He Started a Business to Support his Newborn... Is It Enough?

I'm kind of screwed already.

My name is Mike Andes, and I travel around the country turning around small businesses that are struggling.

How can I call myself a business owner?

I never put my all into anything.

Because I was, like, super depressed doing that. But it felt nice.

Today we're going to a carpet cleaning business that's been growing really fast.

Most home vacuums suck. They don't suck or they don't suck.

Yes.

Yeah. But I'm always wondering, like, where the hell's all the money?

I haven't even got a nightlife forever. Like, I had to throw a punch.

Right now, but over the past year, their bank balance has gone negative twice.

And I just feel like a failure. Easy. It's brutal.

Yeah, it was. Because we just didn't know, like, what to hone in on.

And more than 25% of their revenue is being spent on advertising. Like, you can make sense of a 10x multiple on marketing, but we can't have 25%. That's all you're in profit, gone.

We get kind of, like, verbally abused a little bit, and that can just be like. That kind of checks all the boxes. Like, no one really, like, was nice to me, and it was a nightmare, to be honest.

What just happened?

Let's see if we can turn this thing around. Robert, how's it going, man?

What's up, man?

Good to see you.

Nice to see you.

This is a cool little spot you got.

Yeah, it is.

And who's this?

This is Justin.

Justin.

My name's Justin Thomps. I do all the company's cleanings. I handle the inventory and just any other little thing that needs to be done that Robert can't get done at the moment, I pick up for him.

And you guys were roommates, right?

We are, yeah. We were. Yeah. He lives with me now. He'll be trying to get a spot soon. Completely separate the business and the personal life and the home and stuff.

Cool. And then. You guys raised down here in Marysville or.

No, actually, we were both born in the South.

Really?

From Florida. I'm from North Carolina.

Oh, wow. What brought you up here?

Because my mom lived in North Carolina, then she moved to Texas. Yeah, I followed her about six months later or something, and I didn't want to just, like, follow my mom around, so here we are.

How much did you pay for this spot?

It's $1,400.

That's not too bad. And Gigan includes all this over here?

Yeah. I was thinking I kind of need some type of space just to get Away from home? Yeah, yeah. Cause my home office is like my bedroom and I got a three year old and yeah, my son being born, if that one thing didn't happen, I probably would just be doing something stupid right now. When it came time to actually start that business, it's probably the sole reason why I actually went through with it is because my son was on the way. Every aspect of life, every decision is basically made based off of how he's gonna perceive me as like a man and how he's gonna try to like mold himself.

So basically three years ago, what were you doing beforehand?

I was on unemployment. I looked into like home service businesses. I actually started a window cleaning company before this. Now when I say started like companies, I didn't go like actually have these real companies. It was just like an idea. I got a logo made, printed off some door hangers, hung them up. I cleaned one house of the windows and then I realized that that probably wasn't what I was gonna be good at or be into. Found a car cleaning YouTube video. Okay, I can figure that out.

Cool.

Then what did you like post some.

Craigslist ads or Facebook ads or what you do?

At first, I mean, yeah, it was stressful because we just didn't know like what to hone in on.

I did Angie's leads.

Yeah? Yeah.

For like two or three weeks. I tried Yelp for a little bit.

Angie's List, thumbtack, Yelp, they're okay in some markets. I've seen people build an entire business of the back of these lead gen services, but I've also seen people spend 20 and 30% of their total revenue on getting leads from these services.

And the thing that I don't like about it is you're basically on this.

This like IV drip from them and if it was to be cut off, your business would collapse.

And then I did local service ads.

After just kind of focusing on Google service leads that really did everything.

And I was like, yeah, Yelp and Angelads are terrible.

Google local services, if you qualify for the program, you're gonna show up right here at the top and have this Google guarantee. But here's the thing. The difference between Google Ads down here and what we're talking about now, which.

Is Google local services, is if someone.

Clicks on my ad down here, I.

Pay for a click, but here I.

Pay for a lead. And I would much rather pay for a qualified lead than just a whole bunch of click. Year would have been like 2022 or 2021.

Halfway through 21.

Got it. And so what was revenue for that year? You think I had revenue?

Actually, I can tell you. Yeah, I think it was like 60.

Yeah.

You can see local service. Absolutely crushed. But you're paying a bunch of money. Yeah, I mean, I wouldn't even want to pull up that number.

Google's obviously trying to make more money.

That's fine.

And although it's a pain in the.

Butt to qualify for, it also keeps.

A lot of competitors away from even being able to be in the program.

Yeah, so we did 74,022. That was basically just me by myself. And then 23, we did 200,000. And that was him both. Yeah, he was working at some, like, insurance company or something. He had his insurance license and he hated it and all starting this and had so much work.

And, like, he can't do it all by himself. You know, he tries, but you kind of need someone that's thinking just like you are, that's kind of right behind you or right beside you in a way.

But I was like, I can just answer the phones and you can clean the carpets for like five days a week.

