The Minivan And The Maid

You were rich if you hired a maid twenty years ago. Maids were considered luxuries. In the same class as a Roll Royce. A status symbol.

Today, you need to hire a maid because most of you are just too busy to clean your house. You've got loads of work in front of you. You've got activities planed with your kids in front of you. And the weekend has become more about work than pleasure. So the thought of spending 2-3 hours cleaning house every week has taken a back seat to all of your other obligations. Today, your maid is in the same class as a minivan. A necessary evil.

The minivan is a ubiquitous symbol today. You own one if you have a family. You need one if you have a family. The minivan's biggest attribute is that it provides you with enough space to fit everybody and everything in it. But the minivan has changed over the last few years. You can get TV monitors attached to the backs of seats. You can get DVD players controlled by a remote control. You can get a big engine. You can even get reading lamps if you want them. All for a price of course.

So you buy a minivan because you need the extra space. But you pick the minivan because of all sorts of other things. Think about your maid for a while.

You hired a maid because you need your house cleaned. But why did you really hire your maid?

Rates are an important topic. In fact, that's all most people even care about when they call us for help. That's their first question. The funny thing is that consumers thought this same way about minivans not too long ago. And the only reason consumers think differently today is because the minivan industry started offering alternatives.

That's what Two Maids & A Mop is. We're an alternative right now. Our pay for performance plan speaks for itself. At some point, the maid service industry may wake up and realize that being the alternative works. But until we become standard, we'll keep winning.

Thank goodness that the maid service industry is slower than the minivan industry. It makes me look smart.

Licensing or Limiting

You tell me. Does a professional license promote the growth of an industry? Or does professional licensing simply limit the growth of an industry?

Read this article about the licensing of interior decorators in New Mexico. It sounds silly, but you can be fined for decorating a home without a professional license in New Mexico.

I think that professional organizations are more important than professional licenses. Imagine a housecleaning association that only allowed companies with requirements that met certain ethical, moral, safety, and quality control guidelines. Now only a few member companies would be eligible. But there wouldn't be any type of licensing. The only benefit the member company would receive is acknowledgement that they belong to the group. No, I'm not talking about a simple association. Simple associations just want your money. They're glorified unions.

I'm talking about an association that has no power. Nothing. No muscle to lobby Congress. It serves one purpose - to make sure that its member companies are adhering to the association's bylaws.

You could still clean a home without being part of the association. Nobody should be punished for doing the same thing that our forefathers did. Nobody should ever be punished for simply being a capitalist.

Anybody can do what you do. You're not the only pilot. You're not the only plumber. And you're definitely not the only housecleaner. It's called competition.

Somebody's gotta lose. But somebody's gotta win too. It's up to you to decide who wins and loses. You shouldn't be able to rely on your government to determine your competitive marketplace.

Warren Buffett Worthy

Warren Buffett bought a multi-million dollar company back in 1972. The company was See's Candy. The business is still alive today. In fact, it's thriving. Buffett asked one question before he bought the business. The question, "How long do you have to wait to raise the prices"? And that's how he decided to buy the business. That quick. That simple.

Buffett states it best. "If you are an airline today and you try to raise your prices, an hour later, you will be lowering them because of competition. Not the case with a brand like See's. You can't damage the See's brand in the minds of the 30 or so million Californians. Only See's can do that. Their brand is their promise to provide the quality and service that people have grown to expect".

Think about it. You purchase gas because its cheaper than the gas down the road. You purchase copy paper because its cheaper than the other alternatives. You purchase these cheap products because you don't recognize any value in the product. The only value is price.

So here we are at a crossroads. Two Maids & A Mop hasn't increased our rates in more than two years. In the meantime, our wages have increased because the pay for performance plan only works when the top pay level is well above the nearest competitor's top pay. The pot has got to be big at the end of the rainbow. If not, there is no incentive to work. No reason to care.

Yes, we've decided to raise rates. Not a lot. Just a little bit. But not because we want to stuff our wallets. Just the opposite, we want to stuff our employees wallets.

Rate increase letters have been sent out and we've lost eight customers. And in each case, the customer didn't perceive any value in our services. We must have been cheaper than someone at some point. But the comments have been puzzling. Take a look at what they're saying.....

