By Jeff Gardner | May 04, 2012
If you’re serious about growing the commercial accounts segment of your laundry business, you can’t avoid it – eventually, you’re going to have to make cold calls on potential clients.
Some laundry owners have their drivers handle those sales-related activities, while others may actually hire a salesperson to help them gain new commercial business. Both of these ways can work; however, most laundry owners do the selling of their commercial services themselves, so this is the model we will focus on.
The easiest way to break into – or grow your – commercial accounts service is through networking; specifically, talking to the other small-business owners within your market.
When I first got into the business, I went to all of my “neighbors” that I knew had laundry needs, and I asked to see their laundry bills. I told them of my plans to get into the commercial side of the business and that I wanted to see if it was feasible from a pricing standpoint. This way, I was able to compare customers with different amounts of volume and different types of products – and see what they were being charged.
Instantly, I was able to figure out whether or not I could compete with the large linen companies – and I could.
My next step was to wash a typical load for free for these neighbors of mine – using the linen supplied to them by the linen companies. I just washed one load to see if they liked my finished product.
This way you don’t have to make an investment in any linen, and you get to see what your business friends honestly think. And, from there, you can figure out whether or not you can make any money at commercial laundry (using the calculations we’ve discussed in past columns).
Initially approaching commercial business this way has two big benefits: (1) you’re dealing with people with whom you’ve already built relationships, and (2) you’re researching some of the objections you may face when you make true “cold calls” down the road.
For instance, you’re learning what your competitors – the large linen companies – are offering. You’re seeing what type of product they’re putting out. And you’re hearing from your friends what they like and don’t like about the linen services they’re currently using. And that’s information with which you can arm yourself for when you talk with future potential commercial clients – you’ll have a foot in the door because you’ll know what some of their objections might be ahead of time.
Let’s talk about some of those objections.
One of the biggest issues you’ll hear from your friends is that the quality of the product is lacking. Typically, with large linen companies, items such as towels tend to get very dry and flakey over time, due to the harsh chemicals these commercial laundries use. Of course, that’s something you can overcome because – as a small business offering a more customized, boutique-type service – you won’t have to use such aggressive chemistry on those accounts.
Another common complaint is all of the extra charges commercial laundries and linen services add to their bill. For instance, they may add a fuel surcharge; however, if you’re keeping your delivery route tight, you may not need to charge for this because you’re running your business more efficiently. Or you might just build that cost into your price so that your customers will think they’re getting a better deal.
One charge that customers typically object to is replacement cost. For almost all of the major linen companies, this charge represents between 10 percent and 30 percent of the total invoice, and it is how linen companies pay to replace items that are lost or damaged, or just taken out of service due to wear and tear.
It’s a real cost, but customers hate paying for that – so I build it into my pricing when I quote a potential account. It is part of my marketing plan to emphasize that I won’t charge a replacement cost.
Another common complaint is that linen services are not responsive. If a customer has an exceptionally busy week, the linen company will charge an extra delivery fee if they have to come out and deliver extra linen that’s off of the regularly scheduled route. However, because you’re close by and smaller, you can be more responsive to them, and meet their needs without extra fees.
For instance, hair salons’ busiest times are Fridays and Saturdays, but a lot of linen companies don’t deliver on Saturdays. This is an area where you can be more flexible than the big commercial laundries – and that’s a huge selling point to some small companies that do the bulk of their business on the weekends.
By contrast, let’s say a commercial client is having a slow week. I’ve got customers that experience a lull from time to time, and they just don’t need a delivery. If they’re with a large linen company, they get that delivery whether they need it or not, because they have a contract for a minimum order to be fulfilled every week.
Of course, you can be more reactive and say, “I’m a small business too, and I know there are good times and bad times and I respect that you’re trying to make ends meet. If you just let us know ahead of time, we won’t stop, or we’ll adjust our schedule for your needs.”
Customers also complain about contracts with evergreen clauses that their linen services make them sign. If you have a big account where you’ve purchased a lot of linen, you may need to have the client sign a contract, because you’ve made a significant investment in that individual account. But, for the most part, all of my accounts are very small (about $100 a week in business), so if I lose one of them, I can fairly easily replace it with another one.
In fact, one of my sales points that I bring up with my new clients is that, if I don’t earn their business every week, I don’t deserve it. So, typically, I don’t require contracts – and small businesspeople love that, because they hate contracts.
Other common complaints are that the items come back from the commercial laundry with a heavy chemical smell and/or a rough feeling to them. Again, you can avoid that by using less chemistry and incorporating a more customized approach to each client’s laundry needs.
As far as bidding on an account, be flexible in your pricing. Early on, my friend and fellow store owner Ron Lane – who operates a successful commercial accounts business out of his laundromat in northern California – correctly pointed out that one of the biggest advantages of doing commercial laundry is that your clients typically don’t know each other and they don’t come into your store to see what your posted prices are. In other words, every price is completely negotiable.
Therefore, if you can figure out ahead of time what you think a potential client is currently paying and how much linen they’re consuming each week, you can probably come in with a higher-end price, yet still save that customer a lot of money over what they’re currently being charged.
One method I’ve found to be successful, specifically with customers looking for linen rental but not necessarily requiring flawless towels, for example, is to offer them my “seconds” first. My “seconds” are the towels that may have small stains on them or are graying a bit.
For instance, I’ll make a cold call on the phone and tell the prospective client that we do towels for 16 cents per piece. That’s a low price, and it will usually get them interested in my service. Then, I’ll bring out a sample of the 16-cent towel, which again is slightly stained or grayish. If the client likes it, great – now I’ve got a use for these towels that I probably would have had to destroy. However, if the client doesn’t like the older towel, I can bring out a new “premium” towel, which of course comes at a premium price.
You can do this, too. And if you’ve done your research on the customer, you know how many towels they use, as well as their quality. Let’s say this commercial client is currently being charged 34 cents a towel; you then can come in somewhere in the 20-cent range – and they’ll likely be ecstatic with price, because it’s a huge percentage off of their current bill, especially if they’re not adding replacement costs on top of it.
Truth be told, I don’t like cold calling. That’s why I prefer to do most of my commercial business building through networking at local business events, Chamber of Commerce meetings, business association dinners and charitable fundraisers.
Another great sales tool is my website. I get a lot of calls from potential clients who find me online. From the information they fill out on the site and their initial phone call, I can figure out what their needs might be, so I can go into those sales calls prepared.
And, of course, I always carry a pile of business cards with me, and I’m always willing to talk about what I do.
All in all, the hardest part is landing that very first commercial account. So, I strongly recommend trying to get your neighbors’ business – those small businesses down the street or in your strip mall. It will give you a bit of a track record, as far as commercial work. And, when you visit future potential clients, you can provide solid references. Once you’ve established yourself and you’ve got a few accounts, get some testimonials – you’ll discover that, if you’re doing a good job for these first few clients – they’ll do their own selling for you.
I always ask my friends that I do business with for referrals. This takes the pressure off, and it make “cold calls” a little less frigid.