It just. It just makes a lot of sense just to. Just to put my all into something. I never really put my all into stuff. The only thing I ever put my all into was, like, working out. I lost a bunch of weight and I don't know, that was about it.

I mean, it's super interesting how passionate we both are about carpet cleaning.

Like, I never put my all into anything, you know, and I just see the. I see what can happen if you do.

Of course, there's some days where it's difficult, but I hope one day that he'd be like, you know, my operations manager or something like that. That's kind of like the goal.

I always say, wherever Robert is, I want to be right under him. I don't have to be right next to him. I'm cool with that. That's a lot of responsibility. But, like, right there, I'm fine with that. I'm always cool with that. That's how we always set things up.

And like, right now, like, the constraints are, like, in terms of, like, cash being crunched, really tight.

Yeah, cash is tight. Customer acquisition costs are high.

So right now you're pay $50 or so per lead from Google local services.

Yeah, it fluctuates, but that's pretty average.

And then the average ticket per job right now, what's that?

Looking for 450. Right now, I think 454.

Okay.

But overall average is 350.

If you only get one for a one time job, essentially you're paying $50 customer acquisition cost and then you are only getting, let's just call it 350. That's the struggle. Cause that's all your profit.

Yeah. But I'm always wondering like where the hell's all the money at? Yeah. Sometimes it'll be a day where it just seems like all I' customers that are just really not super happy or I'm getting people that are calling like leads and they're like oh, that's not worth it, you know. And I just feel like, like a failure. Easy. After a day like that, especially a couple of days in a row, man, it's, it's brutal. It's like, I think marketing's like accounts for 20 to 25% every month.

Really? Every year?

Yeah.

Because my conversion rate for a lead is 40%.

So $50 times two and a half.

110.

Yeah.

For, for customer acquisition. Yeah.

So it's like Robert's told me that the average ticket or the average cost.

Of every job that he bills out is $350.

He that his customer acquisition cost is around $110. Which means more than 30% of his average sized job is being spent on advertising. Where's all the profit going? It's going to Google, it's going to Facebook, going to these other advertising platforms instead of his pocket.

It was really tough trying to figure out how to scale when we were paying $100 for a customer and only getting like 3, $400 on average profit.

Bye bye.

It was nice. I mean it helped us do 40k. But of course 20, 10,000 of that went to marketing.

Really?

Yeah, easily, easily. Local service ads was probably like 6,000 do. And then Google Ads, $100 a day plus the grand that I send to the agency. So it's might be higher than that. 25% goes straight to just acquiring that customer. And then we got to figure out paying labor, gas, insurance.

The cost of goods sold or the cogs inside of home services is really brutal. Usually 40 to 50% of all your revenue goes out the door to cost of goods sold or direct costs. Well what are those? Those include your materials, but it also includes direct labor. And that's the challenging part with any service business is the fact that you to actually pay people an hourly wage or a salary to actually go do the work. It's part of your cost of goods sold, which means you have a low gross profit.

So it's kind of hard. That's like the bottleneck right now because like I want to scale, it's like, well, I can't scale local service ads, right, because you set the max budget and you're not going to get any more leads than whatever you're getting out. I mean that's just kind of how it goes.

Honestly, the worst part about Google local.

Services is the fact that I can't.

Pour more gas on the fire, which means if it's working well and I'm getting leads, I can't just put more money and get more leads. There's a finite number of leads and Google has to distribute those all the people that qualify for the program. And so if I want to double my amount of leads, I can't just double my budget to Google local services. Usually they don't even come close to the budget parameters I set out. Right now when you have the 60% that don't accept what's sort of their main reason they're not accepting now?

Price and availability. I should probably know, I should keep track of it. But I'd say maybe like at least a quarter of our rejections are just because we don't have availability. Like someone will call them like, hey, we need carpet cleaning like today or tomorrow. Right now we're booked out probably about a week and a half until we could put anything on the schedule. The other percentage, whatever it is, is all price.

Now it's easy to say never change your prices, never go discounts, never give any sort of money off whatsoever. And I actually don't agree with that. I am willing to give a discount if someone else is willing to concede on timing. For example, it's the middle of spring rush, I'm super busy, I'm booked out five, six weeks and I have leads pouring in. I can't get to the work, I'm super overwhelmed. Hey, I'm willing to give them a 10% discount if they're willing to do the project in the middle of winter. If you're willing to concede on timing, I'm willing to give you a discount. Now if someone also says, hey, it's not inside my budget, things are too expensive or you know, you're too expensive.

Or whatever it might be, the other.

Thing that I can do is change the scope of the work. The thing that really ties this all in together though is like you gotta know their budget. And so whether you're doing follow up phone calls or customer says, hey, you know, I gotta think about it, this is a little too expensive or whatever, I need to know what their budget is. It's above my budget. Okay, great. What is your budget? If they give you a number, then I can work with them because I can either delay the project off into.

My off season, or I can change.

The scope of work to fit inside their budget. The only other time to discount is if you have massive amounts of excess capacity. You have a whole bunch of trucks, you have a whole bunch of employees. You could do way more work than.

