National Clothesline

I get phone calls and e-mails. Before I continue on the subject of last month’s article, I want to put this subject in print first, due to its importance.

I get telephone calls and e-mails on a regular basis from drycleaners throughout the USA. These drycleaners want to increase sales but do not do the most basic of all marketing. That marketing is contacting existing customers using their customer database.

Your most valuable asset, other than the building you own or rent, is your customer database.

I assume you have a computer system. If you do not have a computer system, do yourself and your family a favor and install one. Your return on investment will be instantaneous. How does a 10 percent increase in sales without raising prices sound to you?

The majority of the companies that contact me do not think about marketing to their existing customers. They are missing the greatest marketing opportunity available. These customers know who you are and where you are located.

Please do not think that printing labels to contact your customers is an extra job. Think of printing labels as a method of increasing sales. The time spent printing customer labels is just as important as the time spent taking out spots or taking care of customers at the counter.

The label printing has to be done on a regularly scheduled basis. I printed Thank You labels weekly and Miss You labels monthly.

Send new customers a Thank You with incentives to come back and visit you at least three more times. Send existing customers a Miss You with an incentive.

If you do not do any other marketing, do these two things consistently. You will differentiate yourself from your competitors. Product differentiation is one of the most powerful marketing tools you can use to keep your company from being another generic drycleaner.

There are companies that sell pre-printed post cards. Give Darcy Moen, (306) 721-0124), or Dennis McCrory, (800) 833-0560, a call. Either one of these men can get you started with a basic marketing program that utilizes your second most valuable asset, your customer database. If you are a Sanitone user, Connie Kramer, (800) 543-0406, will be happy to help you.

Last month I wrote about two companies with different pressing production standards for the drycleaning department. At one plant, the pressers were turning out 35 pieces per hour. At the other plant 10 pieces per hour were being pressed.

The result, due to pricing differential ($4 per piece versus $14 per piece), was the finishers at each plant were producing $140 per hour in finished garments. Quality standards dictated the pieces to be finished per hour; the final pricing per garment determined profitability.

Next, look at the number of support people in the drycleaning production department. The ultimate goal would be one support person for each finisher, a most difficult achievement in drycleaning production. These support people would do the cleaning, spotting, inspecting, assembly, and bagging.

As an example, three drycleaning finishers would sustain three support people.

One hundred and twenty hours of finishing at 35 pieces per hour with 120 hours of support time (240 total man-hours) means that the Pieces Per Operator Hour, or PPOH, is 17.5. This is in contrast to the plant that is pressing 10 pieces per hour, with 240 man-hours of payroll, and achieves 5 PPOH.

I have seen numbers ranging throughout the industry from 3.3 PPOH to 16.5 PPOH. In the case of 3.3 PPOH, the company is highly profitable because of their pricing structure. What this indicates is if you price your product to fit your quality standards you will make money.

In smaller drycleaning plants, some owners use the total hours worked in sales and production to reach their PPOH. They do this so they do not have to allocate the actual hours worked in each of the two departments.

It seems like it is a lot of trouble doing all this measuring. However, as a wise old drycleaner told me, “If you don’t measure it, you can’t manage it.”

Another reason for measuring is that it provides you with the capability of comparing the effectiveness of your production department with other drycleaners of like size, quality standards, or pricing. When comparing numbers with other cleaners, you must first determine that they are measuring the same way you are.

After measuring your productive labor, the next number to look at is sales labor. If your counter sales personnel are pricing and tagging the clothing (in addition to other duties) the labor measurement would be different from a plant, where the counter staff only has time to take in clothing, hand out clothing, and hang garments on the conveyor. Different size operations, different plant layouts, present variables.

There are a few ways to measure your Counter Sales Representative staff. One method is to use the sales dollars rung up per CSR hour worked. This method can create a great deviation due to the pricing difference in various plants.

Another way of measuring your counter labor is to use the staffing cost as a percentage of sales dollars. My target is 10 percent if the CSR does not mark in clothing and there is no cross-over into the production department.

If you have two CSRs working a total of 80 hours at $10 per hour, the labor cost would be $800. These two people are also pricing, listing and tagging clothing, so that must be taken into account. I usually allocate 2.5 percent of dollars marked-in for pricing, listing and tagging. If we take the 10 percent, and to be kind to these two CSRs, give them three percent for a marking budget, you would need $6,150 in counter sales to reach the 13 percent number.

If the two CSRs were not listing and tagging, counter sales would have to be $8,000 to justify the CSR ’s earnings. Most dry stores work on a 15 percent budget for their counter staff. If you provide carhop service, your cost will go up due to the time needed to run out and wait on cars.

Besides labor, a couple of the other controllable costs are supplies and marketing. I will provide some targets, however, you must keep in mind that the area of the country you are in will not only affect your hourly labor costs, it can also affect the cost of your supplies and marketing.

I like to see supply costs as close as possible to 5 percent of gross sales. Your packaging, the solvent and the detergent you use, and the amount of waste by your employees, can vary the number somewhat, but the 5 percent figure is a good target.

Marketing costs are interesting. As marketing is usually discretionary in the amount of money spent, the variation from one cleaner to another, as a percentage of sales, can be quite large.

The highest amount of money devoted to marketing that I have heard about is 10 percent of gross sales. Of course, there is the drycleaner who does not do any marketing at all and has a zero percentage budget. My personal target is three percent of gross sales. If funds are available, I would like to kick that percentage up if possible. Airtime and print media vary from one part of the country to another. The only constant is the 39-cent postage stamp.

There are other costs to measure that I will not go into at this time. My objective was to point you in the right direction so you become more than a drycleaner who is using the cigar box.

You can be a drycleaner and a businessperson. The switch will not come easy but the change in your thinking will be enormous. If you want to grow beyond the people who buy themselves a job, you have to put on your thinking hat. Yes, you might be tired after working 10 hours per day, but if you want to extricate yourself from that kind of routine, sit down one day per week, and spend one hour of working on your business. Your sales and profits will increase and so will your bank balance.

You can quote me on that!