"As usual, the ladies who cleaned did a superb job. We were very pleased and rate them at 10. Please terminate our service."

"Thanks for all your help. You've been great, but I can't afford you any longer. I'll refer you to anyone that asks."

"I would give them a 10. I received your letter increasing my fee. I have been paying 79.00 for more than 2 years…and I do not feel that I should pay more than $79.00, so I will discontinue the service."

There's more puzzling comments, but you get the picture. Now we've got over 500 customers. And we've only lost eight since we raised our rates. So we're not about to jump off any bridges. But I just don't get it. What more could we have done to prove to these eight people that we are the best option? It's obvious that they enjoyed our service. It's obvious that they were happy. At least it's obvious to me. But apparently not to them.

The good news is that nearly 500 customers think that our service is worth a little extra money. That tells me that our service is valuable to a lot of people. For some, we're just cheap gas. But for most people we're much more than cheap gas.

What we are is Warren Buffett worthy. And that, my friends, is the best compliment a business can receive.

P.S. Click Here To Read A Recent Speech From Warren Buffett

Quacking Like A Duck

His name was John Amos. He's most recognized as the original founder of AFLAC. Most people know all about AFLAC. They know that they sell insurance. If nothing else, they know that a duck represents the company. What people don't know is that the company started out of a bedroom. The man in that bedroom was John Amos. He was pumping insurance policies all over the state of Georgia back in 1955.

It wasn't working. John was a great salesman, but he knew that his insurance was the same insurance as the next guy. There was no difference. Just a different sales pitch. So John decided to sale something different. John started selling cancer insurance. That's when John's life changed. That's when AFLAC started to make money.

But nobody noticed. Everybody else just kept selling the same stuff. The few that did notice scoffed at the idea. They considered John just another flash in the pan. After all, their way of doing things was the way it was supposed to be done. Meanwhile, John worked his way into all 48 states within the continental U.S. Later, he worked his way across the globe into Japan. And eventually he found himself banging the gavel at the New York Stock Exchange.

Yes, the insurance industry finally woke up. You can purchase cancer insurance from just about anybody today. But it was too late. John had created a global company that now had a customer base ready to buy other forms of insurance. And that's what you have today. A $22 billion dollar company. With millions of customers. All because of one great idea.

All because one man decided to change his industry. And that's where it starts. One simple idea. So simple that anybody can do it. But so different that nobody is willing to do it.

Reminds me of a little maid service company in northwest Florida called Two Maids & A Mop. Reminds me of an idea called pay for performance.

Sure, we only have three offices and fifty employees. But not too long ago, we only had one office and four employees. Growth can be exponential when you're an industry innovator.

Keep sleeping. Your tired, old way of doing things is our greatest strength.

Chasing The Premier Brand In Our Sector

That's what a member of the board of directors at Molly Maid was recently quoted as saying. Yep, Molly Maid's the industry's premier brand. Take a look at the full interview right here.

A couple of interesting tidbits from the interview.....

Are there any similarities between the McDonald's brand and the Molly Maid brand? Very much so

He's actually referring to the franchise system instead of the actual business. But it's still a bad comparison if you ask me. Who really wants to be known as the McDonald's of their industry?

What would you say is the distinctiveness of the Molly Maid services as offered in the market? It very much relates to the reputation of the brand and its caring staff who are well trained and go the extra mile to offer excellence of cleaning services. That philosophy is backed by our commitment to issuing a guarantee to the customer that we will go back to rectify any problem. Our guarantee is unconditional. Our motto is to deliver "Consistent Careful Cleaning". We have great staff loyalty as evidenced by the fact that many staff have been with us for 10 years plus.

What did you get out of that? Well it all sounds good, but it doesn't really tell you how Molly Maid is different. Repuation of brands, guarantees, loyal staff members....all that stuff is great. But we all have that. We all have guarantees. We all have loyal staff members. And our reputations, well, our reputations are only known by one person - the consumer.

Now for the fun part. Nobody asked me, but I'm going to take a stab at this interview. Read my interview, then read the Molly Maid interview.

Then ask yourself this question, "Which is the premier brand of the housecleaning industry"?

The Mock Interview

Sometimes They're Just Better Than Us

But most of the time, they're not. They're not better because they do so many things wrong. Like spending only thirty minutes in your 3000 square foot home. Like showing up late all the time. Like not showing up at all. That's why people select us. Because we do those things right.