What you're currently doing.

That's the only other time I would reduce the price and give them a discount to get the job on the schedule.

I think it's really two problems, but if I solve one, it solves both of them simply just customer acquisition costs and our average ticket being too low in comparison to how much it costs to acquire a customer.

I think the average ticket is, like, where I'm looking at, because, like, $50 per lead is not horrible. It's a matter of, like, right now, the ratio of, like, $50 being paid for a lead to 350, we can't make sense of that. And let's just say that maybe 50% of people do a second service. Well, now, like, the lifetime value of that customer's maybe, let's call it 600 bucks.

The biggest room for improvement, it's just gonna be average ticket price. Trying to figure out, like, how we can add on to customers jobs.

And I think we can make sense of paying $50 per lead if, like, the lifetime value is more like a thousand. So then it's a matter of, like, well, how do we increase the average ticket size and more? So the recurrence and the reoccurrence of them coming back.

I'm super happy that I went with carpet vending. I love the industry. Some things I wish I could, you know, sometimes I like. Lawn care would be pretty cool. I think they're pretty similar, but the easy recurring revenue would be sweet.

For so long, like, it was a lot of us getting to jobs and then us convincing people we could do the work. So it was like, forget adding anything onto it. Let's just get to this house, get it done, and then, like, be happy for at least what we provided.

You know, every industry has its downside, so I try not to focus on it too much.

Like, what is your base kind of.

Right now, our minimum is 175, and that covers one room. 175, as long as it's under 350 square feet. Anything over 350 we count as an additional room.

My thought is, like, even if that number goes lower, but then it's like super basic. And then when you send the estimates, almost like here, do you want this? Do you want this? Like there's like all these, these additional add ons, even like do you guys do smell like fragrances? Yeah, we do.

That's usually included in the base cleaning. Unless someone specifically requests not for scent, we usually just throw it in. We haven't really ever thought of that as an upcharge. It's more of just like kind of an expectation. You get your carpets cleaned, do you expect them to kind of have a nice smell to them? Just upselling our customers. Upselling it sounds like I don't like saying those words. Upselling our customers trying to find a way to word it. I'm not saying that what you're saying is incorrect or wouldn't work, but I have tried in the past to remove some of the parts of our process. Like the first, first thing we do is vacuum. Because most home vacuums suck or they just don't vacuum often.

They don't suck or they don't suck.

Yeah, it's funny, I'll say it on the phone all the time. Well, actually they don't suck. So like maybe eight or nine months ago we offered base level. I forget what I named it, but it was for people who called in especially move outs because they are looking for sometimes a cheaper price too. Like renters or just moving out. Like I don't care what the carpets look like. Sometimes it's fine. They're price shopping. I get it. You know, you don't want to spend. You have a budget for a project, we give you a number that's higher. You're not super thrilled about it. And it depends on the time of year and how our schedule's looking. Sometimes I'll, you know, a first time customer discount. We've had customers that get that and are totally fine. So it's not 100%, but it's definitely like step one, problem customer price shop. So we did no vacuum and it was a nightmare, to be honest.

It's like a core, it's probably like a core service, right? It's like for us it's like I can't say I'm mowing your grass without cutting the grass. Yeah, it is core. And then it's all the other things around it. I remember doing this for a long care. Like I was like, oh, cut your grass. But really it's like we edge, we blow off the walkways. We are going to trim around the edges we're going to usually kind of pull the weeds around the perimeter of the bed. Like, there's all these other things we're actually doing.

No one cares about if I'm having a bad day or really what's going on. They want me to show up at their house and do a good job.

You easily get this done in four hours with one person, two people. Like, if we were both here at the same time and someone starts up there, someone starts in here. Especially me and Justin. We're working together, and we're like, on it. We have a day that we need to knock some stuff out, man, we could be in and out of here in two hours. And that's like doing the job well. If we wanted to just, like, fly through it, if we were just like, scums, you know what I mean? Didn't really care about the result or the customer. You can make it look like you cleaned it in an hour, but I.

Think a lot of times we'll be up front people. People's front doors, and they're like, hey, how's your day going? And if they get like a, huh, well, this sucks. And that sucks. That reflects on the work you're about to do as well.

And so instead of being like, oh, he's mow your grass. I'm like, hey, here's all the things we're offering. And then if someone's price sensitive, okay, great. We won't edge. Oh, you know, we won't bag the clippings. We won't haul them off. And so you could really kind of break it down to where, like, those current things that you're just throwing in are actual upsells. Right? But then even in your base package, you can say, hey, we're going to do carpet cleaning, and we're going to throw in industrial carpet cleaning. And we come in with our vacuums that are twice as more powerful than anything you can ever get in the market for your house. It's adding value without adding price. And, you know, it has to be done anyways. But the customer's not even thinking about that, right. You know, it needs to be done. The customer's like, oh, I didn't even think about the fact that they have to, like, vacuum the whole place. Oh, and they're getting way more out before they even start to clean the actual carpets. The biggest advantage of being in person on the customer's property is the fact that I can see the property and I can actually sell them other services that we offer that they didn't actually ask for.

