 Hey, good afternoon everybody, Tom Stewart here with Liz Trotter. This is smart business moves. This is Tuesday the 16th of February. Yeah Yeah, for Tuesday There's something February 16th is some special day. I hate when that happens and I can't remember what it is Because that probably means I'm forgetting something important I mean is I something in which you be celebrating or is it somebody's birthday? Yeah, I'm taking somebody's birthdays and anniversaries something like that Wouldn't be the first time I forgot something Won't be the last What are you looking for Tom? I'm just looking up and seeing what's happening on February 16. Oh I was originally thinking ah, maybe president's day, but that was yesterday Because it changes Right It's always on monday, right? Isn't it? Uh, I mean actually there's not a heck of a lot that's uh happened on february 16th that We'd want to spend a lot of time talking about today All right. Well good One last thing that we have to waste our time then Um anything new pppy is anything. I don't know anything No, I don't either but before I forget Oops, I need to do this. Um, I'll go to cleaning business today and I'm gonna show where we got our download thingies. Hey leslie. Hey, hey linda and um We missed you guys yesterday. There was nobody on here and nobody said hi I had to beg somebody to just tell us they were here Finally we had a couple of people say hi, but it was like, I don't know 220 225 It was a lonely place I know I was like Tom. Why are we even doing this all today? Nobody's here. Nobody nobody's doing it No, I forgot yesterday was a holiday We actually had people but they just weren't Yeah, but initially I didn't know there was anybody there you can see that there's people I can't I'm like Nobody's here. All right Okay I'm gonna go do this. Are you gonna show downloads? Please? Just just as a refresher In your cleaning business today Here it is And by the way, we haven't shown people how to subscribe in a while if you haven't subscribed to cleaning business today It's really easy. Just your email first name last name Subscribe you get our newsletter which comes out Every thursday, which Shows you what new content came out and it's got other little You know pieces of information like breaking developments, you know Things that are happening in the industry Kind of keeps you up to speed with what's going on So you haven't done it you want to subscribe But if you go to clean business today forward slash just type in smart business moves Sbm and enter it'll take you to this resource page and if I click on this It'll do nothing. Nope. I'm lying. I'll take you to the uh cleaning business market analysis that Liz put together and there are Gee whiz 49 pages of but that's because it's a workbook the tail content But it's because it's workbook y'all so you can fill that stuff in a lot of pages in here There's a heck of a lot of work So I want you to think twice before downloading it because if you don't want to do a lot of work you're wasting your time but if you want to bust your butt doing uh market analysis I'm kidding. This is really has a lot of good info on there's three backstories in there that you can use for uh calling your competition and I have gotten amazingly good information from doing this so And it really is important. It's like one of the cornerstones to make sure that you are Getting the appropriate bill rate for the work that you're doing I mean it didn't know that you have an obligation to make sure that you're charging As much as you really can I mean it's an optimal point for charging it you raise your rates too much You're going to lose business We need to talk about just general econ supply and demand one day There's an optimum price that you want to get to where It's a combination of what you're getting per job times the average bill rate per job If you're charging too little you do a ton of work and you don't make any money If you're charging too much you're just not going to get enough work to even make money So it's got to be at the right place and you know Doing market research which your competitors are charging is is is is useful information and helping you figure figure that out Yeah, absolutely I'm going to make a note though because we're going to do that. We need to do the whole um Economic supply and curve. We don't have that as part of this but we need it okay So now you guys know what we're going to be talking about sometime in the future It all comes into this Because you want to you want to price appropriately? And if you price in too low, you're leaving money on the table if you price too high you're missing opportunities And there's a whole formula and we'll get to build the new another spreadsheet to do that Okay Fun for tom fun for tom Oh, come on more spreadsheet everybody, isn't it? No, we all love that Okay, so fun. No interesting. Yeah, I do find it interesting. I will give you that but fun. No We're figuring stuff out and we're making changes that will have positive impact on our businesses making us more profitable which gives us the ability to create better jobs provide better service and to Build more valuable businesses. What's more fun than that? Mardi Gras Uh, yeah, I think that I'm too old for mardi gras if seeming fun anymore I'm wondering what that's like doing. I mean the whole covid thing going on. I mean, that's like This is this is the time of year where that's happening, right? I don't know is it Makes it up. February 16th So I don't like spreadsheets Okay I didn't say that. I said I love spreadsheets. I enjoy them. I think that they are interesting. I said, they're not fun Fun is the word that I'm taking exception to Okay Tom agree to disagree. Okay, let's move on Very