Are You Doing Business With The Right Kind Of Customer

Fri, Jan 13, 2012

dry cleaning business

This was posted by member Kris Anderson in our membership forum. It’s a very important message I think you should pay close attention to.

(Firstly I like to say thank you to all the great people who enjoy reading my blogs. Greg Colosi teaches us that we should all keep a “Success Journal”, I guess I am writing mine here in this forum. If you have a small win or a great week please tells us about it at the forum so we all can enjoy your successes too.)

Some of you may be wondering why a few dry cleaners had a great year while 50% of the dry cleaners in general have gone out of business? It’s because we are in a Two Speed Economy which is when one groupPrice-Increase of people are still spending and even have increase their spending a little more and the other group have cut back or stopped. The dry cleaners that have done well last year have embedded themselves and focused all their time in the successful people camp.

Who are these successful people? They are the wealthy people in our communities. Why aren’t they affected by the economy? You can define a wealthy person as “someone who makes more money than they can ever spend.” And even in a “bad economy” where they make less money, but still make more money than they can ever spend. So they keep spending the same, if not a little more than last year.

Because money is not the issue to these people, they are more focused on service and quality, and that is what we are trying to drum into everyone in the Colosi Group to do; “Higher Prices, Service and Quality”. I’ll give you an example of how this group of wealthy people think; last year November 1st 2011 I increase my shirt price from $3.60 to $4.00, that’s a 10% price increase. Yes, $4.00 per shirt and I didn’t receive one complaint, nor did I loss one customer. They all stayed with me and even my shirt volume increased 10%! Why? Because Greener Cleaner had already move the whole of its business into the wealthy group of people in the economy. It’s funny, when you start as a discount dry cleaner and raise prices you get a lot of complains but as you continue the raise prices the complains become less and less as you are slowly moving into the better economy where most people only care about better service and quality.

This is all a little like real estate. When the rent goes up in an area more than the CPI, the poorer people start moving out and the richer people who can afford the higher rent start moving in. Every time the rent increases above the national average inflation rate only the people who can stay on are the wealthy. This is like your dry cleaners too, only the weather people stay on when you raise your prices above inflation each year. You keep doing this year after year until you are the most expensive drycleaner in town and only have the wealthiest people in the community as your customers. This is not the right economy to be a discount dry cleaner!!!

As always, love to hear your comments,
Kris Anderson

Most dry cleaners think they’ll attract more customers by having lower prices. Yes you might, but it’s the wrong kind of customer. It’s the kind of customer that’ll leave you in a second if they find a better offer through a coupon in the local paper.

Do you really want that kind of customer? I don’t think you do.

Tell me what you think of Kris’s post down below in the comments. Thanks!

, , , ,

18 Responses to “Are You Doing Business With The Right Kind Of Customer”

  1. Mike Says:

    We started this trend about 3 years ago. I doubled my price from the mist expensive dry cleaner in town. I now charge 6.25 for a laundered shirt. Customers just want that shirt to be excellent. They don’t care what the price is if they going to pay $5 they will pay $6 also.

  2. Greg Says:

    Mike,

    What gave you the guts to start doing this 3 years ago? And this is about when the recession hit, right.

    My hat is off to you. You will survive and strive in the dry cleaning industry.

    Greg

  3. Bob Says:

    How do you guys get away with charging $4.00 – $6.25 for a laudered shirt? I am in an afluent area in New Jersey and charge $1.99 with 6 other dry cleaners within 1/2 mile charging less!

  4. Lon Says:

    They can charge these prices because they have moved to the front instead of following in the rear. Been preaching this for years. Selling the sizzle as I say means doing it right and showing the difference. Everyone has a car b but a Lexus and a ford are miles apart. Another story about waking up, running your business instead of the business running you. Maybe less customers but much more profit.

    Lon Morris
    Intex Distributors
    Austin, texas

  5. Greg Says:

    Lon,

    I like your quote of “running your business instead of the business running you.” You are right on track!

    Greg

  6. Greg Says:

    Bob,

    If you have a route, your customers won’t even notice your price increase. All they care about is your reliability and your quality. If you’re a store, it takes a little more guts in your situation to raise prices, but when you do, your competitors will to. I’d go to $2.29 to start with. With 30 cents more profit per shirt, you can afford to lose a few of those shirt customers (and you probably won’t). Have the guts to be the first one to start this revolution in your area.