These are called upsells.

Selling more services to the customer. Whether I'm doing the estimate video or I'm walking the property with the customer, I'm calling constantly thinking about, oh, I could sell them this, I could sell them that. So even though they got me here for a bush trimming, I'm actually focusing on do they actually need gutters cleaned out? And so the whole goal of doing an upsell is to improve the lifetime value of the customer.

Everything is like, I'm super comfortable with everything that you're saying. Then it's like decreased prices.

And I'm like, it's more like just having an entry level offer that gets people in the door. So for example, like a landlord, when someone leaves as a landlord, I want the cheapest possible. Like I don't care if it smells nice, I don't need to do anything else. I just need to clean the harbors. It's like, it's like when you go to like a dealership and they're like, oh, your starting F150 is $32,000 and you walk out the door, it's a $60,000 job. Because like, well if you want leather seats, of course, and if you want the stereo package and then if you want this, like, so that's the model is get them in there with the entry level price and you upsell them and then you cross sell them and other stuff.

Think of upselling as upgrading the customer to the next model or the better version of the product or service. Think of cross selling as what you might say to the customer, hey, you.

Might also like this other thing.

So if I'm going to sell a better version of a F150, that be upselling. But if I'm going to sell oil changes for life, a extended warranty, or a better sound system, that would be cross selling.

Like before I approached it wrong for sure. Now I'm thinking about it the way you just explained, especially the car dealership before, I would say here's what we do. Like we include vacuuming this, that the other. But we do have an option where we don't vacuum. But if I just did that reverse and said we clean carpets but for 50 bucks more we can vacuum if.

You want, but then you can get your foot in the door with that more price sensitive customer and then they start seeing all these options like take a $300 job turn into six or $700 job and all of a sudden we can of paying 50 bucks for the Google Meet, right?

So this is Actually a sneak peek of the workshop I'm gonna be conducting at Blue Collar Summit coming up in January 2025. This is one slide of almost a thousand slides I've put together for a full day long workshop that is part.

Of the three day event. It's gonna be a three day workshop where myself, John Taffer from Bar Rescue.

And other select home service business owners.

Speak to you on stage about how to grow your business past a million dollars in annual revenue.

You definitely wanna be there. Bring your spous and I'll see you.

At Blue Collar Summit.

Go to bluecollarsummit.com and book your tickets today.

Come to Seattle, we'll see you there at the Blue Collar Summit. I think the way we're going about getting ads honestly isn't that bad. Now we just need to extract more value from them. I've been slamming my head against the wall trying to think of ways to get recurring revenue, but it's difficult cause people aren't getting their carpets cleaned more than every six months.

I like to think about your home service business as three different types of revenue. So first off we have one time revenue projects. These are gonna be jobs the customer only needs done one time. Think of it like a new roof or new windows or an H Vac system. They're usually not gonna get a whole bunch of H vac systems every week or two from you. So these are one time projects from a valuation perspective, creating value and worth in the business. What is more valuable is a reoccurring service. This is where they might need every week, every two weeks, every three weeks.

Or every four weeks.

But they ultimately are doing it ever so often. For example, I don't need to have a Pepsi on a subscription, but I will go get and then I'll get one in a few days and I'll get one next week. So it's reoccurring. It happens periodically over the course of time. This would be something like installing mulch in your flower beds. Like maybe you do it once a year. It's definitely not a one time and you never get the customer again. It reoccurs to some frequency. However, the most stable revenue and therefore the highest enterprise value you're going to get from any type of revenue is going to be recurring revenue. This is where the customers on schedule. You're showing up at their property every week, every other week, every month, every quarter. But they're on some schedule where you can predict very accurately out in the future of what your revenue is going to be. The nice Thing about the landlords is one, they won't ask for estimates. Two, they are super reoccurring because if you get a property manager for example has like a thousand units or 500 units, there's like literally jobs every day. They're having done like every turnover. You got to clean the carpets. And so it might just be a matter like let's get our base package and we know that's going to go after the property manager or the price price sensitive consumer but we can get in, knock the job super fast, there is nothing added on and then only are living off of their reoccurrence and the fact that we don't have to pay for them as a new lead every time.

It sounds contradictory but you can raise your prices and also lower your price to the customer. How? Increase your hourly rate that you're charging all your services but then make one service, your entry level service, the gateway to all your other services.

Really, really cheap.

Yeah, you'll probably only break even. You might cover the cost of the job. However you'll get them in the door and you'll sell them all the other services that you just raised prices on.

There's no reason to have to try to react. Like some of your current leads that you're attributing to paid marketing like Google Ads is simply your previous customers coming back.

And so as long as he can just cover the cost of his technician doing the work, I'm okay with him using that to get these entry level jobs and these commercial jobs that could lead to way more work down the road.