good. Whatever Oh, um, this is what we uh, we're talking about yesterday in terms of you know Making sure the average monthly attrition rate per home is as low as as you can reasonably get it That's a red number. So the lower the better Intuitively, we know that right You know, we don't want to be losing a high percentage of our recurring customers every month because that's Not a you know, we're not gonna Be nearly as profitable as we'd want to be if that's happening Brian loves spreadsheet Tuesday Spreadsheet monday brian because we did spreadsheets all day yesterday Tuesday This is this is the It's happening. Yep All right. Good job. Good job. See I know it was something One of the things I noticed or I thought about last night after you and I got off the call was um, we never talked about the word attrition And this is not a common word If you aren't in this industry if you don't own a business you might not know this word So can you give a nice definition that's more layman's term for people around attrition? Loss Loss rate, I mean that that's so easy right loss rate We say attrition and a lot of people again We're when we're talking about all of these different things these different concepts It's like a whole new lexicon It's like having to learn just the words before we can even understand what it is that we're talking about So average monthly loss rate per home. Yeah, it's great to start with and the reason why I'm Harping on attrition is sometimes what happens is people will Confuse attrition and turnover they think of these as sort of interchangeable terms and they they speak to the same thing But the terms themselves the words themselves are are not the same So that's why I wanted to bring up If I said monthly average client turnover rate or turnover rate per home, wouldn't that be the same thing? monthly turnover rate per home. Okay, so let's see when we're figuring out our turnover usually people are At least the people that I'm usually talking about they're talking about on an annual basis but when they're talking about like Their loss rate usually they're thinking of it like in the now, but maybe that's just me Well, the caveat is this is where the unit analysis comes into play and this is really Algebra type stuff when we say turnover rate per month see I've got I'm saying monthly here And you know monthly loss rate per home or you could say You know turnover rate, you know monthly turnover rate per home And as long as you're specifying What period if you don't have it if you don't have a period because when people just say turnover rate The the assumption maybe is it's an annual number Um, personally that Bugs a crap out of me when I see a number without the units on it you know the When you say units Tommy you mean like You know the the the average is 17 well the average what And it's like well the average turnover rate well the average turnover rate for what period of time because What we Showed up here is what we were you know what we're talking about yesterday I might have an average turnover rate of five percent per month For say my recurring clients Looking at that a weekly basis. That's going to be 1.15 So knowing what that number is without knowing what time period it's applying to Doesn't help me at all and if i'm looking at that on an annual basis Then arguably it's closer to 60 percent And it's not exactly because you get the whole you know compounding the miracle compounding thing going on too that Makes it a little fluky, but you can just say 60 percent just to make the math easy On an annual basis So you say I have a a client turnover rate or client attrition rate or client loss rate If you don't say per what period of time that number means nothing Okay, yeah, that that totally makes sense. I think the other thing that is different is When I think of attrition I think of of them leaving Like choosing to leave for some reason Where when I think of turnover It's like raw data that i'm dealing with And i'm just trying to To change that number Where if it's attrition i'm thinking more in terms of What do I need to do? To for just I think more in terms of like culture the people or something like that because it Is is is losing cleaning professionals because About our workforce we talk about attrition And I think of the whole um attrition is more they've chosen to leave and and clients too So like if the client chooses to leave that I think of it as more like attrition or or loss um, yeah more like attrition, but when I'm thinking of turnover I'm thinking of All of the people um the people that die the people that Everything and I don't know why I think that is does attrition do do attrition and turnover have the same definition Or are they I don't think they're the same? I'm gonna look it up. Okay I'm not sure, but I know they're used to be they're often used to change if that's correct or not I I don't know No, they're not In either case whether you're talking about clients or whether you're talking about cleaning Professionals, they're either with you or they aren't with you and if it's because they quit difference um attrition Is when the person leaves a vacancy and the vacancy remains unfilled Or if like that the job is maybe eliminated That's attrition Where turnover like with clients? We would be talking because we would never want to leave their space open, right? We would be filling that So loss rate would actually be more accurate or turnover would be more accurate When you say attrition the position is empty that means it needs to needs to be filled whereas If you know and remains Vacancy remains unfilled Or the employer completely eliminates that job rule. So they're talking about specifically with employees, right? Jobs rather lost employees. We