National Clothesline

n most cleaning plants, the greatest profits, as well as the greatest neglected profit potential come, from the back-end of the business. It’s what happens as a result of continued customer contact, repeat sales, relationship building and referrals.

The difference between a company that’s barely making it and one that enjoys success and wealth is not found in selling new customers. That’s just the tip of the iceberg (see illustration). Instead, the difference lies below the surface. It’s the HUGE base of the iceberg, which is usually unseen and often ignored.

First, let’s define the terms. When a customer comes to your store and spends money for the first time, that’s your front end (seen here as a $15 net sale). Your back-end is all the business you get from that customer and anyone that customer refers to you. The TLV, or total lifetime value, of your customer would be $3,600.

Most cleaners, however, focus squarely on the front end. They strive to get more new customers bringing in $15 orders but neglect to nurture relationships that could easily bring them $3,600 or more if properly cultivated.

Unknown to most, the back-end represents an honest-to-goodness gold mine and savvy cleaners have been looting the mine for years. In fact, they’ve managed to cart out wagonloads of gold without a struggle because their competitors are completely unaware of the concept of back-end profits.

A necessary key to back-end success, however, is the need to give great service and earn a high degree of credibility and trust. When great service and trust exist, the customer becomes more inclined to do business with you again.

The idea is that anytime a person thinks of drycleaning they think of you, so why not make them think of you more often? That’s what’s known as working the back-end. Instead of just waiting for your customers to come back, you actively and purposely give them an irresistible reason to come in now.

Working the back-end of a business has to do with awakening a relatively small number of clients who spend with abandon and consume your services like piranhas in a feeding frenzy. This group of customers makes up the backbone of your business. They are your regulars, your preferred clients. They are the 20 percent, or so, that bring you the lion’s share of your business.

Last month I wrote about marketing systems and the need to have processes in place to automatically generate and follow up on leads as a means of increasing sales. The first cleaner to respond to my article was a plant owner from the Midwest. He is developing a system to target his preferred list and his plan is a perfect illustration of how to work the back-end. Let me give you the broad outline here.

He has 5,066 customers in his database and each has been assigned a numeric category (from 1 to 5) based on how often they visit his store, how much they spend and how recently they last visited.

A 1-1-1, for example, would come very infrequently and spend very little whereas a 5-5-5 would be a big spending, high frequency regular visitor who very recently spent money for service in his store. The 5’s (1,012 customers) make up 19.98 percent of his total customer count, yet they bring him a whopping 54.25 percent of his total revenue.

He has defined this group of 5’s as his preferred customers and plans to market to them in a special way. With regard to preferred customers, here are a few facts you should be aware of.

First of all, a buyer is a buyer is a buyer. If they don’t spend their money with you, they will spend it with someone else. Top-tier customers are always capable of spending more. You just have to ask them for it.

Second, it’s easier to make the second sale than it is to get the first one. If you’ve done any prospect marketing, you know this is true. Prospecting is often uncertain and very costly, but once you have a viable candidate for your business, follow-up is simple.

Third, if most of the cost to acquire a customer is used to make the first sale, then each subsequent sale is more profitable than the one before.

Fourth, the most neglected high probability target market is your past and present customer base. If you are not using a computer or have no way of capturing names and tracking sales, you need to begin doing so. In order for your wagons to gain access to the goldmine, you’ll need a customer database of some type.

Fifth, customers welcome frequent contact and communication. They do not resent it. The hidden competitive edge that any one drycleaner has over another lies not in how to remove a spot or how to press a pleat or how to sew a button but rests squarely on the quality of the ongoing relationship a drycleaner has with his or her customers.

So what does our cleaner from the Midwest plan to do with his new found information?

In phase one, he plans to systematically communicate with his top 1,000 or so customers on a frequent and regular basis. The way he sees it, 1,000 is an affordable number to manage. He can easily pay for 1st class personalized mailings in full color on over-sized stock.

The key will be to communicate regularly and strengthen his relationship with his big spenders. Phase two of his plan is to focus on his 4’s. With good communications and incentives he’ll be able to convert a hefty number of these customers into big-spending 5’s.

Of course, his system is a bit more detailed than I have time to elaborate on here, but if you would like more information on how to segment your own database and determine where your back-end potential really lies, please e-mail me at billbishop@golombgroup.com and I will be happy to pass your name along to him. And since I use a number of filters on my e-mail, please use only the words “bottom of the iceberg” in the subject line.

There is one more fact you should be aware of. As industries go, drycleaning has one of the best “back-ends” of any industry today. If applied effectively, back-end sales alone would give every drycleaner the potential to build an enormous annuity.

Bill Bishop has been a consultant with the Golomb Group for the past 12 years, designing marketing and promotional programs for drycleaners. He can be reached at the Golomb Group at (800) 679-5856 or by e-mail at billbishop@golombgroup.com.