Yeah, I mean I kind of looked at it complete opposite which is interesting because we really don't do a lot of commercial cleaning like landlords and stuff because it's like they just want the cheap. Exactly. Like you said. Yeah, so we've gone, I've gone like an opposite direction where I, I just increased the prices so much where we just don't book those jobs anymore. Like don't even talk to me on the phone or they'll call, hey, we just want to get the cheapest whatever. And I'm like oh, we're probably not the ones. Price shoppers tend to be the customers that are a little more difficult or want us to deviate from the way that we do things. Like we require a deposit, we have a four hour arrival windows. And I've noticed any time that we have to make exceptions for any of those two things, every time it's end up being a problem, we lose money. So I've done Away with that. It's either we're going to do it exactly the way that we do it or we're just essentially not gonna service the customer.

But then you'd be able to go after the more price sensitive customer by having the basic thing and then to someone that is even price sense of $50 to clean all your baseboards is a deal. You know, an extra, you know, $50 to polish the hardwood or whatever is all like little things that all of a sudden the $200 package becomes 500 and the customers like to them they solve more of their problems. Like right now if you're going to like an average ticket like a 300, $400 job, what's the current upsells that they could potentially put on?

Really it's just we do carpet and upholstery. It's simple. It's easy to train too. So usually we book a carpet cleaning and then hopefully we can add some furniture when we get there.

When you're trying to add things on and then we have like a fully booked out day, it's hard. You know, suppose I have to add on a couch or a sectional and yeah that'll make us 200 extra bucks but that might take me two hours to do and that's going to put everybody else behind if that makes sense.

If you kind of strip down down the basic and then you would increase your close ratio probably more like 60 to 70% is what I'd be shooting for. But you're really just trying to get your text in front of them and then they're doing okay. We got deodorization, we have baseboards, we have polishing all these other options and I just generally believe you could get the ticket size like to at least 500 bucks. Like you can make sense of a 10x multiple on marketing like 10% but we can't have 25% that was kill like that. That's all you're in profit gone.

I would have paid to have this done, especially it being free. It's like a no brainer which I almost just didn't even submit the the video. See I'm glad I did it, glad I submitted it cuz just getting even 30 minutes of knowledge from somebody who has been through the similar process and has made a ton of mistakes. Nice to get that. I mean I was probably going to end up paying for coaching anyway. I think I said that in the video just to get an hour because I know that that's so valuable. Infinite value. Because if we implement the things that he told me today. And it works and I do it correctly and I double our revenue in a year or two or even three or four years from now. This was like a five hour commitment and we could potentially make a million dollars on it. You know what I mean? In the long run, it's just like it's a no brainer. That's something that we should be mentioning on site.

I think on site's more powerful because when you probably feel it when they, when you do the phone sales like the before and like you feel, you don't want to feel pitchy, right? They're like, I want the cheapest price. And you almost feel obligated, like, okay, well I'm not going to try to pitch them on other stuff.

Yeah, it sucks because the first thing I try to do when I get on the phone with someone is have that human connection because I'm not like a answering service or something. When I'm answering, I'm the owner of the company. I can have 30 great days, customers absolutely thrilled. And then one day with customers that are like four or five that are just upset or leads that call that feel like we're not worth it or we get kind of like.

Verbally abused a little bit. You know, people kind of beat you up on the phone versus when someone's.

On site and they're able to actually assess like, dude, these baseboards are horrible. They can upsell that extra value. And then the customer has built the rapport with them. They're in their house. Like there's a lot more, but it takes way more training of the techs. So this is the conversation I'd have with him because it's a good big change from a tip for a tech to start having new sales. So I'd just be like, hey, look, I want to pay you more. The business can afford it. I want to pay you more. I think you're worth 5, $10 more per hour and I want to be able to pay you. And this is how we're going to do it.

At certain times I almost have to tell him like, hey, I will do more things. Like, I don't. Like, he knows, like if he pays me to do certain things, like I'll just do it. But I don't know how to put it. I think he just wants to do too much himself, if that makes sense.

Super, super lucky to have to have Justin. It's hard to get any employee to actually care as much as you do, but he's pretty close. Sometimes it feels like he cares more than I do.

I'm older than him, too. I think that plays a big part. I'm tired of starting over with things. I just know if we put a bunch of effort into something and it works, why not keep doing that?

That's really all you need. You get someone that really cares about the business and cares about the.

I think everything else can be figured out. Like Justin specifically. He's like, a really good. Really good customer service.

Yeah.

I mean, like, most of our reviews after I rdm, a lot of them are like, justin, Justin, Justin. I do repeat. Sometimes I'll do. I clean on Sundays, and I'll have, like, his repeats, and they'll be like, where's Justin? Yeah, what's going on? I'm the owner. Like, you should be. You should be happier. But, yeah, they love. He's really good customer service. So, honestly, if I could just tweak. I just need to systematize it, showing.

