Advantages
Of Residential Over Commercial
By Paul Dutton, Paul’s Window Washing,
Glendale, CA
In
reviewing your company's production and profit margins,
have you ever wondered if you could be more profitable in
residential rather than commercial window cleaning?
Comparing
the two could lead to a lengthy discussion. I would like to
limit the discussion to two general areas: "time constraints"
and the "residential" vs. the commercial customer. First we
must define what a commercial account is. For the purposes
of this article, we will consider the commercial account as
store front route work or
low
rise. In viewing sales time in landing a commercial account
over the last 14 years, I have found that it takes five to
six times longer to actually land the account. Whether it
be store fronts, supermarket chains, banks, restaurants, department
stores or small low rises 3-to-4-story buildings), it has
always taken longer to actually get the account.
In
commercial accounts it is always harder to locate the decision
maker. If it is a small store front, you can hardly ever find
the owner. Many times you're giving the estimate to a "want
to be" boss; many times, after leaving the estimate you can't
locate the owner or find out if he or she is interested in
getting the job done; many times you find out the order is
handled by the main office or a property management company.
Now you know you're spinning your wheels. If you weren't used
to a comparative bid and the cheapest, no one is going to
let you know a decision had been reached. So usually you waste
five to six weeks mailing letters and making calls in hopes
of being the squeaky wheel that gets the grease.
Why
does it take longer to land the commercial account? Because
the commercial customer has a different mind set than the
residential customer. Property managers' and commercial business
owners' mind set is that they are giving you the privilege
of doing business with them. They have lots of accounts so
you better give them a good deal. Business owners are concerned
about their overhead and costs, so they also want a low cost
job. Commercially, storefront owners are concerned about overhead
so 99.9% of the time they are looking for the cheapest price.
Restaurants usually look toward cleaning services that do
everything like floors, general cleaning, and window cleaning.
Therefore they don't want a separate window cleaning company
which makes more administrative time for them. Most chain
stores and larger department stores also seek everything in
one cleaning companies like janitorial company. Most janitorial
companies hire cheaper labor to do all their work and can
offer cheaper bids, so the commercial customer is looking
for the cheapest company because they are worried about their
overhead.
Property
managers who sub the work out for their buildings also are
looking to offer their clients the best comparative price.
They get at least three bids and, of course, the property
owners' only concern is the best price. Rarely, if at all,
have I seen a property manager go with a higher bid because
they want quality. They seem to expect a perfect job for the
least amount of money. They prefer to hire the cheaper company
and hope no one will complain if the job isn't done right.
When the property manager gets the cheaper company, that company
will tell them "we will do a good job." What company would
say "because we're the cheapest, we're gong to do lousy job
for you"? If the company does a bad job, the property managers
can always call the company back. It never occurs to them
to pay to get the job done right the first time. If a property
manager has gotten burned by a shoddy company doing a lousy
job, he or she will just look for the next cheapest company.
So, commercially, the property managers, business owners and
property owners are only concerned with the cheapest price,
not about quality.
Where
does all this put you as an independent window cleaning company?
It pretty much means you're going to have to compete with
the cheapest in town. This will be the janitorial company
which hires workers for minimum wage or one-person operation
window cleaners who have no overhead and bids low because
they don't know any better.
To
compound this problem you must spend more time kissing up
to the property managers. This means more time calling and
checking up with the property managers, making appearances
and sending letters. All for the allure of the big "commercial"
account.
Residentially,
it's a lot easier. The time spent to land a "residential"
account is a sixth of the time spent to land a "commercial"
account. Once I have made contact with the residential customer,
I can usually go out the same day and give an estimate directly
to the potential customer. Most of the time, I can land the
job that day and make an appointment within the week. Commercially,
I could spend weeks writing letter, making phone, calls, or
stopping in to see when a decision had been made. Residentially,
I will know within the first week.
Residentially,
customers are looking for a reputable company they can trust
that will do quality work. They are not looking for the cheapest
price. Unlike property managers, they care about the kind
of job they are going to get and are concerned with the kind
of company that will be in their house. Commercial businesses
and property managers could care less about that company's
image and reputation because it's not their building. Most
of the time the property managers are located some place different
than the actual job, and almost never check up on the company
while the job is being done.
Because
the property managers are not on the job site there is no
accountability to the company doing the windows. This is why
many companies are able to bid two or four visits per month
and then only show up once a month asking for cash. I know,
by watching my competition, that they are not making regularly
scheduled visits to their storefront customers. Thus commercially
you have to compete with unethical and unprofessional companies.
The actual owners don't know what's going on until they realize
their windows have been dirty for eight weeks.
Residentially,
customers do care. In fact, it's their primary concern. They
made his decision to hire you on the premise that you would
give him the best job and price is always secondary to that
decision. By offering the best service that customer can get
anywhere I can charge twice what my competition is charging
and get it. In fact, I'm almost always double in price and
after 14 years I'm still getting that price. So the residential
customer wants a company based on "trust" and "quality" and
is willing to pay more to get it. The residential customer
also has made the decision to get his windows done and almost
always has an immediate time frame. That time frame is usually
just 1-2 weeks ahead.
So
you can see how the mind set of each customer is completely
different. The commercial account will take you five-to-six
times longer to land and give you five-to-six times more hassle
because you underbid it. I have learned the golden rule about
business. "The job you drop your price on, will be the job
you will have the most hassles on." Residentially, if you
drop your price and come in low because they want a "good
deal," you will gain the biggest problem-customer you have
ever had the displeasure of working for. This same analogy
runs true especially with the commercial customer.
Other
time constraints to consider besides sales time is production
time. If you do land that commercial account for $ 100 per
month for four visits per month, how much extra drive
time, administrative paper work, and gas are you wasting to
make four visits. You are also wasting setup and pack time.
Residentially, my smallest accounts are $115 for one
visit. Would you rather make four visits to earn $100 or one?
Other
considerations are payments. The average commercial account
takes 26-35 days to pay. I know this to be true because I've
talked with lots of companies about this. The residential
customer usually pays the same day, or at the latest within
one week.
After
14 years of doing both commercial and residential, I have
1,400 accounts, 90% residential. My average job size is $238
for one visit and I usually do them 2 1/2 times a year. My
average commercial account is $25, requiring two visits per
month.
Once
you establish a residential customer, you have established
trust and usually a customer for life. Commercially, if someone
comes along and is $5 cheaper, they drop you in a heartbeat.
I don't want to do business with that kind of thinking or
person. I'm tired of trying to kiss up to property managers
and their business attitudes of being dictated to by price
not by my professionalism. I'm tired of waiting 30 days for
my money and I'm tired doing them a big favor, tired of competing
for the larger commercial jobs with five or six other bids.
I would much rather stay in residential where the competition
isn't cut-throat and people have respect for quality and appreciate
it.
This
article was reprinted with permission from American
Window Cleaner magazine.