used to have Employees now we have 45 employees and we're never gonna we're not we have no plans to replace the other five. That's Yeah, that's why I'm thinking in terms of a year, but that's not accurate because You could be, you know, um eliminating a job this month. I think covid is a great example, right? We had much more attrition because we lost we had positions that we weren't Going to be filling at least for the Time being because our clients were gone where I guess turnover our positions that need to be filled because you're It's filling and that's why you keep hiring a dozen people for one Open position because you can't find the right person and create the right You know onboarding process and training and to make them successful. Yeah Yeah, so, you know, I'm a stickler for words. I really like a lexicon to make sense so that we don't run into You know that the conflicts and we're talking about one thing somebody else was talking about something else. So I think it looks like At least from what I read in those what three minutes Looks like attrition is more commonly used with employees But i'm sure it's not only Seems like you're talking about companies allowing jobs remain unfulfilled if someone quits or retires downsizing. Yeah, or like, um and I was thinking like with when covid happened and Especially for businesses that stayed open The customers left, you know, if you lost 30 of your customers, you weren't keeping those people employed you were Letting people go and not refilling. You know, there was attrition there and you weren't filling their spots That's interesting All right, so probably don't need to spend a ton more time on that I'll give some thought to that it appears that attrition is not the most appropriate term to use in In this case, so we'll go with loss for the moment. I love loss rate too. I feel like it's really clear I mean and it strikes a nerve for me. Like I don't want to lose a client It hurts a little more when it's a loss if it's attrition. I don't know what the heck that means. So It's like But loss hurts I agree loss is like oh, this is bad. I don't want to lose Okay, so We don't want to have a high loss rate Be it on a weekly basis a monthly basis an annual basis. We don't want to have a high loss rate Yeah And yesterday we talked about how you gain homes more at a constant rate where you lose them as a percentage of the ones that you have and this whole slide here basically we We built a spreadsheet and kind of demonstrated how that works that You know, you can say we're doing 25 Quotes a week and we're turning 40 of them to more current customers But we have a monthly loss rate of 5 percent of your recurring customers Your growth rate in terms of recurring homes is going to look like this and these are weeks going across the bottom. So You know two year mark Yeah, the two year mark was somewhere around in here and you're you're Feel like if you're on top of the world, you've got an awesome business and you're just clicking and you're growing and you're growing and growing And then you start getting to the point where not so much and before you know it You're not growing at all, but you're just doing the same stuff that you did before What's the uh Goldsmith what got you here won't get you there. Is that that's book talk right now. That's what we're And so for those of you that weren't in book talk today shame on you Um, yeah, that was book talk today. You didn't talk about that bud. Yeah, we were I channeled that Good job. Tom. Yeah Call me Nostra Thomas Yes No, um, we got you here won't get you there So I've been talking about, you know, the the the green numbers you want to drive them higher and the red numbers You want to drive them lower in that context? It's like you can take any one of them and change it and all things else being equal If the green numbers are going up, you're going to be More profitable if the red numbers are going down, you're going to be more profitable all things being equal We're going to be getting to the point where we're going to be talking about we don't want all things to be equal because if they are We can pretty much tell you with a pretty good degree of accuracy If you give me some of the metrics we're talking about here how big your business is going to be and it's never going to get any Bigger of all things being equal. So the whole point of this is to be making changes improvements in your business So all things aren't equal Yes, green numbers go up and red numbers go down Was this uh, was this spreadsheet here, uh useful yesterday? Did we get any feedback? Was this We have fun with this because these are basically total homes um Can you hear me now? I can hear you now. Okay I think one of my cats hit the microphone It's my guest. I don't know you couldn't hear me, but I was saying that um I really love this column um h i and j maybe just a real quick I know we want to get started on new material, but just a real quick how these three play out. I love that Well, these are the number of recurring homes that we had at the end of year one end of year two end of year five and if we change the monthly loss rate from occurring homes from five percent to say four percent But You know we get five more five percent more homes the first year, but 10 percent more homes year two and 17 You know year five And all all things being equal. We're still doing the same number of quotes in the same same close rate So if you always want to know what's a good close rate, so uh tom you had a number that we were going to start with today about um The number of people that die Two percent. Oh, yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Well that that really ties into the loss rate monthly loss rate postal