But every now and again, somebody's better than us. Here's how another maid service can beat Two Maids & A Mop.

You can beat us by cleaning all the homes yourself. You can't hire anyone. You can't depend on anyone but yourself. And you've got to really enjoy the challenge of cleaning. Making that house look clean has really got to get you going. That's it. That's how you can beat us.

The good news for us is that you can't clean every house in town. The good news for us is that you are rare. And the best news is that you're not our competition. Because we can't compete with you. You're better than us.

Our competition is everybody else. Like the ones that show up late all the time. Like the ones that get pregnant and have to quit cleaning. Like the ones that get married and move away. Like the ones that miss the same things over and over again. Like the big, franchised maid service companies that spend more money on advertising than on payroll.

They're the ones we're trying to beat. Better yet, they're ones trying to beat us.

Sidenote: If you live in North Dakota, call these people. They're better than us.

The Birth Of Competition

A New Competitor Is Born

And this how the competition gets their new cleaning business started. Next stop, Wal-Mart. Time to get that mop and bucket.

Watch out Santa Clara. There's a flier coming to your mailbox in the near future.

The Reason Merry Maids Is For Sale

Merry Maids is for sale. It's for sale because it's losing money. Lots of it.

The most recent SEC filing stated that the combined operations of ServiceMaster and Merry Maids increased revenues by nearly 33%, with the revenues for the last three months totaling just over $55 million. That's a lot of customers if you ask me. But they lost money. Almost $12 million.

Think about that. Merry Maids and ServiceMaster are on pace to lose more than $45 million this year. So, that's why it's for sale.

Seems to me that Two Maids & A Mop is worth more money than Merry Maids. Would you rather purchase a business that loses nearly $50 million per year, or would you rather purchase a company with profits and unlimited potential?

Merry Maids is mature. They're dug in. It's possible that it's too late to revitalize the brand because it's so big. Two Maids & A Mop is young. We're far from dug in. We change something in our business everyday.

But we're not for sale. There's no reason to sale. Things are going too good and the future is very bright. Merry Maids may be making our ride to industry domination too easy.

Merry Maids Up For Sale

The CEO of Servicemaster recently resigned from his ivory tower. There was an interesting quote in the press release.

"ServiceMaster also said at the time it is exploring the sale of American Residential Services and American Mechanical Services businesses."

American Residential Services is the parent company of Merry Maids, the so called leader in residential cleaning in America. Industry leaders don't normally get sold unless there is a problem.

Have you ever tried to play a song with a broken record? That's what cleaning businesses do everyday. They fight the turnover problem with the same wrong solutions. And I guarantee you that turnover is the reason that Merry Maids is for sale. Turnover costs money. The more turnover you have, the more money you spend.

Two Maids & A Mop isn't for sale. In fact, we're growing at an exponential pace. The industry leader wants out of the business. Ironic don't you think?

Merry Maids Financial Update

ServiceMaster is the parent company of a business called American Residential Services. American Residential Services owns one of our biggest competitors, Merry Maids . Merry Maids is big, real big. They have thousands of locations across the country. They've been around for a long time. And they're losing money. Check out this quote from a recent news article about ServiceMaster.

Through the first nine months of 2005, American Residential Services posted sales of $570.1 million, an 11% increase over the same period in 2004. Operating income for ARS surged 189% to $6.54 million. The cleaning businesses, however, remained under water, losing $9.25 million through three quarters, despite a 7.4% increase in sales.

Merry Maids cleans more homes than any other company in America. They're the first name that pops into a person's head when it comes to a professional maid service. Yet, they're on pace to lose more than $12 million this year. How can the nation's leader in residential cleaning lose that much money? Focus.

Focusing allows you to concentrate on the real problems. Focusing allows you to fix mistakes immediately. Focusing allows you to plan for the future. Focusing allows you to grow the business.

At TwoMaids, we're focused. Granted, it's not that difficult to be focused right now. We only have two locations. We only clean in four counties. And we only have forty employees.

Everybody knows our focus. It's customer service. Maintaining a high level of customer satisfaction is our number one goal. It is today and it will be twenty years from now. A person can't succeed without focus and a business can't either. You've got to have direction in order to know where you're going.