That, like, I don't mind coming to your house and cleaning your carpets. This isn't the end of the world. I don't hate my job. I like doing this. It's great. I get to watch the company grow. It's wonderful. They need to. They need to be able to see that as well.

Well.

And you want to pay him more?

Yeah, I mean, I would love to.

And so now it's like, this is how you pay him more. Here's what I'm doing. Let's walk through the property together. And in the back of their mind, they have, like, the five things. They know they come. They're looking. Okay. Oh, they have hardwood. Okay, great. Oh, the baseboards, they need cleaning. I got to get the window sills. Like, you add in all these other things. I'm like, okay, Mr. Jones. So this is what I'll be doing today. And then here's this. Option one, option two, and option three. I can go ahead and get these knocked out for you today if you want. And he's like, oh, yeah, extra hundred dollars. This, this, this, this, this. And all of a sudden, you increase the ticket size by 50%.

Like, if someone was right in my face, if someone.

If someone told me $50 to clean all the baseboards in a house, I'd be like, yeah, do it, please. I don't wanna be bending around going.

Yeah, dude, in a harpy.

Especially if I just, like, literally swiped a bunch of dust and, like, do you want this clean? You almost feel stupid not to say no.

Yeah, 50 bucks. I mean, it's real quick and easy to do at least the tops of the baseboards just to make the carpet cleaning the final product look better. 10 minutes so we can get 50 bucks off of it. That makes a ton of sense.

And then it's like, well, you know the reason the desk is here is cause you prepare your air filter. Like we can just switch out your.

Little stuff like that.

You start tacking that on, you make the make the 3, 4, $500 tickets. And it's not high pressure sales. You're adding value to the customer. And if they say no, no problem, just exit off, boom and just keep going. And now customers are going to be happier because you have a lower priced option.

Like I had a apartment complex the other day. I had to park in a parking garage, go through an elevator lobby, get to the elevator, go down to that lobby, go around the building, go up 25 flights of stairs and then I'm at the space, stuff like that. Sometimes I have to go back and forth to my van like six times.

You can pay them 10 doll hour. If you told him that, he'd be like thrilled of his mind and you could potentially lose someone like Justin over a $5 more power that he can get someplace else. Give him the chance to make way more. Like here's how you do it on an eight hour day, you make $80, that's $10 more per hour. Here's how you do it on both your jobs, you make 40 bucks. How you make $40, you're two upsells. You're going to reactivate them and get a review.

This is a part of some of the more difficult situations of carpet cleaning is that this is actually going to dry up and look really great. These are all just one wet spots. The rest of the carpet doesn't need to be super wet, but there was probably some thick carpet or thick coffee spots and stuff that he had to treat a little extra and add a little pre spray to it. So it's just gonna be like kind of wet. So sometimes it's difficult to be like bring the customer and show them this.

Yeah, right.

And then try to ask like, you know, are you happy with your service? Do you want to leave a Google review? Sometimes you have to like give it a day. So I do a. I call all of our customers the day after cleanings, after it dries everything, check in with them and make sure that it looked good. And usually they're happy on that phone call for sure. I'm always curious about how these other carpet cleaning companies have such a low like initial Price or low minimum. Like some big companies have, like $130.

They probably break even on it. They break even on it or maybe even lose because all the value is how do I take the $100 customer and upsell them in a $300 package? Because you see as a competitor, 99 bucks. And they know average ticket size $400. Because they know they've nailed their sales process of upselling, and then they've nailed their after sale process. How do I get them to come back next year and the year after that and the year after that?

In general, the lower price the ticket.

That you're trying to sell, the more.

People are willing to buy it. What that means is if I can have an entry level offer at the top of my funnel that's very cheap, I'll get people inside of my funnel. And then I need to grease the wheels from that low ticket item to more expensive options, services, or products that I sell.

It's like for us, our Christmas lights, for example, we break even on the first year. It's all about how do you get in the second, third, and fourth year when we're 70, 80, 90% profits. And so everything is built around. Get them to commit to it again, like the first one, we will lose money. Like, it's like friend versus backend. Even in info marketing, it's easier because usually the products that they give away is like a PDF or a free course. There's no actual cost. Like, there's no variable cost. But the whole reason you do that is that's the upfront. You sell them the back end, and those are the big ticket items. And that's what you just do in in service land. But we have to cover at least our variable cost on that first service. What's funny is, like, it's always funny when, like, I did the same thing when I first got started, it was like, well, I'm gonna do everything different than like, the big guys.

Yeah.

Of course, the reason they're big is because they.

Yeah, right.

They filled out their back end. They had things like incentives around $1,000 of upselling, and then they build a front end offer that, like, people feel stupid saying, $99 for a house cleaning, 100%, let's do this.

Yeah.

And they get there and they sell a $400 job.

Yeah. If I made it $99 for, like, for one room minimum, I would close like every single call.

Great.

Every single.

