I behave with customers has a bearing and has had a bearing on how many keep phoning each year and on occasions go to a lot of trouble to find me.
Perhaps I should add that my productivity has always been a lot higher than most on here judging by many posts over the years, so even with lowish charges my hourly rate will be higher than many who charge more than me and my marketing costs are extremely low.
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mike if you use an online mailing company like docmail to do postcards letters etc it takes 5 min to send 500 letters once you have it sussed and its cheaper than buying stamps and doing it yourself
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Robert,
I agree with every word of that. We aren't the cheapest, far from it, but like you I do free rugs and mats and little extras that customers really appreciate. One of my goals as a professional is to try and put the customer in a position where they can't get what you do anywhere else. It doesn't always work, obviously not, but in the main customers appreciate an approach like that and it shows in their loyalty that has spanned more than three decades.
Simon
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Monte (it's easier to call you this) how long will it take you to clean say 2 rooms and a hsl of a 3 bed semi with your TM?
I also take it that you re location is a better place than your (ower) old one?
Shaun
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In my opinion it would be a serious mistake not to market to your existing customer base, every business does it as its people already familiar with your work.
If I send out 100 letters I know i will get 3 or 4 phone calls the following week from those clients, which has got to be a better return than trying to find new ones.
I'm sure one of the big reasons people get us back is that we try and make friends with them rather than just rushing in and doing the job and out again, that starts on the quote as I tend to go and quote nearly every job, even existing clients as it gives me a chance for a chat and really asses their needs etc.
Same as Steve.
In fact try this saying we use "They are not just our customers they are our friends" and treat accordingly.
It's not just being on time, wearing a uniform, being polite etc it's about taking an interest in how they've been, where they're going on holiday, discussing your own family etc that moves away from just a business transaction but makes them think you really care about the person.
Yes it can take up a bit of time but remember this is in effect free investment in your future.
Perhaps it because I have a police background that I know how to make people talk and to look for points of interest that you can strike up a conversation about.
I have never got my head around how you (Mike) need to constantly keep putting so many leaflets out, after so many years in the business. By this point you should have 70% repeat/referral rate and no body on here has such an eye catching van as what you have.
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As for prices try this analogy, but you'll need to know something about football to understand it.
Quickly rising through the ranks of the non league set up is a club called FC United of Manchester (FCUM for short).
This club was set up, run and well supported by former supporters of Manchester United. For all the League championships, European Cups, FA cups etc etc these supporters had reached the point where they weren't willing to pay the prices to watch Man Utd anymore, but loved football and loved their city, so set up their own club where you can watch football for £10 instead of the £60.
The point here is everyone has their price and if people can get their carpets cleaned for 40% less with just about the same end product what do you think is going to happen.
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If you keep 'pumping' leaflets out won't it grow your business more/faster? also there's the 2 other points 1. working in the areas he selects 2. keeping alot of other cleaners out which is impossible but if you do nowt you get nowt.
Shaun
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2 rooms and a hsl of a 3 bed semi with TM = 50mins pulling up to pulling away...and that includes pre vaccing. Shaun... when have you ever worked with me> I think you getting me mixed up with someone else.
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Loyalty has little to do with price and everything to do with setting yourself apart from the crowd. Although being 'cheap' is also what the crowd do.
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Iwould certainly be worried if i was only getting 20% repeat custom.
I keep my prices what i percieve to be fair to the customer and enable me to earn a decent living. I dont do leaflets or keep in touch with my regulars through mail shots but wait for them to ring me when there ready.
I have an add in yellow pages and go in local magazine the combined cost is about £260.00 a month but after 17 years in business i expect the large majority of my work to come from repeats and referals.
For instance next week i have 16 repeats 8 recommendations and just 5 from advertising and that is my typical ratio throughout the year. I obviously dont normally do that many jobs but the percentage of repeats is always high and if it wasnt i would definately be questioning why not.
Regards Andy Locke.
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I also take it that you re location is a better place than your (ower) old one?
Shaun
Oh yes. All I seem to be in competition with is so called professional carpet cleaners who can not do a good job and the dreadid rug doctor. My service has completly taken this area (Somerset) including Bristol and Exeter by storm. Just expanding into Torquay and Plymouth as done some jobs around that area and the general consensis is the same.
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Oh dear, monty's lost the plot. He'll be going national next ;D
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European next for me lol ;D ;)
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Good to see someone with ambition, how many emplyees/vans you got so far Monty?
