Six years ago this August, Bill Muske bought an inefficient, medium size mat laundry in Minnesota’s Twin City area. What happened next is a story of transformation of the industrial laundry business model. For the past 3 years Mid-City Services has experienced double digit growth and is on track to grow 30% for 2014.
Before purchasing Mid City Services, Bill spent 22 years working with national laundry chains. This experience taught him about how the laundry rental business really works. During the last several years, Bill noted a disturbing trend. The national laundry chains were spending a lot of time and effort marketing to national accounts, oftentimes with little to no margin. Conversely, they made up some of that lost revenue through their small business accounts. While the quoted entry pricing was low for these small accounts, the nationals added a seemingly endless list of upcharges: minimum inventory billing, maintenance minimums and auto damage billing—all hidden in the fine print of the contract.
A Better Way To Do Business
Bill took Mid City Services in a different direction by offering concise, transparent billing. In Bill’s experience, no two contracts from the national chains were ever the same. “They quote whatever it takes to get the business and make up the difference with upcharges.” All of Mid-City Services customers pay the same price. There are no hidden charges; they are charged for what they use with no minimum service fees. This translates to savings for small restaurant clients since they experience seasonal traffic changes throughout the year.
Because of his transparent pricing, Mid City Services appears to be a more expensive than the national competition. Bill admits that it is hard to overcome the price objection but the fact that there is no contract helps getting his foot in the door. Once clients experience Mid City’s high level of service and overall cost savings, they become loyal customers. Bill states that even without contracts his retention rate is 97%.
Bill’s satisfied and loyal customers are only too glad to provide testimonials to Bill and referrals to prospective clients. This approach of acquiring new clients by offering better processes, excellent service with customer endorsements is the cornerstone of Bill’s growth strategy. Bill targets established “mom and pop” owner-managed restaurants in the Twin City area. He has experienced that the majority of start-ups do not survive their first year of business so he does not waste his time and effort. Bill interacts only with the owner because of the high turnover rates of managers. “Without a contract, a new manager will hand over the business to anyone that seems to have a better deal.”
From Clicks to Clients
In addition to the referrals from existing customers, Bill exploits internet marketing to grow his business. Having had a web site for years, he was stymied by national laundry chains with their constant stream of new content which enables his competitors to always outrank his site on search engine results pages. Not to be undone, Mid City Services leverages Google AdWords to even the playing field. When a prospect types in one of Bill’s carefully selected keywords for a search, an ad for Mid City Services will be at the top of the results page—even with national competition. When he began this practice, he paid less than $2 per click. With increased competition, he is now paying over $8 for each click on his ad.
The cost seems high but because of his select keyword terms, it results in prospects who are more likely to become customers. If Bill’s ads get six visits to his website as a result of an AdWord click, he may get three calls from those prospects. From these calls, Bill usually closes two out of three. Even if only one client was closed resulting from a week’s AdWords spend, “It’s still cheaper than hiring a sales person. If I sign up a customer for $30 per week service, that’s a lot. It’s $1500 per year. I’ll take them every day. They’re great business.”
Bill described his web site as “Nothing flashy, but it demonstrates that there is a better way of doing business.” He makes it a point to follow up with each of his customers by asking them what they like about Mid City Services. He pointedly asks if they received what was promised and/or was expected. He displays those testimonials on his website. When visitors see these testimonials, they are pleasantly surprised. “Prospects are not used to hearing business owners talk so positively about linen rental companies.”
When Bill is contacted by a prospect regarding Mid City’s range of services, he will inquire about their existing contract. Many times a prospect will not realize that they have a contract with one of the national chains. This happens when the person who originally completed the agreement is no longer employed at the business. More often than not the contract has an auto-renewing policy. Bill’s first order of business is to instruct the prospect on how to request a copy of the contract and how to remove the auto-renewal clause.
Bill never encourages his prospects to break a contract. He will note when the contract service period expires and get back in touch with the prospect at the right time to switch them over to Mid-City Services. He is able to keep track of all these dates and contact information with a contact data base. “It takes some effort to keep it up to date but it’s worth it in the long run.” He adds “The challenge in the industrial laundry industry is anticipating when customers are able to do business with you. They are often willing but seldom able.”
Bill also compensates his drivers with “new sales” commissions. Bill has experimented with direct mail with some success but most of Mid-City Services’ growth is attributed to customer referrals and his AdWords program. Bill claims that his simple methods are easy to duplicate and any laundry in an urban area should be successful if they give his methods a try.
Bill is eager to tell his story and looks forward to meeting with other independents to trade information on all the details of running a successful laundry. Even with his decades of experience, Bill admits that it’s impossible to know everything. Bill says “Universal Unilink provides resources I need to explore more about these different facets of the business, make good comparisons and good decisions.”
You can meet Bill Muske at the 2014 Business Development Conference in Charleston where he will be leading a forum called Low Cost Marketing THAT WORKS!