Interview with Ken Snow 12-13-06

#2
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Ken, thanks again for doing this!!


I want to remind folks that the first hour is going to be "pre asked" questions so please wait to ask your personal questions.

It's up to Ken to pick the questions to answer in the second half.


So here we go.

1st question:

Can you tell us about your business background?.
 
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Sure Mike

I came from the school of hard knocks, taking a break halfway through my junior year of college and joining Hagopian via a recommendation from a friend. I have been here ever since, almost 27 years. I grew up in a family of accounting minded people, financial officers and CPA’s so numbers and logic always came easily to me. Being a Gemini, I have the blessing or curse of duality, so I also like people, being creative and teaching. I was planning on being a psychologist, but life took a turn and here I am. My experience, knowledge (whatever that is) and growth has been literally from making many mistakes, and from a number of wonderful mentors, some of which do not even know they mentored me, like Jim Pemberton, Mark Violand, and many others in Michigan and elsewhere from out of the industry.
 
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You know Mike that is a question I am not sure exactly the meaning of. If you mean size quantity $ volume etc.

We have grown from a 1 person company to over 150 employees in all our businesses, with about 55 of those as cleaners.

Is that answering the question? I have no problem sharing I just am not real clear on it.

Ken
 
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Sorry about that, I am not all to clear what they meant either...

so, next!

. I assume your idea of the $99 whole house special is due to in part of doing quality. Do the customers really receive quality when you target quantity? Do you run 2 man crews on these specials to get the quantity?
 
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Great question Mike

We have a couple of marketed price points: 2 rooms for $49.90 and 5 rooms for $99.95 (I HAVE NEVER HAD A WHOLE HOUSE 99.95 PRICE). Every customer has different needs and will have more or less done and many add furniture and most have halls and/or stairs. They also purchase Scotchgard on about 70% of the jobs. Our average ticket is about $135. We feel we give exceptional quality at an affordable price and we feel this is evidenced by our customer retention, our questionnaire response cards, and the tons of phone calls and letters we get thanking us following jobs. We run only two person crews, with rare exceptions. I like to think of us as the Outback Steakhouse of carpet cleaning: Consistently high level of service, with friendly staff at a reasonable price.
 
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Wow, sounds good would you be willing to pay me to relocate and come be your lead tech?



Next question...


. Do you pay on commission? If so, how do you deal with the guys who get bitter at customers who dont want any extra services and proceed to rush through the job? I am sure you must get the call backs where the carpet needed more then what your base price included. Is it policy to send back the tech to clean the carpet again? Or do you tell the customer that they should have spent more on the deeper cleaning option?
 
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I don't know Mike- this is the midwest, I don't think I could afford to pay you 150k a year.

All of our Cleaning Specialists & Assistants are paid on commission, both for what is booked/pre-sold over the phone and for any additional work or topical treatments they add on. We do not have any issue specifically related to rushing through the job because something more was not purchased. That said, being that they are commission it is always prudent to have in place accountability. Our cleaners go back for free if a customer is not satisfied for any reason. We do not find call backs related to how soiled the carpet was before cleaning and in fact I would guess that the dirtier the carpet was before we were out the less likely it is for a call back as the difference in appearance will be more dramatic. I have always found that the higher % of callbacks all other things being equal is when the homeowner is not there when it is being cleaned as they do not have the frame of reference of how it looked before. Contrary to our wishes, carpet cleaning is not really that high on the list of life’s priorities. If a customer calls and is not totally satisfied, or if they make a negative comment on our questionnaire, (mailed separately) we will do whatever we can to rectify their concern.
 
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First let me say Mike that I would not want to presume to be an expert on being a small carpet cleaning business. I do not have any experience in that arena. That said, I would think that networking with people (mostly outside the industry) and learning from as many sources as possible within. Everything else I could say feels cliché like do good work, ask for more business or referrals etc. The only thing that I would caution is that I sometimes sense that some people in this and other service industries think their customers can not live without them. I think this is dangerous and that the reality is the exact opposite. Think about how you would like to be treated if you could be treated in the nicest and fairest way possible and then try to treat every customer that way. I believe this will increase your likelihood of your customers choosing to not live without you as well as just feel better.
 
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Our repeat run right around 90% or so, but that kind of a thing is always a moving target as when you are dealing with a large customer base there are a lot of factors that can change the needs from Moving out of area, Moving in with others, Dying, Children leaving causing frequency to drops to being unsatisfied (hopefully that is the smallest part) and others.
 
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yes you read it right. We are marketing all the time though as we want to keep reminding and being in everyone's face, ears, mail etc. whenever they have the need and can trigger a response. Carpet cleaning is a necc evil, most people would much rather spend the $ on a nice night out etc.
 
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Amazing! :shock:


Mr Coit is rolling over in his grave right now after reading that...


Next question:

What advice would you give to a company that wanted to start a fixed price carpet cleaning service? What three things would a service like this do to ensure their success?
 
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As long as they stay out of my neck of the woods that's okay :)

1. Have room size maximums i.e. 150, 200 or 250 sq ft. This protects you from having to clean a 500-1000 sq ft great room, or lower level room at your single room price. You can then either have it count as multiple rooms or have a sq ft price for the overage.

2. Have marketable price points that work for you and prospects i.e. 3 rooms for 79.95, or 99.95 or whatever you feel you need to get, but make it attractive.

3. The phone and technician staff are really important in this scenario as you will not be going out to many homes for estimates and developing that face to face relationship. From that first encounter over the phone to the initial opening of the door at the home you have 2 critical customer contact points that can make or break you in terms of having a long term relationship.
 
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Yes Mike, we have a $99.95 price point as well as a $49.90. For years we were an even 99 & 49. We decided to raise it a bit and no one though twice about the 95 cents so with that slight increase it added almost 60k of gross revenue between our in home and in plant cleaning. I think the psychological value of having price points of less than 50 and 100 are important for us. Who knows someday we may say 2 rooms for 99.95 instead of 5 rooms, but I’m pretty sure it will still be 99.95.
 
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Over 70% of our residential customers add something to their order when the crew is at the home, whether it be another room, a piece or more of upholstery, or a topical treatment. Our guys are paid commission for everything, and have a couple incentives. They get a little higher % for topical treatment add-ons and also every quarter we have incremental bonus levels that if they attain they get gift certificates for a local mall, anywhere from $100-$500 or more.
 
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If we do our Job right on the front end they are already aware that oversize rooms are an additional charge. Occasionally one slips through the crack and we eat it. Back in my cleaning days this happened 1/2 dozen times a year maybe. I just sucked it up and did the job and let them know in the future what thew price would be.

Ken
 
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The metro Detroit area has a few pretty large multi truck companies, a larger # of 2-5 truckers and then 100’s of owner ops. I would think that overall the owner ops have collectively more customers, but our prospective customer is one who is looking for a company they can trust (usually by referral) and with brand recognition, which we are fortunate to have. A couple of the franchises have started to adv more heavily in this market and we really don’t know what type of impact they are having exactly but we are hoping they are taking it from our competition.
 

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