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perhaps give you a hand on the liners as i sail over there simon ;) we could have a race with the RX ;D
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Hi Guys
I believe all CC businesses , cheap or expensive need to advertise if they want to be working above 60% capacity.
The internet has allowed us to advertise much more cheaply but it does mean more travelling as you cannot dominate an area as you can with leaflets.
As for what is the optimum price to retain a customer there is no complete answer as all are different but I believe I offer my customers the best value they can get.
It is important to leave customers with the impression that they just cannot buy better.
Cheers
Doug
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"That puts me £800 in front of you every month as I do not spand anything on advertising."
Monte, about 2 months back I was considering a move down to Taunton, of course I investigated the market in Exeter, Bristol etc etc. I found that you were running a Google Adwords campaign... so please tell me mate, how do you get for free?
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Mike
Do you think you have created a different market in your area by saying on here over the years, how you target a small relatively affluent area on a continual basis?
Cheers
Doug
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Quote "Google Adwords campaign... so please tell me mate, how do you get for free"
I had been given a load of vouchers to use by a friend of mine. Had to set up loads of adword accounts but worked a treat.
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Doug I have created an unusual business model by only targeting a small area ( about 4 miles from my front door) which is still 95% of my business, but like i said this has been under attack by other companies that have realised this area is a honey pot of good customers, now i am doing 50% more leaflets than 5 yrs a go to get the same work.
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How's it a honey pot of good customers if repeat rate is so low?
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Dave its full of people who will happily pay £150 for suite cleaning and £70 for a lounge, they live in nice homes with lightly soiled carpets, its easy parking with nice drives they offer coffee and cake.
its a really nice area.
I think people get hung up on the £200 a week i will happily pay £200 a week for the rest of my life and i don't care much if no customers return. over the last 4 weeks and until Xmas it is working out at 10% of takings....... OK its not this good on average through the year ( maybe 15%) But I bet if I'd asked if people if they thought spending 10% on advertising was too much i would have got different answers
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Mike,
But you shouldn't be spending anything on advertising, or next to nothing given your a second generation business and must have zillions of past customers. I don't understand why you're not extremely concerned about that. If this area of yours is such a honey pot, why are you spending £800 on it when it doesn't even yield repeat customers with a zero advertising cost attached to them?
Simon
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I have customers who use someone else then return for various reasons more so for the job I've done for them,I did one on Saturday where it was 3 years ago since I last did it when I asked why she came back she said carpet never looked clean after she had it done by someone else. Booked her daughter in too while I was there.People will try and use other people who are cheaper its human nature to save money
I sometimes print £10 or £20 pound notes off with my logo on to use against their next clean which works quite well as long as you put an expiry date on with minimum spend too and leave plenty business cards
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Hi MIke
At the risk of being shot down in flames I have been going for about 10 months, part time to wish to go full time. I try and advertise and leaflet drop and place ads in the local paper and even have hung a big sign outside my from door, all with poor or mixed response.
The customers I have got have never had their lounges done for 14 years, or 5 years etc etc. I have a mailing list which is manageable (because it's small) and I think that i stand less than 20% chance of making any referrals next year on the list.
Yes I can have the reply that I ned to spend more on adversisng and get off my butt and all of that but many of you guys are really well established businesses that have built up your business over years so have that mix of customers.
I go in in a uniform, am pleasant, do a first class job irrespective of time if I have to, and am a bit under your rates...........I discount 10% over 100 etc and do the entrance mats and landings if they ask for free.
It's just the customers I have picked up are not repeaters..........so like you Mike I have to find new ones.
Who knows next year may produce me a better mix of customers.
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The question is, Is loyalty affected by price and of course a certain percentage is always going to be, as it is for all of us we do the same. If you had a plumber who charged you £300.00 and needed the service again a year later but a different plumber is going to charge you £250.00 naturally you will choose the cheaper one.
As you cover such a small area and flood the area with marketing material it must be inevitable that previous customers of yours are receiving the mail outs, so in effect you are getting repeat business, if not then there is a problem with some aspect of your business either in presentation or service. But again as an established business in your area if your service was so poor then word of mouth would be a factor and you would in all probability not be operating now.
General rule of thumb for marketing spend is 5% of turnover which would put you at around £200k, as your not VAT registered then clearly you are not doing anything close to this, so your marketing spend is high but so what,if its effective and sustainable then, (especially in these time and its only going to get harder) clearly in your area this is whats required to keep you running, so keep it up.
I am not sure how anyone arrives at a view that you do not have to advertise at all simply on the basis that the business is established, if that was the case Coca-Cola would cut its entire markeing budget and save a billion or two.