    Greg

  7. jim Says:

    Hi Greg,
    Me and my wife have struggled with this question for 2 years now. We definitely want to raise prices but are scared of what might happen. We are a high quality cleaner and have increased business 100% since we took over 3 years ago and don’t wish to lose that momentum. My wife thinks we will ruin our business or open the doors for a discounter if we raise prices, I think the customers will see value and still do business with us, what suggestions to you have to back up your consensus to raise prices?
    Jim Athanas

  8. Greg Says:

    Jim,

    RAISE YOUR PRICES NOW!! Nobody will even notice. The only thing you’ll notice is more money in your pocket every week. It’s a “no brainer.” Look at the other comments.

    Try a small price increase of only 1% or 2% to get your feet wet. You won’t lose any customers. And then in a few months do it again. And so on.

    Greg

  9. Kim Says:

    We raised our shirt prices from 2.00 to 2.50. Most noticed. Those who said anything negitive only bring in 1 or 2 shirts a week. They are still coming in. We are slowly raising our prices overall by 50 cents per item. We offer on site tailoring and repairs to give our customers overall satisfaction in their cleaning.

  10. Greg Says:

    You go Kim! I’m so glad you raised your prices. As you can see, most don’t notice and the only ones that do are the cheapskates. Give yourself a raise and keep bumping your prices!

  11. james Says:

    Greg, I plan to start a dry cleaning delivery service after my surgery this month. I plan to offer discounts to active military, seniors and anyone who has honor roll students. What do you think?

  12. Greg Says:

    James–that’s a good idea, but unfortunately it won’t get you boatloads of customers. Great marketing will. Price does NOT motivate the people who want pick-up and delivery. They want service first, quality second, and everything after that. You need a good marketing system to get those people on your route and that’s what we do.

  13. Lon Says:

    Really like your blogg, for those who listen and have raised their prices they might want to seperate themselves from the crowd with this little tip.
    When the order is complete and assembly is next, most times the clothes are a mix of his and her’s, seperate the two. Mens in one bag womens in another. When the customer arrives home they will notice immediately! And love the “special” service.
    This idea isn’t new but few cleaners do it. Owners have to distinquish themselves from their competition. This is a simple almost cost free way of making sure their customers feel special.
    Good luck and raise those prices!!

    Lon Morris
    Intex Dist. Co.
    Austin, TX

  14. Ronald Rogers Says:

    I have been in the allied trades side of our industry for almost three decades. The issue of dry cleaners raising their prices has long been a topic for me.

    A few years ago I approached a current customer of mine at the time and encouraged him to raise his prices in the face of significant expense pressure that was eroding his profitability. Everything was going up throughout his business except what he was charging his customers. His response to me was ” Ron, I would rather go out of business than to raise my prices”. Fear of loss is a paralysis that shuts down judgement. Just think of it this way.

    FEAR..False Evidence Appearing Real. Dry Cleaners don’t do this!!!!
    Your business is at stake. Raise your prices!!!!!!!

    Ron

  15. Peter Finch Says:

    Some years ago we were up to capacity in our laundry sector. Choices were, increase capacity with all the relevant costs or to increase charges to reduce the volume but, hopefully, maintain the revenue.

    We decided to TRIPLE our charges!!

    Guess what? We retained over 50% of our clients and our profit margin soared.

    We were working for too little. Anyone can increase turnover, but increasing profit is harder.

    Remeber,turnover is vanity, profit is sanity.

    Peter

  16. Greg Says:

    Tripling your prices is HUGE! Wow! This proves a good point, that you can be much more profitable if you choose to. Most dry cleaners won’t have to triple their prices like you did, so this is a good case study on what could happen. It took a lot of guts to do what you did. I commend you!

  17. samuel Says:

    Hi Greg. I run a strictly pick up drycleaners biz in Nigeria. I have been richly blessed by your blog. Thanks

  18. Greg Says:

    Thanks Samuel!


Leave a Reply

This blog is kept spam free by WP-SpamFree.