Why not do those shirts for free?
et’s discount
shirts! If you know me or know anything about me, then I surely
have your attention with that opening line. But I’m
serious. Let’s do shirts at a discount. Let’s use
them as a loss-leader.
How about 49 cents?
Or how about the all too familiar 99
cents?
Why? You already know why. To “get
the drycleaning” of course!
In fact, how about doing shirts for free?
Perhaps that will create some traffic, huh?
Is that a good deal? I don’t know.
You’re more likely to know this than I. I say that it is.
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Why?
You do it because you know that you can do
better than that and you want your customer to understand that
without question. Come back again and you’ll see what we
can accomplish.
What has happened here, subliminally, is
the customer knows that you encountered some expense to process
his shirts. He knows that you are taking money out of your
pocket to make a point. There is no thought, whatsoever, that
you did these shirts at cost. None. Any other amount that you
charge him could be considered to be “cost.” But
not when the amount is $0.00.
Let’s say that you normally charge
$2 per shirt, but fail to satisfy a customer. You handle the
problem by saying “Instead of paying $10 for these five
shirts, just give me $5 and come back next week. We’ll do
them right then.”
This could be perceived as your cost to
process them. You take a dollar each to cover your cost and
then get to work fixing the problem. Not likely that
you’d do that. I’ve never seen it. No, you give
them the shirts for free.
What has happened here? You have lost
money on some garments in order to make up for it in the
future. Nothing more, nothing less. It probably is good
business. Come back again, pay full price, and you’ll see
that we are worth every penny. It is done every day in every
business.
But in many of our businesses, it
isn’t done properly at all. The philosophy is much more
like “rob Peter to pay Paul.” You rob the shirt
department to supply the drycleaning department with profit.
Grocery stores can do this because they
have thousands of products that they are absolutely sure that
you will need to buy to supply them with profit.
Do you know how much a grocery stores
makes on Coke and Pepsi? Zero. Really. They sell it for what
they pay. Why? Because it is a luxury item and an item that you
want, not an item that you need. They do get a kick-back if
they sell enough, though, but that will only happen when and if
they meet a quota. Otherwise it just takes up shelf space at
the store. But it gets you into the store where you will buy
something else. It works and it continues to work, because we
must eat over and over again, day after day.
It is important to understand that they
don’t lose money on Coke and Pepsi products. Although I
bet that the accountants argue that the shelf space used by the
soft drink bottles could be used for profit-generating products
rather than with what they view as a loser.
Surely the managers that are in tune with
the day-to-day operation of the supermarket counter use the
predictable argument that if they nixed the soda pop
they’d lose customers to the supermarket that
doesn’t decide to do the same. So they don’t lose
money on soft drinks and they have rather easily defined a cost
which they simply pass on to the consumer.
I’ll bet that during summertime
cookout season, competing grocery stores vying for your
hamburger, hot dog and buns business, do give Coke and Pepsi
away at a loss of 25 or 50 cents, betting heavily that
you’ll be there to stock up on those essentials. Then the
price goes back to normal.
So let’s do what they do, but be
prepared for a “catch.”
How shall we price our shirts? 99 cents?
49 cents? What about free? Pick a price, any price. Can’t
decide? OK, my call:
Our executive decision has been made.
Shirts are 75 cents each, but we ask for $20 worth of
drycleaning to give us some revenue. Will we lose money? I
don’t know. Maybe you know.
Let’s say that we start this on
Monday. How about an ad campaign? You must get the word out.
It’s only fair to charge the advertising cost to this
whole thing. If it costs you $5,000 to get 1,000 customers to
bite, it seems reasonable to add $5 to the cost of processing
this $25 order of shirts and drycleaning. Sounds like it might
be a loser campaign for sure.
Or will it?
So, the word gets out with some sort of
media blitz. You undercut all of your competitors who surely
are flabbergasted at your new price. “How can he make any
money?” they all say.
The big day comes. You do land-office
business. People come in droves.
Mission accomplished? I don’t think
so.
You have succeeded at getting the people
in the door. Was that the goal? The primary goal, perhaps, but
you have only just begun. If you fail to perform now that the
customer stands at your doorway, you have wasted a lot of
effort, buckets of money and dug a hole into which you will be
dumping still more money. I guarantee it.
If you define “fail to
perform” as simply failing to do a great shirt, you are
still missing the point.
The entire point is to get a new customer
into your store and get him to understand why you charge $2 for
a shirt and $20 for a suit, by wowing him with extraordinary
customer service, great quality, a beautiful call office, a
friendly staff that makes this new customer feel welcome and
basically exceeding his or her expectations in any way you can
think of. Is that so hard?
You better believe it is. But that is why
you cut your price — to show off. We are offering shirts
at 75 cents, this week. Not forever!
You knew that didn’t you? When you
met the guy in your call office — you know, the guy who
was dissatisfied and you picked up the tab for his shirts
— you didn’t offer to do his shirts for free, for
life. No, just this one time.
Just like that, our shirts are back to $2
next week and hopefully we have bought ourselves a bunch of new
customers who are now convinced that we are the cleaner of
choice.
Perhaps these are customers who were
long-time patrons of your competitor, who have finally found a
reason to give you a try. Success with this is in your hands.
The easy, perhaps lazy, thing to do is to
keep your price at 75 cents and not bother trying to impress
new or existing customers with great service and great quality.
Reasoning that, well, we aren’t great or perfect, but we
are cheap. That doesn’t fly. That’s the easy way
out.
My money says that a low price isn’t
really what they’re looking for anyway, unless you prove
to them that all shirt launderers are the same. Then, price is
the only difference.
Arguably, if you are already busy and
profitable, the wizard of customer service and the grand
marshal of quality, you don’t need to cut prices to get
new customers and you could very well be 100 percent correct.
You never have to cut prices to build
sales. It is just one of your options and I address this option
because I write about shirts and shirts are often the
sacrificial lamb.
If you keep the price at 75 cents, you are
forfeiting the potential for profit from a part of your
business that drains your working capital, tests your patience
and takes way too much of your time.
Furthermore, you are lowering the
perceived value of the service of laundering and pressing
shirts and suggesting that it costs something in the ballpark
of 70 to 75 cents to process the shirt.
None of these things work to your
advantage. And you aren’t challenging yourself either.
Maybe you don’t care about any of
those things. Or maybe you are in a rut where you have been
doing shirts for 99 cents for so long because all of your
competitors do the same.
Frankly, you can change that “99
cents” to any number that you want, even if it’s a
high number, like $2.75, or whatever. It really doesn’t
matter.
What matters is that your customers see
obvious value in what you do. If you agree that shirts should
not cost 99 cents but competitive pressure dictates otherwise,
there is something you can do:
Wow your customers with extraordinary
customer service, great quality, a beautiful call office, a
friendly staff that makes this new customer feel welcome and
basically exceeding his or her expectations in any way you can
think of.
Is that so hard?
You better believe it is. But you get to
do it without all of the expense associated with a media blitz
and doing all of those shirts at a cut rate price. You already
have the customers (and maybe the cut-rate price), now show
them why you’re better than the guy down the street.
Prove to him that you’re worth an extra 25 or 50 cents
(or more) per shirt.
You are, aren’t you?
Donald Desrosiers has been in the
shirt laundering business since 1978 and is a work-flow systems
engineer who provides services to shirt launderers through
Tailwind Shirt Systems, 867 Spencer St., Fall River, MA. He can
be reached by phone at (508) 965-3163 or by e-mail at tailwind1@comcast.net and he has a web sites located at: www.tailwindshirts.com and www.dondesrosiers.com
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