And then you basically know that you can break even on just labor. Like, you're basically your Variable cost of labor and fuel to get there. You cover that with the 99 bucks. And like I do not want to be in that business. Me neither. But we know we're gonna have a process to get the average 90 to 299 by all these other upsells. You look at any product line, whether it be like an iPhone. There is a $400 iPhone. Yeah, there's also a 1500 dollar iPhone. It's like, do you want it faster? Do you want bigger? Do you want a different color? Do it newer? Do you want like there's so many different ways to get them to the price package of premium.

That's like every product ever, ever. I'm thinking about it now like everything I buy it's like, well, by the end of the purchase because I was just, yeah, I'm buying tire. I have a Corolla and I'm buying tires on it.

Do they crush it there?

Yeah, I got a discount tire. I like looked online, it's like 159A tire.

By the end of it I'm like, well, I might as well get the insurance on it.

Yeah. Why would I get 20,000 miles if I get 60,000?

Now it's eleven hundred dollars. I'm like, let's double the price.

And they know the chance of you having the car in 60,000 miles is basically zero.

My goal is to get as many people into the funnel doing business with me and then making sure I communicate with them. My offers, my services, my products, my promotions to get them to continue down the funnel and spending more money with my business. This increases the lifetime value of the customer and I can turn that $99 into a $10,000 lifetime value.

You're thinking about all these other aspects that are really not carpet cleaning. Like if you're mopping, you're doing their baseboards. I bet there's three or four other things that you're doing that you just kinda like think of the service and it's actual value to the customer. And if it's not, we'll do it for $99 and we're just gonna come in like this could be a 20 minute job.

Every. Everything that I think we need is just perception. We went from having the Jetta to a Ford Transit connect, that helps so.

Much now it would suck. But we could take that Jetta, load these mach it and clean like residential carpet and we could do a fantastic job. People would just never be happy no matter what.

And then we went from having the Transit connect to just a Bigger van parked out front. That helped so much.

Yeah. A lot of the stuff we do is just based on customer perception.

I realize a lot of it had to do with customer confidence. Like if customers aren't confident that you're going to do a good job, but it's hard to add stuff while I'm in the mix, if that, if that makes sense. If they're, if they're wary about just the way we look and other little things, it's hard for them to be like, oh, okay, yeah, go ahead and clean that couch, or go ahead and let's add these rugs. They're trying to see like, am I going to do a good job just on whatever they ordered first.

It's easy to be able to think.

That if you just do a good job, customers will buy from you. In reality, you're not just selling the carpet cleaning or lawn mowing. What you're selling is the experience. And part of that experience is you showing up in a professional uniform and.

A professional looking vehicle. This is like a massive walking billboard wherever you go.

And if that's not part of the experience, the customer will value your service less. Even though the exact same services were completed, you're like, I did the exact same carpet cleaning. It smelt the same way. But showing up in a bad looking vehicle or without a uniform is going to massively decrease the perceived value from the customer.

Even at the end of a job. Do you have a sales process to try to get them on recurring?

We tried like a yearly maintenance plan. Essentially, they would prepay for their carpet cleaning for the next year. It didn't do so well.

What if you didn't require the prepay though? What if you just said, hey, at the end of the job, they're thrilled, it smells great, everything's amazing. That's the peak height of satisfaction for the customer. And even if it's not, the final process is you're going to upsell them, quote unquote, into basically scheduling their next year service. And if they do it on site, they get a discount. So it's like, hey, if you go ahead and schedule next year's service, we'll give you 20% off. But we do need to get scheduled today. And then you just give an incentive to your crew. Be like, hey, for every one of these customers, you got to do the walkthrough anyways. But I'll give you 20 bucks if you simply get them to sign up for the following year and then you put them in here and then just be an automated Reminder beforehand. They'll be like, hey, you're scheduled until next week for your carpet cleaning is the date we're coming. Boom.

Yeah, it's not a bad idea. A little bit easier to get them on the schedule. Home service companies, for some reason, are able to get away with not having, like, super high customer service, or seems like to be at least a common occurrence here. Like, when I was initially doing my research on carpet cleaning, I was calling a bunch of companies, getting quotes like, no one really, like, was nice to me. So I was like, we're just going to be like, you know, just provide excellent customer service. I'm just going to listen to people try to have, like, a human connection with them.

You have to combine two aspects. So the aspect of just being super nice and then the aspect of, like, being super confident and then putting those together because I realized I was being way too nice. And when you're being way too nice in someone's house, they're like, why is this guy being so nice? Like, what is he hiding? Like, what is going on? Like, like, I'm coming off more like a, like a happy salesman than just a very confident technician. So being able to kind of take just being nice and friendly and then being like certain times, like, hey, I know what I'm doing. I do this every day. We have done this for three years. We do three to four houses a day. Like, trust me, I got.

Taking those two elements, combining them together, that's kind of like what I think about when I step to everyone's door.

We do require a deposit. Do you think it would make sense to just not to deposit?

Not to another. Assuming this customer is a good customer, they're happy. Like, I want to do business with them. I'd just be trying to get them on the next one. We usually do this about annually. If you go ahead and schedule it now, today before I leave, you get 20% off. And then on your end, it's just a matter of, like, put the job on the schedule. Reminders automatically tell them you're coming and the job's in there.