I
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Mike
if you had done what I had done today at your prices then you would have charged £718.
What I did today I charged £328 + v.a.t.
That is a normal day on domestics if I charged what you charged I would not have had much work. Only one of the customers was a new customer. If I did not have the good wiil and loyalty of my existing customers then I do not think that I would be in business today. Things will be a lot tougher next year and as a result marketing stategies will be a lot less effective and therefore much dearer. The value of loyal customers cannot be taken for granted, goodwill is probably the most valuable asset any business has and makes other assets insignificant.
I would like to earn more but if I doubled my prices I would not expect to have customer loyalty because I work in a competitive industry where there are a lot of competitors that could supply a comparable service.
If I did not have customers coming back time and again and recommending me to their friends then I would after 25 years (my time in bussiness) be concerned.
Peter
www.carpetcleanercardiff.com (http://www.carpetcleanercardiff.com)
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peter you say if you charged my prices you would have no work....... but i charge my prices and I'm fully booked,
why?
I could charge more as I get no price objections, i tell them the price and they say....... when can you do it?
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Looked at my diary for the last 2 weeks 90% are old customers the new tend to be recommendations,getting lots of price shoppers through the net
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peter you say if you charged my prices you would have no work....... but i charge my prices and I'm fully booked,
why?
I could charge more as I get no price objections, i tell them the price and they say....... when can you do it?
Mike,
But you've got £200 per week coming out of your sales for advertising, so you might as well charge Peter's price and make money. I can't get my head around why you think it is a good idea to be spending £800 per month to get £5,800 per month in sales, that's 14% of sales, less your guy's wages, crikey, it's hardly worth it. :'(
Simon
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Advertising is relative to turnover but I cannot understand how you are all the time looking for new customers, if you are constantly marketing in a select area but not retaining customers then there has to be something wrong. If you cannot retain customers in a small select area it is only going to be a matter of time before you cannot find enough customers to sustain your business. I am not being critical but it is a matter of fact, if every other job that I did was not family, neighbours or friends of existing customers then I would be really concerned about what people were saying about me.
I have over the last 5/6 years see the traditional wats of advertising such as yell.com /yellow pages/ newspaper advertising and leaflet dropping become so ineffective as to make them non economically viable. I still drop leaflets but the response is in constant decline as there are so many other people after the same pound. You do not have the problem with loyal customers unless you are charging a lot more for a service that other people offer for a lot less.
I do not spend anywhere near £800 per month on advertising but what I do spend puts me over the v.a.t. threshhold by several times and my business could not sustain the % - turnover cost of your advertising.
As I said in my previous post I think that next year is going to be a hard year and I take great comfort in the loyalty of my customers, it is however something that I have worked very hard to get.
Peter
www.carpetcleanercardiff.com (http://www.carpetcleanercardiff.com)
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so let me get this straight....... at the moment I'm taking 2 grand a week but i should stop what I doing becuase its not the right way to run a Business :-\ :-\
bloody hell!!!!! just think how much money I would be making if I did know what I was doing :) :)
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I you're taking 2 grand a week Mike then surely you would be vat registered ?
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so let me get this straight....... at the moment I'm taking 2 grand a week but i should stop what I doing becuase its not the right way to run a Business :-\ :-\
bloody hell!!!!! just think how much money I would be making if I did know what I was doing :) :)
You said it ;D
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Steve if I took 2 grand every week and worked 52 a year you're right (last year i took 6 weeks) .
as I have said in the past I'm an employee of the company, I also have a small business working independently as a sole trader which does the power washing side.
I.m legitimately under the threshold
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Mikes is right it is legitimate to have a limited company and a sole tradership with both taking under the vat threshold. If you had 2 sole traderships then it would be different and you would be liable for vat.
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If you could save on your advertising costs, could you then not pass that saving on to the customer? You benefit and almost as importantly, they benefit too. Perhaps you could give your newly found customer's a money off coupon for next time they get you in...
Sorry if someone's already asked this ?, I CBA going through all the other posts... ;D
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Mikes business sounds pretty good to me.
If it ain't broke don't fix it.
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Mikes is right it is legitimate to have a limited company and a sole tradership with both taking under the vat threshold. If you had 2 sole traderships then it would be different and you would be liable for vat.
John/Mike
You have to be careful how you do this.
I do it myself, I can separate general/window cleaning from carpet cleaning by having a ltd company. I have two vans: because the carpet cleaning can only be done from one van ( truckmount fitted), no other cleaning is done from this van then it is looked upon as an entirely different entity.