So, hats off to Merry Maids. You clean more houses in one day than we clean in one year. Of course, we didn't lose $12 million dollars this year either.

Provide Something Extra

We're required to purchase an occupational license each year in order to legally hire an employee. I just searched all year-to-date occupational licenses for the janitorial/cleaning industry and found that just over four hundred licenses were granted. The alarming thing is that I only searched one county. We compete in four counties.

Think about that for a minute. Four hundred cleaning businesses have been in existence at some point this year for just one tiny county. I should restate that. Four hundred "legal" cleaning businesses have been in existence. There's probably a few thousand "illegal" cleaning companies out there.

In contrast, only twenty-six accounting firms were granted a license this year. Fourteen liquor stores. Seven boat dealers. One amusement park.

We compete against a lot of people. It's an easy business to start. A few bucks at the dollar store, a few flyers in a neighborhood, an inexpensive occupational license, and you're in business. It's easy to start, but difficult to maintain. That's proven time and time again. Check out your area Yellow Pages if you need tangible evidence.

Highly competitive markets are typically the least efficient markets. Businesses tend to take the easy way out and attempt to capture market share by being the least expensive option. It's harder being better.

The problem is that you can never be the cheapest provider in a highly competitive market. Somebody will always beat your price. Think about the airline industry. There's not four hundred airlines, but there might as well be. The cheapest provider gets the customer. When is the last time that you paid a higher price for air travel? If you have paid higher, then there is a reason. That airline gave you something extra.

The cleaning world better wake up before it's too late. You better start providing something extra.

Turnover In The Housecleaning Industry

I've seen some companies brag about 15% annual employee turnover in the housecleaning industry. They're lying.

A recent survey indicated that the average turnover level for a janitorial company is just over 600%. That means that the average company is changing its entire staff six times per year. Sounds about right to me.

Our early days were ugly. Employees were hired as fast they quit. Our turnover rate was so high that I never bothered to even calculate it. I didn't know what to do. I treated every single employee with respect. I never demanded too much because I was afraid that they would leave. I basically begged for every employee. It was a difficult time to say the least.

I was frustrated. My frustration lead to desperation. My desperation lead to even more frustration. How could I make the job better when nobody seemed to want it?

You all know the answer. Our pay for performance program changed everything. We still have turnover. In fact, our turnover level is still pretty high when compared to other industries. A law firm wouldn't be too happy with a 150% turnover rate. But we are.

We're happy with it because we know the realities of the housecleaning industry. You can't have anything less than 150%. The job presents too many challenges.

Most housecleaning companies require each employee to use their own car for travel. How would you like to put 75 miles on your car everyday? Most housecleaning companies require each employee to work very hard. How would you like to scrub someone else's toilets everyday? Most housecleaning companies require each employee to work for low wages. How would you like to clean your house three times per day/five days a week for minimum wage?

Of course, we pay our employees pretty good when compared to our peers. Nobody can beat our pay system, but it's still difficult to attract qualified employees to our business.

The experts tell you that your employees need to feel respected. They need to feel as if they are a part of the business. They need to feel like it's not a job basically. We're working hard to try and improve our turnover level, but we also know that some things can't be avoided.

We've faced the facts. Our industry is difficult. We can get frustrated and keep banging our heads against the wall. We can get desperate and hire the wrong people. Or, we can just live with it.

Turnover in the housecleaning industry isn't going away anytime soon. It's a reality. Live with it.

When Price Doesn't Matter

There once was a time when I thought that we could be the most affordable cleaning company in town. I don't think that any longer.

Our original employees were paid poorly. They performed poorly.

We were cheap. As a result, we had no problem finding new customers. The problem was that we had trouble keeping those new customers. We signed up new customers just as quickly as we signed up new employees.

It was painfully obvious that we needed to raise our employee's wages. There was only one problem. We also needed to raise our customers rates in order to afford our employees. Try telling an unhappy customer that he needs to give you more money so that you can fix the problem. It wasn't a fun time, but it was essential for our survival as a business.

It hit me one day while in a department store. I was searching for a stapler. There were plenty of staplers to select from that day. About five if I remember correctly. What intrigued me was the price deviation from stapler to stapler. The really cheap stapler cost about $5, while the most expensive stapler cost just over $125. They each did the same thing, they stapled.