service And this this number is is a bit dated so I don't know what their current number is But if you'd asked them about 10 years ago How many people changed their mailing address on an annual basis? Or a monthly basis actually they say about two percent a month people move In this country in the united states So if you do that that's about 25 percent if you take that two percent a month Now not all of that two percent actually will like leave The city or your server delivery area and move somewhere else But a responsible chuck of them will And you can actually go to the census now It's a bit of you know, I've actually done this it's been a while though In the census has data In terms of how many people are physically moving each month where they're moving from where they're moving to and if they are moving out Like to a different state for instance And if you look at and those numbers vary A decent amount from from state to state as well. So just making some general number Really You know give you all the information you need, you know, how many people are moving out of your town You know each each month varies depending upon on where you live But you know, it's it's you know, the one or two percent range, you know on a monthly basis Is is is is not a bad place to start So to say that, you know, I'm not going to lose any of my recurring customers as impossible then You know people die people transition into You know Living and other, you know scenarios like that, you know, you're going to lose a percentage of Your clients that way as well Not as many of our clients move As I would think Across the board, right because a lot of times the people that are moving A lot are people that military people in apartments. So not our our typical demographic, but still I At one point in time our loss rate was 1.8 percent and that was like Ridiculous that's crazy low. It was crazy low And and it was that was that was for a year the next year I bounced up to 2.3 And we've never seen any any number below 2.3 again I I have heard people having Feeling really good about their loss rate because I wanted to get to the question of How what's a good loss rate number and again? There's no right or wrong, but giving you some averages here is I I would say good would be between two and Five once you start hitting five You start needing to really look at it two two to four point nine Because it seems like five you really need to start it starts getting harder to bring in enough Especially if you get bigger, right Starts getting harder to bring in enough jobs You know depends upon your your your your business model as well I mean, I know some people that have built successful businesses on You know a lot of one-time jobs and with basically a high churn rate and You know if you can can do enough quotes You know and you know your your rate can can can can get real wacky high But you can still You know make a whole lot of money doing it If you're the type of market that you can can Do a whole lot of quotes and get a you know just a whole lot of one-time Or short-term business on the books. Yeah, we know a company that does mostly one-time Claims and is very successful very successful And I can't remember the percentage, but it was ridiculously high. I know some that 60 percent of their jobs Are one-time jobs not customers, but just on any given day 60 percent of their jobs are one-time jobs Yeah So There's a lot more that that that that will be doing we might just keep building on this spreadsheet I think we're on a roll here because we need to talk about How we translate homes into jobs and if they're recurring homes what's the recurring frequency and I'm going to get more jobs if they go every two weeks as opposed to every four weeks And then we need to talk about the bill rate per job. We need to talk about the skip rate And a few other things here so we can build this out in the in the days ahead But we'll park him for the moment because today we're talking about monthly loss rate per home So and we've shown over here. I wasn't At the time I didn't know we were going to build that spreadsheet But this is kind of what happens over time that all things being equal Your loss rate is going to equal You know the number of homes you lose each month is going to equal the number of homes that you gain each month And it starts to flatline This is this that focus on one-time jobs are not too concerned about loss rates That's a fact Yeah, they don't they don't need to worry about loss rates But quality is still an issue because they very much are concerned about the reviews they get for instance so And what we really want to want to talk about here is And also a lot of the companies that focus on one-time jobs are Not necessarily just one-time jobs. They are More like on demand jobs Where you might have the same customer you're cleaning Four times this year But each time it's a one-time job because they're not on a schedule. They're not on a routine They're not on any type of a schedule So even those people right you don't want them to just forget your name and start calling somebody else Even if they only call once every three four or five times a year Why would you not want to get that money too? The problem will have one or two L's on it On two I don't know gosh tom. I'm thinking it might be one It looks it it looks right, but that's why I said it's the state spelling bee I gotta check I i'm saying two but it always is two, okay I Just because you win doesn't mean that you're 100 confident all the time I I'll dispel when the other day. I'll say when when how do you make that? What sound WEN didn't look right. I was right Let's talk about uncontrollable loss. Okay, awesome We we have these discussions about well, does