It's when I did that in the.

Beginning, I like, told people, hey, you want to book for a year from now?

I had.

I only did that, like, three or four times. So in reality, when, like, I was out on the truck, but I do know we weren't sending out postcards, we weren't sending out emails and stuff.

So they.

We had one that just forgot who we were. And, like, they got the reminder text the day before, and they Were like, who the hell is this? Like, no, this is some scam carpet cleaner. And I was like, I called her and was like, no, we came out last year. And she was like, no, we had somebody else. And I was like, that was like, I sat down on your back porch.

We talked about it.

But yeah, so, yeah, I think just staying in front of their face too. That way they don't forget who we are. Cause I mean, a year's kind of a long time.

And even, like, even with text and email, if it's like, hey, hey, fill in first name. Was thinking about you today. We have a spot available next Thursday. We're booking out pretty far otherwise. And I know last year this time, look, I'd be looking at every single month, the year prior on your schedule and looking at every single one of those customers and trying to up, hey, a year ago we did your service. Let's go ahead and get done today. Because you have like, really every single month we have a calendar of like, what is the text or email that's going to be most relevant to them? And some of it's more promotional. Some of it's like, hey, thinking about, you have a spot available once a week, right? Get your carpets clean before, before the holidays, right? Like before Thanksgiving or whatever. And then just timing that like an email and text every single month. That's not too much. There are people that text every single week. There's text every single, like, it's not too much. And if we can get that to replace what is currently taking 20 to 25% of our revenue, you're gonna be in a much better spot.

I understand the desire to not overload customers with text messages or emails, but the vast majority of small business owners don't contact their customer base enough. This is the equivalent of saying, oh, I don't wanna go to the gym because I' gain too much muscle and get too bulky. I don't think you've ever been told your entire life that you have too much muscle. This is the same thing when it comes to small businesses. We think about how the customer's gonna be annoyed with all our communication. And because of that, we don't ever communicate with them. The vast majority of small businesses don't text or email their customers enough.

And then I would just break your marketing campaign into two things. One is like customers that were able to after the job sell in the next year, those are a different. We need to tag them so we don't keep promoting stuff to them. And then the reactivation campaign would be for anyone that says no to that. And I'd be tracking like right now you track your close ratio. I'd be tracking what conversion ratio you have from one time jobs into that recurring second one which is the annual plan because you're going to start segmenting like everyone your databases either A, I'm retargeting them because they did not take their recurring like the sec, they did not schedule their next year's service or the going to be these people who have scheduled next year's carpet cleaning already. That the way you would target them.

Is differently of course.

Yeah, right. And you'll have to create like a very diligent system for this to work. Like if you just tell the text like hey, before the job try to upsell them X, Y and Z and then like after the job try to get them next to your schedule. That will never work. Yeah, like I would either A give them iPads or B a sheet that they have to fill out for every single job.

He's, he's such like a perfectionist. I think he just wants to do, do too much himself if that makes sense. Do something about that because you can't just handle all that yourself. You know, it's just, it's just little things like that and it's like I'll always do more. I'll always try to add more things to job. Be as productive as I can throughout my workday. That's just kind of how I'm set up.

You know, start with paper just so you can like get started with it and then you'll refine it to. Okay, now I'll put in the software, put in the forms. But you want it to be when like the, the crew shows up. The client is like oh, this is how, how it's supposed to go. Like I'm supposed to go along. I'm following throughout the property. Okay, Mr. Jones, we're going to get started. Here's what you go. You've already got signed up for. Here's the other package. I can offer you today at a 20% discount if you go ahead and get them scheduled day. Here's the $50, this $50 this whatever boom. Sign off on that. Great, I'll get that done. When I'm done, we'll do a walk through of the property. Great. And then in the project then you have another checklist and it's like okay, so this is what was completed. Here's your total price next year. Now we've done the property, everything. Have them sign off on it to make it official. Okay, I can actually do this next year again. It'll actually be 20% off if we just do the exact same service one year from a day. I don't need your card information, I just need yes from you. Go ahead and sign and we'll put on a schedule. And you can cancel any time. There's no reason to have to try to reactivate them. Like some of, some of your current leads that you're attributing to paid marketing, like Google Ads is simply your previous customers coming back.

Yeah, yeah, yeah, for sure.

And so it's like, how do you we recapture that? Just book the job before we leave. There's no downside for the customer. Just cancel anytime. We're not going to show up randomly. We will be notified before you show up. It's like a no brainer for them. You know, a lot of your numbers, you have it dialed in the software. So like I have a lot of confidence you'll be able to just like focus on the systems. Think of it literally think of everything as a funnel, right? Like there are customers you can make tens of thousands of dollars on and there are customers you're making 99 bucks from. And that's fine. Just create the system and grease the wheels to get them down to the higher value.

Yeah, that's sweet. Yeah, I'm excited to implement that actually.