You have to be careful if you share office space/ vehicles / equipment etc. between the two business. It needs to be looked at carefully. There are lots of case studies on the net, for example where husband and wife run a pub and the wife does food and doesn't want to charge vat, if she leases the kitchen and pays utilities etc. then its ok, if she doesn't then HMRC can demand vat.
Iv simplified this for the post but researched myself and also my chartered accountant set up everything within the guidelines. I think Mike has a browser type pressure washer set up so could most likely say its independent i think you may struggle if you were using one van, carrying pressure washing equipment in and carpet cleaning equipment in it and operating from it for both cleaning processes.
I'm no expert but would definitely say a good accountant needs to be consulted before splitting up "related" industries to keep under the vat threshold.
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Likewise fuel, repairs, materials etc.
I know someone who got well and truly stung doing this, ended up with bill for thousands. Unlike criminal proceedings where your innocent until proven guilty, the tax / vat is different, you have to prove you don't owe them the money when they send you a demand.
Simon
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Dfs and carpetright have great ongoing marketing campaigns, probably spending millions and millions. I have purchased from both over the years but not more than once, they sell rubbish but have a massive marketing budget so are always busy.
Being busy does not mean your doing a good job if all your customers are first time users, what is your evidence that you are doing a good job if you don't have repeat customers?
Heavy marketing is a good marketing strategy for some but quality recommendations is what it's about. Along with repeats, how else do you know you did a good job??,,
Tony
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"Being busy does not mean your doing a good job if all your customers are first time users, what is your evidence that you are doing a good job if you don't have repeat customers? "
I can assure you Tony, Mike does a great job, uses all the best equipment carrys out the cleaning procedures as is needed, has a good rapport with his customers, has a smart van, appearence is very acceptable and imo does not over charge , i have worked with Mike on many occasions ,rest assured nothing wrong with his cleaning practices.
Geoff
ps. maybe, just maybe ,, he is so ugly ;)
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Tony you make a very valid point, what being passed over on this post although I don't get a great deal of returning customers i do get recommendations.
Tony when you walk out of the customers door do you know if you have done a good Job? or do you have to wait for that customer to come back next year to find out? I get a lot of feed back from customers when i finish who are really happy with the work, and if my work was sub-standard in such a small area the word would get about, i often have multiple customers in the same street
I mentioned earlier on that i believe the lack of repeat customers is the amount of other companies targeting my small area
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i believe the lack of repeat customers is the amount of other companies targeting my small area
Mike,
But that doesn't make sense. Other companies may be targeting your area but they haven't served your customers and you have and that should generate a whole lot more customer loyalty than you appear to be getting.
The problem may well in the constant leafletting of these areas by you and others, where people have got used to your services being marketed like that and are aware that there are a number of you in the area to choose from and so didn't think about loyalty because they don't have to, as there is always someone else offering exactly what you do.
I don't envy your predicament.
Simon
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Mike, maybe it's time to spread your wings a little further afield
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Tony you make a very valid point, what being passed over on this post although I don't get a great deal of returning customers i do get recommendations.
Tony when you walk out of the customers door do you know if you have done a good Job? or do you have to wait for that customer to come back next year to find out? I get a lot of feed back from customers when i finish who are really happy with the work, and if my work was sub-standard in such a small area the word would get about, i often have multiple customers in the same street
I mentioned earlier on that i believe the lack of repeat customers is the amount of other companies targeting my small area
Mike what your forgetting is the area you attack as a lot of top end rental properties - I would assume a lot of your cleans are for short term tennants on 6month to 1 year contracts the properties been paid for by the company they work for
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Mike, I've been scratching my head, wondering why your customers apparently behave differently to mine and many others by the sound of it ???
My pricing isn't too far out from yours, there's plenty of competition close to me but my repeat rate is high enough, and I only ever manage one or two mailshots a year ???
I remember you saying some time ago that you didn't send out mailshots, because you're always leafleting the areas you work in and that serves as a reminder. That's probably true, but think about what comes through your own letterbox.. doesn't it p*ss you off getting the SAME charity bag and the SAME curry menu shoved through there every month or two? Maybe you're turning customers off you by using that approach? Just a thought.
Another thought, completely swinging the other way... name all of the companies whose leaflets came through your door last week! Bet you struggle! Could be that nobody even notices your leaflets any more?
I'm surprised you've found direct mail not to be profitable. Even if a mail shot only broke even, in a way it's securing those customers and their referrals for the future for you so it is certainly worth it. It's also adding to the value of your business.
