We Signed a Contract…and Other Epic Fails
Today I shall share with you a failure, or a few really. It was a bit of a rollercoaster to tell you the truth, but in the end we learned so much.
We had managed to weather the recession, and it seemed like everything was starting to look up again – cue the clouds parting and the sun peeking out with rainbow overhead. We had lost a ton of business, but we still here when many of our competition threw in the towel.
So we needed to jumpstart our growth and we decided to add new and expanded services. What could be a better fit for our residential cleaning company that to add-on carpet cleaning services. Sounds simple right? What could go wrong?!
We invested in the top of the line truck-mounted equipment. We had our lead carpet cleaner certified by IICRC. Our marketing materials were top notch and we made sure that all of our current clients knew that we *also* offered professional carpet as well as upholstery cleaning. We really figured that we had all of our ducks in a row….that surely people liked to roll around on clean carpets!
Somehow, they didn’t. There would be days with no jobs, days with one job, days with two jobs!….But, on the opposite end of town. And we did what most business do, they throw money at a problem.
We did what the other guys were doing.
One of the bigger local companies advertised in a local community paper, so we thought, we should be in there too! We signed a contract….Which in and of itself is not the end of the world, but why would you sign a contract for $1,000 a month, when you had no idea if there would be any return on the investment? Well, we did and we learned from that mistake. In three months time, out of a 12-month contract, we had only gotten 3 clients. You read that right, 3. Now I know they say that advertising and marketing can take 3 to 6 months to see results (for large item purchases), but carpet cleanings are here-and-now services. Most folks who call in want services TODAY.
So failure #1 turned into lesson #1 and #2, just because the other guys are doing it doesn’t mean you have to, and never sign a contract unless it is backed by a history of ROI or you had a money-back guarantee from the advertiser. 🙂
We ran a special with Groupon.
Ekk! Need I say more?
We always knew that we would not run one for residential cleaning, we did the math and found that it was not worth it. Plus the folks who wanted a cheap maid service would likely stick with a cheap maid service and not sign on for recurring scheduling. But carpet cleaning is more for occasional use, move out services, refreshing a dirty couch and so on. So we thought we would give it a try.
Ok, so to give an overview of how the whole Groupon works and how it can work for some. Basically, you set a price for services that you want to offer, then that price is slashed in half, in order for it to be a good deal for the purchaser. Then Groupon gets 40-50% of the sale price. So if you offer $179 for a whole house carpet cleaning, up to 5 rooms, then you offer it on Groupon for $89, and in the end you are doing the job for $44.
So based on that math we decided to go for it. If we could up-sell at least $29 in extra services on about 50% of the homes and if 10% of the vouchers go unused, we’d still make money!
Failure #1 we thought Groupon was going to include sales tax. So in other words our already very small margin for profit was diminished even further since we still had to pay taxes on all the sales.
Failure #2 we did a horrible job of planning for the increased call volume.
Which brings me to failure #3…
We forgot how hard it was to staff for a business that didn’t have consistent full-time work. When we first started with the cleaning company it was the same thing, but honestly getting maids (albeit not always great ones) is so much easier that hiring and training someone to use heavy (expensive) equipment properly and consistently.
We would get busy during the end of the month with move outs, allowing for full-time work, but during the rest of the month there was only enough for part-time work.
I could go on…There were so many other bumps along the way, but I think you get the idea. We did a few things wrong, but the #1 thing we did wrong was to think that we needed to add on services in order to grow our cleaning business.
So we learned and we decided to move on with life and cleaning, but dropped the carpet cleaning, returned the truck and focused on our primary work.
We know it can work, and has worked for tons of companies out there, but the fact is that we were trying to act like a big business with profits to spare when we still needed to work on growing our cleaning company.