this count? Does that count? You know, so some we can't Uncontrollable loss that reminds me Didn't somebody robin didn't you have a question yesterday that you wanted to know? Right at the end. I said we'd talk about it today No matter what it was post it. I'm pretty sure it was you robin All right post it, but we'll keep going tom. Sorry I mean the I guess they have the part of it is which ones do we count in our Our loss, right? We'll save that punch line till the end, but We lose customers for for a ton of reasons, right? Yeah What would be an uncontrollable loss? I would think death That's the first one I come to mind You can debate we're going to debate we can have a debate about a lot of these but I don't care how good you are. I don't care how good your You know follow-up rescue program is if somebody's dead It's hard to clean for him. Yeah Really hard unless there's survivors in the home in which case you still can but if that's the last person standing But but even survivors in the home. You're now cleaning for a different person So Yeah, that's a new particularly that's a new client. I guess Same home but different side of of expectations There are a lots of times where you're cleaning the same home, but it's a different client, right? I know I've had situations where Client lives in a home and then they move out and they start renting it and now we clean for a new client And the home is different with the new client living there. They have different stuff and It's a different job. They're a different scope of work So That's that's that's pretty good though. Hey, hey Susan. How about kovat losses tom? What's a kovat loss? I mean, it's like Yeah, there's skips Like when they go on hold are you talking about robin or people that Nope, they decided to cancel service because of kovat and they're not working now And so they're at home and they're doing their own cleaning You're never cleaning my home again because of kovat. Nobody's nobody's ever cleaning my home again because of kovat I think uncontrollable has to be nobody's ever cleaning here again If it's if it's that you are not cleaning here again Then that's controllable so Would you say moving Out of the service area? I feel like that's those are the only two that I can think of off the top of my head Ooh, brian foreclosure Yes Yeah, that's good. If they get foreclosed on they're not I mean you got one one last cleaning maybe You got a really good move out clean and even if they move in the area if they got foreclosed on that's it That is a different scenario. You might You're not I like I think that one's a little waffly because you You know if they got foreclosed upon are they going to live in the area if they are Can you get there? Can you get their work in their new place? And as long as you're taking as long as they can get a credit card, you're good, right? Yeah, linda best one Lenny's got the best one fire fire Yeah, I would say I mean assuming they're eventually they're going to pull things together. So I guess This is a good question I'm sorry if the house burns down Well, they're gonna rebuild it I mean, what are you calling austin never ever to clean again? Yeah, I mean this is a gray area and and I'm asking this question because I don't have You know, this is debatable. Yeah, somebody calls up and says Hey, I am going to be leaving the country for the next year Back. I want you to clean my home So do you count that as a loss? Yeah, uh, some people count it as a loss some people count it as a like a hold or a skip For the purposes of this conversation tom, are we going to define loss here? If it were a year we would treat it as a loss because it basically Because the other question is how many recurring clients do you have and how many recurring jobs Would you expect to do each month? and if you're using that for planning purposes staffing purposes And if you know that person gets their home clean like every week every other week Then you're inflating those jobs because you know, you aren't going to be doing those jobs for the next year That's a good point. I never thought of that. We consider it a hold If it's three months or less and they give us a date So if they tell us when we're coming back, then we call it a hold but that's a really good point because The the need is different and don't actually have accurate information if we're thinking especially during COVID when some people did give us dates And they you know, they just asked for like four weeks six weeks, whatever. We got we got a lot of them over here Let's see. What do we got? Lost job budget reasons. Ooh, that's that's only We debate on that one a lot. I I put that one over in the controllable loss susan me. I do Uh, susan. Oh tornado. Yep. We got natural disasters Natural disasters. I think a lot of times with natural disasters It's not necessarily a controllable loss, but how are you going to consider a loss at all? Is it just a temporary? Is it a hold again? I don't know Especially And is it Forever, you know the three-month thing I think makes a lot of sense for for for planning purposes And if they're going to be gone for longer than three months, you're probably better going ahead and Taking them off the schedule and saying that's no that's currently that's not a recurring home and Set a reminder for three months out to follow up with them and see if they're okay and see if you can get them Get them back on the schedule in which case you would count that as a as a quote and a close and that would be You know more. Yeah, so so so it's going to be longer than three months. Basically Assume they fell out of your bucket. They and if they come back in three months or four months or six months They're going back in the top of the bucket