The beauty of direct mail is that it's completely scalable - you can send one letter or one million! As a test, why not pick a random cross-section of your customer list, send out a sales letter and see what response you get? I wouldn't make the group any smaller than 200 otherwise it might not show a true result
I would filter the records so that you don't market to anyone you've worked for within the last 10 months or so, and probably not worth going too much further back than 5 years.
www.imail.co.uk 2-side colour printing will cost you £0.44 per letter... cheaper than a stamp!!!!! So that's £88 inc VAT in total for 200 letters, so you only need one or two jobs to get your money back and get in to profit
iMail is a little bit of a faff to get set up but once you've got it sorted it is dead easy. You can send hundreds of letters in an instant, no printing, folding or licking!! You don't even see the damned letters. God I used to hate doing mailshots myself, services like this are a revolution!
There's a few other services around like that, but I haven't used any of them so can't compare. If you fancy a crack at iMail give me a call mate and I'll help you out with it ;)
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Jim over the weekend I will start another topic about my marketing budget and how i've experimented with it other the last year, its only this month ( for January) i have started back with the 30k leaflets. i have spent my money on lots of other ideas.......including at the moment a girl in the office the doing reminder letter & Xmas cards.
John I do many rentals but i don't think that causes a big loss of customers..... but thanks for trying to find an excuse for me ;) ;)
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Mike
So you can put aside that quality/price of work as an issue as you are getting referals, so why do you think your repeats are lower that anyone elses? unless you can give a rough percentage for say repeats referals and new business there is no way of knowing if yours are higher or lower than anyone elses on here, and even then unless the customer says I got your number from so and so you cant be sure they are a referal or a new customer.
Also as has already been mentioned, it can be down to the type of customer, do you think that the customers you had last year that have not used you this year have gone elsewhere? You probably cant answer that because you have no way of knowing but you (in my view) have only lost them if they have used someone else to clean their carpets, its more probable that they, for whatever reason didnt have them cleaned at all.
The last week of November I did a mailshot, I took my highest tickets from June 2010 to July 2011 and got a list of 150 customers, I sent them a pen (ordered them on ebay 200 for about £50 with my company name and telephone number) and a slip of paper printed off my computer like a compliment slip saying hi etc etc, i now take debit/credit cards and an offer of £10 off the price I quote them until January 2012. To date I have only had three call and all booked, the interesting thing that they all had in common was "hi Tony I got your pen, been meaning to ring for a couple of months to come back and clean again"
I have no idea if that is a poor response for that kind of marketing because I never tried it before but it cost me about £90 including postage and pens and has so far returned £330 which I probably would not have got if I had not done it.
I would put my own figures at somewhere like:
Repeats 20%
Referals 50%
New cusomers 30%
Tony
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Tony I think its a number of factors, but to be truthful whether they are an old customer or new I still have a full dairy of customers so i'm not that bothered
what has been missed on this topic has been the very point of me starting it in the first place which was the question....
Do you think customer loyalty is influenced by how much you charge?
which i don't think anyone has answered..... but to be honest will anyone say "I'm cheap and don't get many recommends" it seam everyone get tons of repeat work ( apart from me :'( :'( :'( ) :D
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Mike,
When I finish a job for a new client I always try to have a discussion about how often to clean and when would they like me to contact them again. e.g. 6 months, 1 year, 18 months. If they tell me 18 months it goes into my system and I will get a reminder to contact them on the appointed day. I usually email or text to avoid difficult conversations
I normally get response of great thanks for the reminder - book me in or not yet contact me again in 6 months.
It keeps the contact going and seems to work well for me.
Nigel
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..........I do not spend anywhere near £800 per month on advertising but what I do spend puts me over the v.a.t. threshhold by several times and my business could not sustain the % - turnover cost of your advertising.
Peter
www.carpetcleanercardiff.com (http://www.carpetcleanercardiff.com)
Peter
If what your turning over sends you 'over the vat threshold by several times' you must be turning over a minimum of 220k. What Mike spends on advertising is shy of 10k - which in your case would be less than 5%. Totally realistic for any business. May I ask where all your expenditure goes that makes this sort of figure on advertising unsustainable for your business
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Mike
I believe the answer to your question is NO!
Tony
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Mike,
You might have a full diary but it comes at one hell of a cost, when most of it should be costing you nothing. I think your problem is one of complacency. If you had things in balance then you'd still have a full diary, but without the £800 per month bill.
