One of my competitors is currently running a 'deal of the day' with Living Social. If you are unfamiliar with Living Social it is a website, whose primary audience is women between the ages of 18-30, that offers specials to their members much like Groupon. In order for a vendor to be considered he or she must offer a discount of at least 50% off their regular price. Here is the deal he is currently offering:
$55.00 for three rooms of carpet cleaning, up to 900 square feet. A 65% savings, regular price is $159.00. This ad ONLY mentions carpet cleaning. Pet Urine, red stains, blow drying, carpet protectant, and carpet deodorizer are typically extra, since these services are not mentioned in his ad we must assume that these services will still be extra when he arrives at your door. These are typically called "up sells" because they 'up' the ticket price for your cleaning. If we divide $159.00 by $55.00 we would find that his regular rate for cleaning is $53.00 per room which would probably make him the most expensive carpet cleaning in the Sacramento. Again I must reiterate that his ad does not include pet urine removal, red stains, ink removal, carpet protectant, carpet deodorizer, vacuuming, etc. in his ad.
Let's now look at the money. From the $55.00 you paid he will receive half or $27.50. The other $27.50 is paid to Living Social as a commission for running the ad on their website. If we go back to his original cleaning rate of $159.00 and divide it with his portion of $27.50 we discover that he discounted his rate by his carpet cleaning service to you by a whopping 87%! If you took an 87% pay cut how motivated would you be to go to work tomorrow?
If the drive over to your home is (30) minutes and it takes him (1) hour to clean three rooms of carpeting because you moved the furniture, you pre-vacuumed, etc., this would translate into (2) hours or about (4) gallons of gasoline which would equal to $16.00 in gasoline expenses. Let's also assume that he only spends $5.00 on cleaning chemicals (Rug Doctor chemicals would cost more). $16.00 (gasoline) + $5.00 (cleaning solutions) = $21.00. If we substract $27.50 - $21.00 = $6.50. Keep in mind that we did not include insurance, taxes, maintenance & upkeep, etc. The only way this carpet cleaner is going to make any money is with his 'up sells'. If you do not buy enough additional services from him he will lose money. Can you say 'High Pressure Selling?'
Remember "Good things aren't cheap and Cheap things aren't good."
As I write this blog it is pouring rain in Sacramento. Over the past (24) hours we have received almost one inch of rain with another inch to come over the next (2) days. When the week started I had several 'all day' appointments and two half-day appointments for cleaning Tile & Grout, Carpet, & Upholstery. Because I checked the weather daily I informed my clients of the weather conditions and suggested that we move their appointments into next week, they all agreed and thanked me for my foresight.
This morning I saw a Stanley Steamer van (7) houses down from mine, in the pouring rain, cleaning carpets. This home, which is a rental, is a 2 story model with (4) bedrooms, stairs, hallway, approximately 2,000 square feet of wall to wall carpeting. Stanley Steamer was their about (2) hours during the pouring rain and thunderstorms which means they probably cleaned their entire home. Because of the high humidity and the on going rain the clients carpets will probably be wet for the next (3) days. Even if you turn on the heater it will not be able to over come the moisture in the air to dry the carpets in a timely manner.
I do not mind my neighbours calling a competitor to have their carpets cleaned. In fact this particular home has been cleaned by at least (3) different carpet cleaners including Sears, Stanley Steamer, and white van with no signage that I have eye witnessed. The problem I have is the fact that these carpets are going to take days to dry. Every client that I have ever worked for wanted their carpets to be dry as quickly as possible - (3) days is NOT quick. The other problem I have with this cleaning is the potential for mold & mildew which could become a serious problem for allergy suffers.
Someone could argue that the client wanted it clean today and only today. Still, I wonder if they were given all the facts would they have re-scheduled if they had been properly educated.
Last week another one of my competitors decided to run a 'deal of the day' with Groupon. If you are not familiar with Groupon you can read about them in detail in my other blogs. Here are the deals he promoted: $59.00 for whole house carpet cleaning, up to 1,100 square feet of a single story home, a $200.00 value; $99.00 for a two story whole house carpet cleaning, up to 2,500 square feet, a $350.00 value; $39.00 for 125 square feet of tile & grout cleaning, a $150.00 value. If we divide 125 by 150 we find that his average per square foot charge is $1.20 per square foot to clean tile & grout. On his website he is running a monthly special where for $99.00 he will clean up to 120 square feet of tile & grout which translates into $1.21 per square feet. One of the promises they make with the 'deal of the day' is that they will use a truck mounted cleaning system and will use a (2) man cleaning crew.
Will this turn out to be another Groupon disappointment for the client or my competitor? He sold 420 deals and he and his crews must complete the work in (6) months before the 'deal' expires. Let's look at the tile & grout cleaning deal: Since the coupon is for $39.00 Groupon will get to keep 50% or $19.50, my competitor will get to keep the other $19.50 paid out over three monthly instalments. Let's assume that the cleaning company is only (15) minutes away from the job. This would mean a total driving time of (30) minutes. Let's also assume that both employees are being paid $10.00 per hour with no bonuses, commissions, health benefits, vacations, etc. If you did factor in worker's compensation insurance, payroll administration and payroll taxes the cost of the employee would be approximately $13.00 per hour. Let's also assume that it takes these two men (15) minutes to set up, (15) minutes to clean up, and only (30) minutes to clean 125 square feet. When you add this with the driving time you would get 1.5 hours total. If we multiply 1.5 x $26.00 (the cost per hour for two employees) this would EQUAL $39.00. We then need to subtract $19.50 (the profit from the 'deal') from $39.00 which gives us a NEGATIVE $19.50. Keep in mind that we did not include gasoline, cleaning chemicals, supplies, insurance or a reasonable wage for the cleaners.
Will this company have to resort to high pressure sales tactics to get the clients to purchase additional services they don't need or don't want? What happens when a large group of people all call wanting their tile cleaned in the next (7) days - this will certainly happen. One of the biggest complaints I hear from people and read about on line is that they had to schedule their appointment out (3) weeks in advance and they guys were still late or did not come at all. According to Bloomberg.com Groupon has had trouble with large deals being charged back - refunded by the customer.
My fear is that this is a No Win situation for both the clients and the company. It is worth repeating - "Cheap things aren't good & good things aren't cheap." If you have questions about this blog please email me at email@example.com.
We provide professional tile, grout, carpet cleaning services for home and businesses in the following California cities: Sacramento, West Sacramento, Elk Grove, Wilton, Galt, Lodi, Stockton, Laguna West, Rancho Murieta, Mather, Rancho Cordova, Folsom, El Dorado Hills, Rescue, Cool, Carmichael, Fair Oaks, Orangevale, Antelope, Roseville, Lincoln, Loomis, Rocklin, Natomas, Citrus Heights, and Slough House. We will travel to other areas.
Hours: Monday thru Saturday 8:00AM till 8:00PM - Sitemap