Yeah Yeah, but they can't be in your bucket if if they're not going to get their home clean for three months or more Regardless of the reason so yeah natural disaster um, that's uh, that's a big deal and that happens from time to time and It hurts your business. I mean I live in hurricane country and even if even if you know You know, you don't necessarily lose customers, but you lose a lot of work You know, I guess even the snow and stuff that that that they were getting people are losing or Oh, especially in some of the areas where they don't get snow like texas told I mean, it's bad enough here where we get it every once in a while, but in texas They're freaking out Don't even know how to handle it sarah's asking about layoffs And you know had one client return to us after several years because they were laid off Is a lot of uh uncontrollable loss or controllable loss so I had gosh, I I go back and forth on this one. Um layoff I might put them if it was like a big um, like if bowing shut down Then I might consider it an uncontrollable loss something that's so big it's impacting the area so fast and to such a big degree that there just aren't enough jobs currently to to um soak up that loss, but if it was just A laid off from their job, and then I might consider that controllable maybe If I get laid off from my job for I mean, it's just like for one individual person I got laid off. I was the only person that lost my job or me and 100 other people lost their job for me as an individual I call up and say hey, Liz. I can't you know, you can't clean my home anymore. I lost my job Yeah Our thinking is we treat that as a controllable loss Now if it is or it isn't I don't know but your whole thought process is different if you treat it as a controllable loss because It's a controllable loss and you've got whole programs on this list where things you do basically to to recover Yep, you've got other terms for what do you what do you call it when you're trying to not lose a customer? I don't know All That you had you got presentations on it. You're talking about like our proactive reactive Yeah, yeah and retention activities. Well, we we just focus a lot on retention retention and You know, there's just so Whew, we found out so many times that things that we thought Were uncontrollable or actually controllable. We just we just didn't know it And and so treating it. I I like what you said tom about You approach it with a different attitude And and that's true if you think that well, there's nothing I can do Then you don't you don't do anything Um sort of the henry ford thing right whether you can or you think you can't you're right so I like to think of as many things as possible as controllable losses because I I put them in a different in a different activity barrel Then I'm using barrel instead of bucket Because otherwise, I don't know with uncontrollable losses. It's easy to just go Okay, they died And we took them out of this we took them out of quick books and we took them out of here And took them out of the schedule and check. Okay. We're done Where when it's a controllable loss You know, it's okay. That's what we're doing today But what are you gonna do next month? And the month after that the month after that the month after that and And somebody asked me once I think this was laura smith She said well, when you take them out and stop reaching out to them Never I don't if they don't ask us to stop contacting them then I just don't I'm just waiting for them to come back. Why not? Why not come back at some point time? You need your house cleaned again. Everybody needs our house cleaned again Even if it's because you're gonna move then you need your house clean On the controllable side, I put one thing quality totally controllable Is there anything else? I mean it doesn't it In my mind so much falls under quality I know Showing up what's that called Well, all that's quality, you know, maybe I screwed up the invoicing. Maybe the scheduling is wrong But at the end of the day you diminish the value proposition the quality We could go back to the surf call model tomorrow And there's so many different dimensions of quality and And just how well we remove dirt from a surface is such a small part of what quality is I might I might argue the word quality with the word value Okay So, you know, not not not providing the value That gets into Somebody calls up and says hey, I lost my job. I can't use your service anymore There's a whole Spectrum of of scenarios that could fall under that. I mean, you know, my thinking is Well, what what other, you know expenses are you going to maintain? Are you still paying for cable? Are you still going out to dinner every friday? Are you still planning on going on vacation this summer or what, you know, I mean I kind of what Sarah meant when she was talking about major job layoffs, right? Like Like some kind of Yeah, I think what you're talking about, you know, if a thousand people get laid off It really doesn't matter because I'm on the phone with one person who's talking to me saying I can't use your service anymore because I no longer work at Boeing to use that for example What doesn't really make crap if they were the only person lost their job or for thousand people For that one person is that person controllable? And it's really a matter of how much value They place on your cleaning service versus the other things that they spend their money on Yeah, I'm not going to argue that with you With it relative to how quickly they whether or not They think they can come up with the money for it because There are some people that no, they're not going to have cable. No, they're not going to have phones No, they're not going to have cleaning service. No, they