Simon
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Mike,
When I finish a job for a new client I always try to have a discussion about how often to clean and when would they like me to contact them again. e.g. 6 months, 1 year, 18 months. If they tell me 18 months it goes into my system and I will get a reminder to contact them on the appointed day. I usually email or text to avoid difficult conversations
I normally get response of great thanks for the reminder - book me in or not yet contact me again in 6 months.
It keeps the contact going and seems to work well for me.
Nigel
Spot on, and if you are charging good prices you aren't having to rush off to your next job.
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....... and to answer your original question ...I think customer loyalty is only partially affected by price.
It is affected by value for money and whatever that represents for your type of client. My clients pay me relatively high prices but still consider me to be good value and are very loyal to me. I now only work for repeat or referred clients . if I push the price too high they may go elsewhere but there are many other factors that might make them go away too. e.g. quality of work, personality, presentation, and on and on. We all focus too much on price - it is not always the deciding factor - in fact for my clients it is almost never the deciding factor.
Nigel
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I think price is only a factor if the quality doesn't match the price, otherwise people will always pay your price, despite cheaper cleaners.
Simon
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Totally concur with Nigel and Simon. It is all about 'quality, presentation & personality'.
But then are we looking at it from only one angle. Our business comes predominantly from reps & refs. With most of my refs bookings, price does not even come into the discussion.
However, have we pitched our Market into a certain sector?? :-\
The other end of the Market may well be very price conscious and more Groupon orientated
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Mike you said that you spend a lot of time writing post cards to send out to previous customers there is a programme which is ideal for carpet cleaners to list customers and merge mail responses out to customers in minutes without the tedious job of hand writing post cards I obviously don't want to name the programme in case i am breaching forum rules.
john
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I agree with Nigel repeat work is so much more than price. Its all about trust once you have that people come back year after year. I don't think its something which can be learned on a course or conveyed by a leaflet or an add or a fancy website. Its just about asking what would I want to happen if I were the customer how does that individual customer need to be treated, what are their interests beyond the job in hand, how do I become the person they want to invite back in to their home and trust in their personal space.
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Mike ask your customers
it might be worthwile in going back through your'e bookings from a couple of years ago. and call 20 to 30 of your
clients who haven not booked again with you and ask them why. should only take a most a couple of hours.
good bad or indiffrent at least you will know why
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maybe your doing such a fantastic job, and the carpets look so pristine that the owners are extremely careful, shoes off, matts at door etc... plus the fact that absolutely no residue is left so carpet aren't attracting any soil whatsoever and therefore are lasting years and years before they need another clean. ;)
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maybe your doing such a fantastic job, and the carpets look so pristine that the owners are extremely careful, shoes off, matts at door etc... plus the fact that absolutely no residue is left so carpet aren't attracting any soil whatsoever and therefore are lasting years and years before they need another clean. ;)
You might just be right, perhaps leaving a 'measured' amount of detergent in the carpet might just result in more regular work from the same people. (not that I would advocate such methods)
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Hi Mike
In marketing terms people who have used you before are much more likely to use you again. They have experienced what you do to the standard you do it and are probabaly very pleased with the result. As said before, why not take 150 customers from your list and send them a personalised letter. Not a leaflet but a letter. Again in marketing terms sometimes a leaflet (which many people associated with lower priced advertising campains for "instant" results) is less likely to work on the repeats but a longer letter is sometimes a better approach.
Send them a sort of 5 around letter saying that you cleaned their upholstery/carpets last year/18 months ago and give them te benefits of clean carpets etc etc. Don't make it tacky but you may like to offer them a welcome back offer of say 10% off if their cleaning bill comes to over £100 say. You could just leave it at 10% as you have the information on record as to what previous customers have spent anyway.
In industry terms a response rate of 5% is the norm and on repeat customer lists then it can rise to 10% if the customers are recent. By recent I don't mean last week I mean recent in the ready to buy stakes i.e. 12 months.
Try it you have a database to die for and I am sure with a bit of effort you will reap rewards.
I think perhaps with you (and I mean this totally respectfully!) you advertise @£800 a month and are rammed busy so it sort of works, so you keep going but it's called "churn rate", you need to use your customers to repeat a bit more.
Another Tony earlier mentioned 20% repeats which in my new business is what I identified. I know you guys are experienced carpet cleaners but I used to work in the media and direct mail for a PLC.
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"Mikes is right it is legitimate to have a limited company and a sole tradership with both taking under the vat threshold. If you had 2 sole traderships then it would be different and you would be liable for vat."