I thought, "Why would someone purchase anything but the $5 stapler?" I was intrigued, so I asked a store employee. What she told me was alarming. The $5 stapler was the most popular item, but the $125 stapler wasn't far behind. I still didn't get it. I pressed on. According to her, the expensive stapler belonged in a classy office setting. Professionals use the expensive stapler, while everybody else uses the cheap stapler. That's when it hit me.

People are more than happy to pay more if they perceive the higher price results in more value. I was scared to be the most expensive cleaning company in town. I preferred being cheaper because it was easier. Higher rates meant that I needed to provide more value.

We not only needed to raise our employees wages, we needed to increase our value. We did it and our customers are glad we did it now.

Your product or service must provide more value than any other available option. That's when price doesn't matter.

Failure

The typical scenario is for a person to set a goal. Success or failure is based on the attainment of that goal. The problem is that nobody really fails at anything. You only quit trying.

A marketing idea bombs. A new product flops. A new business dies. It happens every day, every hour. It's possible that your project is simply a bad idea. But, it could be that your bad idea can be improved into a better idea. Or, maybe even a great idea. Only one way to find out. Keep working.

The Dyson vacuum is quickly becoming the most trusted vacuum cleaner in the world. It didn't begin that way. Nobody wanted it and nobody bought it. James Dyson could have quit. He could have got a real job. Instead, he kept working. The rest is history.

There's a little Mexican restaurant down from my home. They held a grand opening about two weeks ago. The doors are closed today. They must have had a less than grand opening. They quit trying. They failed.

You can't fail if you're still trying to succeed.

They Hate Us

They hate us because we get their best employees. They hate us because we get their unhappy customers. Simply put, they hate us.

The big guys hate us because we're emptying their feeding trough. The food's always just been there. No struggle, no fight required. All of sudden, the trough is getting bare. Where are all those customers going???

The little guys hate us because we're defeating their purpose. Big companies aren't supposed to care. Big companies aren't supposed to measure customer satisfaction. All of sudden, a big company cares. Where are all those customers going???

Of course, they're going to us.

We've got a lot of work still yet to do, but man........things are getting really exciting. We're getting tons of new customers every day. We're making tons of current customers happy every day. We're on the verge of opening our third location. The sky's the limit and they know it. Boy, they really hate us!

The Economics of Housecleaning

The housecleaning industry is crowded with hundreds of competitors within a given market. The competitors range from small, one person businesses to large, franchised businesses. Someone recently asked me why rates vary so much within the industry. The main reason: low barriers of entry.

Anyone can become a housecleaner tomorrow. There's no required licensing, no high amount of education, and you only need a small amount of capital. At the same time, anyone can quit being a housecleaner tomorrow because of the same reasons. For example, John Doe wouldn't start a construction business today and close tomorrow. Why? Because John has spent a large amount of money on equipment and land. A newly formed housecleaning company requires about $40-$50 towards basic cleaning supplies. Not exactly a large investment.

A larger housecleaning business requires a larger investment. The business owner must provide workers' compensation, general liability insurance, bonding protection, cleaning supplies, office equipment, advertising, office space, and; most importantly, employee compensation. Obviously, a larger business can't compete with a smaller business on price alone. So, we don't.

I compare most large cleaning businesses with Superman. Superman was invincible, unless kryptonite was in his presence. That's us. We are the most customer friendly cleaning service in the world, but far from the most perfect cleaning service in the world. I know plenty of people who have used the same cleaning person for years and years. Their cleaning person charges them about 25% less than we charge. I have never once tried to steal that person's business because I know they are better than us. They personally clean everything with their own two hands. They probably know the house better than the homeowner. We can't compete with a great individual housecleaner. If you find one, hold onto them.

The problem is that most individuals aren't very serious about their occupation. Since the barriers of entry are so low, there's little reason to care. Some of our clients have told us that their previous housecleaner just quit showing up or quit caring. That's sad because it makes the rest of the industry look bad.

I have a dream. My dream is for our services to be respected. I want our business to be held in the same regard as your accountant or financial advisor. In other words, I want our employees to be regarded as professionals. The only way to accomplish that dream is to consistently satisfy each of our clients. It's a long deliberate process, but we can do it because we're here for the long haul.