did have to quit smoking No, they're not going out to dinner because they can't get another job, but that's rare That is so rare It's so rare that somebody loses their job and they change their whole entire life Yeah, what they drop is the superfluous stuff So the stuff that they can let go of that doesn't have any real emotional attachment to them If they have an emotional attachment to the person that's cleaning their home, that's a tougher thing to do You know, you know, I can't I can't let My cleaning person go I feel like They're part of the family Yeah You know, I'm not saying That's the relationship that that that that that that we need to have or should have with with all of our clients but the fact of the matter is Consumers make choices with what they're going to do with their money if they have less money It doesn't mean they're not they're going to spend it It's just a matter of they're making choices what they spend it on And if you're creating more value for them and other things that they're spending their money on then you're going to lose Fewer people when they feel like it they need to make a budget adjustment Yep, I agree Sarah's bringing up this question of The pitas right pain in the butts Right, and she's she's calling those controllable losses But controllable the other way Pina pain in the butt P pee pee pee pee Think think of a different butt. Yeah, I know. I'm just picking on you Well, those those clients she's thinking of it the other way, right? That it's a controllable loss and yes I'm controlling it that I want to lose these people That and so there might be some people that you want to lose and it kind of depends on Who you are your company who you want to lose what you you know what you want to work with size of the company sometimes has to do with that Sometimes Just your your personal temperament has to do with that I'm going to say as a rule In terms of a philosophy You want to put pitas under controllable They're they're exceptions to that if you've got a client that is prone to violence or harassment Who is a danger to you know, you're you're you're cleaning professionals then you have A moral obligation and just smart business moves. You need to get rid of them and just You know, that's an uncontrollable loss just because somebody's grumpy and complains a lot and you know There's an opportunity to manage them and Why are they grumpy and why are they complaining a lot? And maybe we really haven't set expectations appropriately and Maybe they should be paying more but we just don't automatically want to go to well, we need to get rid of them because They're a grumpy person. I'm gonna say two things about that one is for some business owners one of the things that they enjoy about this business is that they Can do that that they cannot clean for People that they don't like that they have that flexibility to never have to work with or for People that they don't enjoy working with or for But I would still call out a controllable loss because you still that you can control that you get to decide Whether or not you're cleaning for them again So still call them that and then the second thing that I wanted to Talk about with them is for some people They're thinking the 80-20 rule Right like 20% of your people or your clients are going to give you 80% of your problems So they're thinking I'm going to get rid of those people that are causing me 80% of my problems and I'll have more Time energy, you know resources to spend growing my client base, etc So with those two different things to think about The the pitas are I I I try to save and you know this time. I try to save them all All and I will I will do a lot to save a customer Our average customer is worth quite a lot of money to us and I don't want to I don't want to let them go so Um, community and client could who's yes Fire the client if necessary Whoa auto error Oh Yeah Communication with the client. Oh, absolutely susan I think that is one of the biggest ones Tom alluded to it a little bit when he was talking about expectations Right setting expectations that has a lot to do with communication I think a lot of the covet losses had to do with communication People that were better at communicating lost fewer customers than But I'm not saying that this is This is a generalization. I'm not saying that this is across the board for everybody But generally the people that were better at communicating lost fewer customers than they would have or clients Then had they not been good communicators Whoa, oh, uh, I see what she's saying. She's not she's not saying who's she wanted to say, whoa Yeah, yeah the client so did we you know Maybe this would help in in this context of what's controllable and what's not controllable and the overarching point is you don't want to develop a culture within your office within your support staff of Every time there's a bump in the rug. Well, that's uncontrollable. We're just going to have to let that one go right And you mentioned lifetime value of a customer Have we shown how to calculate that? I don't I don't think we have here Tom Okay, we got a few minutes. Do we want to do we want to see that? I think people would love to see this so Tom what Tom's going to build this a little spreadsheet here and while he's building We're going to talk about lifetime value and the reason why Tom's bringing up lifetime value right now Is because when we're talking about whether it's controllable or uncontrollable And sometimes we're quick To want to let somebody go for whatever reason they're frustrating their house stinks That he's rude. He's you know Whatever whatever the things are that aren't dangerous that aren't really safety issues Um, I don't like the way he yells at his