PoppyCock.......Yes maybe if they were diferent type's of business, but not 2 cleaning companys!
"as I have said in the past I'm an employee of the company, I also have a small business working independently as a sole trader which does the power washing side."
Mmmmm..... very dodgy ground........The only reason to do this is, is to avoid VAT.
The inland revenue are not STUPID.
This smacks of artificial separation as they are both cleaning companys.
I think you need to be carefull what you say on a public forum!
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maybe your doing such a fantastic job, and the carpets look so pristine that the owners are extremely careful, shoes off, matts at door etc... plus the fact that absolutely no residue is left so carpet aren't attracting any soil whatsoever and therefore are lasting years and years before they need another clean. ;)
You might just be right, perhaps leaving a 'measured' amount of detergent in the carpet might just result in more regular work from the same people. (not that I would advocate such methods)
Many a true word is said in Jest.... ;);D
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i was actually being serious, never seen eye to eye with mike but got a lot of respect for his passion for cleaning.
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You might just be right, perhaps leaving a 'measured' amount of detergent in the carpet might just result in more regular work from the same people. (not that I would advocate such methods)
This was common practice ( not necessarily deliberate ) years ago when the only products available were high foaming and soapy detergents.
The difference today is huge and I've found with return customers of the once or twice a year variety, that in general, the carpets do stay cleaner for much longer but, fortunately, people get careless and tracking will always occur so they still need attention.
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i was actually being serious, never seen eye to eye with mike but got a lot of respect for his passion for cleaning.
That's 'cause he's Big Mike.
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i was actually being serious, never seen eye to eye with mike but got a lot of respect for his passion for cleaning.
That's 'cause he's Big Mike.
didn't realise you knew him that well robert, i'll take your word on that one if thats okay.
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Why ask the question?
You say you are booked solid, you don't mind spending £800 to achieve this. So even if you have a bucket with a hole in it so what?
You say your time is more important than faffing around with other marketing ideas that may help retain or jog existing clients into a repeat clean.
What's your problem?
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Mike
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Mike
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Mike,
1/ Why not employ someone part time to keep in contact with your existing clients? I'm sure they would bring you in more than they cost.
2/ Percentage of turnover is a bit misleading. What about return on investment (ROI)?
If you spend £ 800 to get £ 5,000 back, that's not bad ROI at all (minus costs). Break even is acceptable if you generate enough repeat business.
I did my coptwriting training under someone who charges up to $ 25,000 a letter. If that letter brings in several hundred thousand dollars in sales, then those sales are effectively free.
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garry over the last few months I have had a girl in the office doing that, but looking at the figures spending my £800 marketing budget that way it not the most cost effective..... the amount of work she bring in is not as good as leaflets that's why from Jan I'm going back to spending all my money on leaflets .
i was going to start a topic at the weekend about how I've experimented with my marketing money over the last year spending it different ways and which gave the best return.... leaflets won by a mile
I've done AdWords, newspapers adverts free spotters, free newspapers, a girl in the office doing telesales, free de-icer, mailshots( to plumbers, estate agent, letting agents, doctors, dentist) plus other stuff..... none got the ROI of leaflets ....with zero effort on my part
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Fair enough. At least you've tested the various approaches.
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I've done AdWords, newspapers adverts free spotters, free newspapers, a girl in the office doing telesales, free de-icer, mailshots( to plumbers, estate agent, letting agents, doctors, dentist)
Mike all of that stuff is aimed at getting new customers... what about keeping your existing ones?
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Jim you missed my first sentence which was in answer to garry question 1..... I've had a girl ringing past customers and over the last 2 week sending out Xmas cards, still not the return of leaflets
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Jim you missed my first sentence which was in answer to garry question 1..... I've had a girl ringing past customers and over the last 2 week sending out Xmas cards, still not the return of leaflets
Depends on how you want to read the results Mike.
For example you can put out 10,000 leaflets in a week but with the best will in the world your girl is never going to do 10,000 phonecalls even if you had that many previous customers to call.
Ignore the numbers but what percentage of interested customers does she get from phone calls etc against blanket leafletting an area?
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Neil I'm talking about financial return, her wages and how much work she brings in is more than if i spent her wages on putting leaflets out
I can pay her to send out reminder cards and phone old customers but the amount of work she brings in in less that if i spent the same money putting out leaflets
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Mike,
Would you maybe get more jobs quicker by phonecalls though? As opposed to people keeping leaflets for 3-4 months before calling you I mean?
