Almost daily we receive calls, here at the Golomb Group, asking if we can develop a direct mail program to help a drycleaner build his routes.
The answer is: “Yes” and “No.”
Direct mail, alone, is an extremely ineffective way to attempt to build a route. The results are usually less than one-half of one percent. Compared to our 7½% average return for over-the-counter sales. It’s hardly worth the effort.
However, direct mail can be very effective in softening the market prior to your route sales person actually going door-to-door offering your pick up and delivery services.
One drycleaner we’ve been doing work for effectively softens his market by picturing his route driver on the postcards with the caption: “Have you seen this man?” The reverse side then says: “You soon will. He’ll be calling on you in the next few days to explain the benefits and answer any questions you may have about our FREE pick-up and delivery service.”
Drycleaners using this two-fold approach to route sales, are seeing results in the 30% range. Of course, a lot depends on the effectiveness of the person selling your route. But it is possible. We have several clients for whom this approach is working.
Let’s take a look at a situation where a cleaner has a small business doing about $4,500 a week and is just squeaking by. This business needs more cash flow to provide the owner with a decent lifestyle. And as an investor, he or she is entitled to a reasonable return on investment.
The answer is to increase sales. But how?
Let’s say the owner is in a small town and is unable to attract a significant number of new customers. There’s only one solution to increase cash flow, and that’s diversification.
If this cleaner has other towns within 50 miles, he could develop a route. The average route generates about $4,500 per week. Though our demographic capabilities, we can help our members identify the best areas to target any new service. Then all we have to do is set up a plan to get the business.
Assuming that the average route order is $25.00, and the route is run four days a week. The driver would have to make 45 stops per day to generate $234,000 per year. This $234,000 a year route should provide enough additional profit to make this a very viable choice.
The marketing of a service like this is a major consideration. For instance, how much does the cleaner need to invest to make this goal a reality?
The very first step should be to develop a marketing plan and then compute the necessary budget to support that plan. Many cleaners, whether opening a new store or beginning a new route, think that they can and should begin the operations before developing a marketing plan. Still others develop grandiose marketing plans with no consideration for the expense of these programs.
How much would you budget for marketing, if you wanted to build a route doing $234,000 per year? I would figure about $11,700 a year plus the cost of the salespersons time.
Think about it. $11,700 is only 5% of the total dollar volume expected from this route. That’s less than $1,000 per month. Yet few cleaners embark on a venture like this with a clear enough focus to include marketing in their budget. There’s a misconception that they can begin the business, and then use ”profits” from the early sales to finance the necessary marketing. This never works.
It never works, because the sales never materialize to the point where there is enough “profit” to pay for the marketing.
Next, there’ll be the cost of hiring a salesperson to drive the vehicle. Remember, anyone can drive the type of vans typically used for an operation like this, but not everyone is a good salesperson. Salesmanship is the number one trait you should be looking for when hiring someone to run your route. A person, who smiles a lot, is energetic and pleasant to talk to, will be the best choice.
Finally, a delivery vehicle needs to be purchased, if the cleaner doesn’t already have one. Many cleaners seem to like the new Dodge “Sprinter.” I’ve never bought one, but they’re definitely worth looking at. Whatever vehicle you choose, it’s worth the money to have it shrink-wrapped. Just as it is with your store, really good signage on your vehicle will pay for itself many times over.
Building routes is not cheap, but it can be done at considerably less expense than opening a dry store. After all, there’s no long-term lease and, if business isn’t good in a particular neighborhood, you simply drive to another.
Pick-up and delivery is not difficult. Effectively marketing it can be.