PEMBROKE, Mass. — In my ambles around New York City, I come across Laundromat after Laundromat. I counted once and there were five within a six-block radius. Five! That means many patrons have a choice of where to get their clothes cleaned.
I am sure this is true in every urban metropolis in the country, including Detroit, San Francisco, Newark, Cleveland, Boston, Miami, Los Angeles, Dallas, St Louis, and so on. In these areas, there is a glut of Laundromats.
What that means for you, if you are an urban operator, is that your customers have many choices. You might be the most convenient option, but if you made a customer mad in any way, this person could drop you and travel an extra half-block to another Laundromat. Who knows, he/she may like the new choice better, may find that this new Laundromat has lower prices, newer equipment, more space to move around, or a full-time attendant. The person may spot a nifty Internet café across the street. All are things which would make him/her your ex-customer.
To combat this urban glut, you must do two things:
Do All You Can to Retain Existing Customer Base — Solve problems quickly, be attentive to comments, and respond to client needs. That means you must personally get involved with squabbles. If you run an attended Laundromat, make sure that all issues are communicated to you, along with the phone number and/or e-mail address of the customer involved. Follow up on all issues to make sure they were satisfactorily resolved. If unattended, hang out in your store long enough to see what’s going on, and have a clearly visible complaint box.
Utilize “Guerrilla Warfare” — Commence a campaign of guerrilla warfare to win over some of these area residents who are going to nearby Laundromats. After all, most of these patrons could be your customers. It might take a small nudge to get them to walk into your shop. Why settle for 20% of the area business when there’s so much more potential out there? Wouldn’t it be better if you owned 40% of the trade, more than your share?
There is a silver lining to there being so much competition. If you were the only Laundromat in town, you wouldn’t have this opportunity to pump up trade. After all, everyone who needed a Laundromat would be using you. In an urban setting, you’re lucky. You can go after additional volume. It’s all around you, so take advantage.
One way to think of your campaign is the average weekly spending of each new customer. Say your typical customer gives you $9 a week in volume. That’s $468 new revenue a year. Win two new customers, that’s almost $1,000 new business. Win 10 new customers, that’s $5,000 new business. See the possibilities? Think of every new prospect giving you $500 more weekly volume, and that will be a motivator.
Then consider the economies of scale and how this relates to profit. Since any new business is retail trade, and since you can service new volume with your existing capital/labor base, that extra volume will flow down, resulting in substantial profits.
Consider this example in which you’ve won 50 customers:
- Current Operation — Revenue, $200,000; expenses, $190,000; profit, $10,000.
- Operation After Campaign — Revenue, $225,000; expenses, $200,000 (mainly increased utilities); profit, $25,000.
Notice that profits have more than doubled.
Check back Thursday for the conclusion, featuring several suggested “guerrilla warfare” approaches.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].