dog, you know, whatever the things are but we can be quick to let go of our clients and but Knowing what the lifetime value of a client is can help you recognize that whoa that I'm not sure if how this guy walks around the house and Skimpy shorts, they're they are close. They're skimpy Makes me want to lose that $12,000. I don't know so but again going back to the point that You can you get to choose as a business owner. Absolutely Who you want to come for and who you don't want to work for? uh The the message that we want to give you without being disrespectful or saying Stop being butt heads and getting rid of all your clients without saying that is make sure that you're making a a well thought-out decision and that Knowing knowing all the facts you still agree that okay, it's worth it to me to not keep this client. All right, so We got that backwards there Tom Ldl yeah, okay Yeah, thank you test. I know I'm good at passing these lately. Um And there is another there's one more argument that we get for getting rid of pita's and I forgot to mention earlier I just remembered it right now another argument is customers are easy to get employees are hard to get so if the Employees don't like this customer. They don't want to clean there. They hate going there if it's impacting the the potential retention of employees that it might make good sense to get rid of a client And I feel like that is sometimes a good thing to be thinking of because what is the lifetime value of an employee? And we talk lifetime value of a client all the time, but what's that lifetime? Value of an employee because that's a good chunk of change right there too And we all know how hard it is to get especially at different times right now Most people are struggling with finding employees right now So all right, Tom, what you got there? So let's uh, let's just make up some numbers here So your your your average bill rate per per job per cleaning is 150 dollars sounds good and Let's say your average customer It gets cleaned every other week now. Remember we said there's 4.333 homes or 333 weeks in a month, right? So If I do 0.433 Yeah I do 4.3333 And divide that by two That's getting cleaned every other week now There's some other adjustments that we could be making in here because customers typically have some percentage of those jobs that they skip for various reasons but And also you're with your quad clients you're every four weeks and you're every week You're probably your average isn't really exactly two weeks. So you want to want to say it's like just be two to make it easy Okay, we'll say it's two And the average monthly loss rate for recurring home. Let's say it's it's it's it's five percent but that's just kind of the the the the baseline That you've been talking about So the the average monthly Recurring home The average rate Recurring home average monthly rate No, we got average revenue per job How about this the average number of The average months Per recurring home. That's what I mean. There we go Okay, so if I'm losing five percent of my recurring homes every month then If I take one and divide it by that five percent That means my average recurring customers with me for 20 months Does that make sense? Yeah Five percent every month over 20 months. That's a hundred percent, right? So on the average, I'm going to lose all of them and It really gets interesting if you start looking at this turnover rate by How long a customer has been with you and graph it Because most of your turnovers taking place with these recurring clients that have been with you for a short amount of time Yeah, if somebody's been with you and say a thing well on your on your cleaning professional side, too Yeah, turnover rate Most of that is what I mean. You guys all know this, right? You've experienced it So go ahead and talk them through it time but use the employee because I think more people are familiar with the concept when they're talking about employees and then Um, so everybody I want time to go through this again. Oh, it's 258 But tom can we just come back to this tomorrow because I think it's really important. Um So what can happen when we're talking about how? How long customers stay with us a lot of people don't know how to figure that out They don't know that it is 20 months. So and they they don't even know I would hazard that many of the people that are on this call today have never even figured this out this way If you're one of those people, please say me. Yes, something like that Because I think that what most people do is they look at the customers that they've had for a really long time And they anybody that they've had maybe longer than two years And then they take all of those people me. Thank you. Thank you Shannon. I appreciate that And they take those people and they kind of do an average of those because they think the other people don't really count because You know, they haven't had them long enough yet Or you've only had them for a year and they take the number of where they are today. Yes, susan. Thank you So I think a lot of people have never ever figured this out and it's easy easy math thing Walk people through what it is again tom show them math if you could like, um Average months tomorrow Oh, sorry Sorry guys. Yes tomorrow. We'll we'll go over this just a little bit more super easy math But you have to know to do it Are you or you'll figure it out the wrong way? Once you start doing this, you'll look at your business differently And when you're looking at the things happening in your business, you'll see things It's right before your eyes, but you'll just see it differently and it'll be useful Okay guys take care. Have a good rest of your day. We'll see you here tomorrow at five o'clock Easter