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Neil I'm talking about financial return, her wages and how much work she brings in is more than if i spent her wages on putting leaflets out
I can pay her to send out reminder cards and phone old customers but the amount of work she brings in in less that if i spent the same money putting out leaflets
But I think that's always going to be the situation unless you added 'cold calling new customers' to her remit.
My own findings are that when times are quiet we get a better % return on letters etc to previous customers than leaflets put out.
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Mike have you considered the "bloody hell, not another leaflet from Henry Halliday" effect.
Maybe mix it up a little using newsletters, postcards.
Mind you I don't leaflet so what do I know ;)
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Sorry Mike I thought you meant telesales as in phoning new prospects.
I have to say though, Xmas cards are NOT sales letters... unless they are A4 printed on both pages inside, with sufficient copy doing the selling and a tempting offer presented to the customer?
My reaction when I get Christmas cards from my suppliers is "oh p off" but if they WROTE to me with a letter that actually sold something to me, I'd pay a lot more attention. If I needed something that they were offering, and with a bit of a deal on the table, I'd more than likely oblige.
Do you get what I mean, in that there's a difference between those two messages? It's my belief that just sending "something" from you isn't enough. You need to give it all to them, the only thing they have to do is pick up the phone and take it.
Also, how much per mailing piece did those cards cost you, including postage? Bearing in mind you can send a 2-sided A4 colour printed letter for £0.37 (ex vat). (https://www.imail.co.uk/save_on_postage/prices.aspx) which is cheaper than buying a 2nd class stamp!!
Comparing the ROI of your £x.xx per xmas card to £0.37 per letter, would it have made it a more worthwhile return? And further to that, if (arguably) a sales letter would have provoked a better response than xmas cards, would that have made it even more viable?
Going further still, a direct mail campaign for the pre-xmas rush just a few weeks before is surely too late? I did mine mid-October and got work from it instantly and I've still got a couple of jobs to go next week from it.
As far as telephone sales goes, what's your knee-jerk reaction when someone phones you up to sell you something? I'll tell you what mine is - I hang up! As a general rule, people don't like "in your face" sales techniques and they instantly throw up barriers to it.
Mike I know this is coming across a bit like I'm trying to teach granny to suck eggs... honestly I'm not, I'm genuinely trying to think round this issue with you :)
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Derek has cracked Social Media Marketing ??? I have just bought a book Free marketing 101 low cost no cost ways to grow business online offline by Jim Cockrum availble on amazon . Jim also wrote The Silent Sales Machine biggest ever selling digital book on ebay , but now revised for any business. All strategies based around social media
I personally understand Mikes Model better for immediate results
put in £10 get a £100 out its the way most direct Sales Companies Work
In theory if Mike doubled his area of operation he would mega blast VAT .
Even if his other Strategies do not deliver such a good return I have not read him complaining about not being busy
I personally think Mike does well to get that return from leaflets and would take a while to get that result if he increased his area of operation
Mike is in a position where his turnover suits his life style . He probably could stop advertising and still get calls but why risk it.
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Lots of good response but for a few years I have excepted the fact that I need to spend money on marketing to get the amount & quality of customers I need to be busy all the time,
if I gave £200 to every person on here and said go spend this money on marketing, no one would do anything I have not tried. And what have found that works for me with the smallest amount of my own time taken is leaflets.
Now if idid'nt put a value on my own time then it would be different, if I ignored how long it, took what gave the best return on money spent was delivering complimentary newspapers to small/medium sized business ( something I,ve never heard anyone else doing)
In the end weall choose how we do business & what works for ourselves.
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Mike,
You appear to be completely missing the point. By now, given you're a second generation business, you should have so many past customers that you shouldn't need to advertisie, or at least very little, but certainly not to the tune of £800 per month. The fact that you do need that level of investment should be telling you your doing something wrong and instead of finding out what that is and correcting it, you seem intent on throwing money at it which is bizarre.
But it could be as simple as you've now educated your customers that they buy carpet cleaning services via leaflets because they are always coming through the door.
Simon
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Simon
I do not get what you are saying.
5 years ago U was working with a Direct salesCompany that had been established 25 years
Although they had repeat business they still spend money on aquiring new customers , generating referals andrepwat business,
If I had just worked with one company I would perhapd think they are wrong . But everything I have ever read , companies I have neen with tell me this is what tou have to do.
I think you might be a position where iver the years you have a some Big Contracts under your belt which means you do not need to advertise.
I wish I had played my cards right 27 years ago when I left a major retailer and had as part of the package contracts for their Mrgga stores