Tuesday, May 7, 2013

Focus grouping: minimums, fees, etc.

I have a question about people's perceptions about moving fees and what-not. I've always endeavored to offer top-notch service for affordable prices, but there's always a tension between what people expect and what we need just to keep the lights on. As the owner/manager/sometimes mover, I'm responsible for the bottom line and often see things primarily through the prism of the bottom line. I know we could raise rates and still get about as much business. But, do we need to? Not yet, but if gas goes up anymore, or any of a hundred other things get more expensive, or if a truck breaks down...

Anyway, what do you think about the following:

Minimums: it's common for moving companies to charge a minimum number of hours for their work, even when the minimum exceeds the amount of time actually worked. It is a defensible charge. You have to pay your guys for travel time to and from the job. You burn fuel during that time, too. And then there's the harder-to-measure wear and tear to the truck while you're using it to get to someone's job, and then head back to HQ.

If the customer decides to get started early and takes a few loads to the new place before the movers arrive, the job that the company was budgeting to take, say 3-5 hours, takes 2 hours instead. Now, we don't necessarily mind that, but we would like to know in advance so that we can plan and "fill the gap." We could have added another job to the schedule.

I think you see what I'm getting at. Minimums aren't always (or necessarily even often) sketchy. There's a good reason for them -- staying in business.

Nonetheless, I know that people often see that and think "What a scam. Charging for time you didn't work? There oughtta be a law!"

Base rates and zone fees: I don't know many companies that do it this way, but it's a slight modification of the minimum idea. The gist: They charge a "base rate" which is essentially a minimum amount needed to make the job worth it, or they'll charge a "zone fee" or sometimes what they call a "truck fee" to avoid having a high hourly rate, but still make enough to cover the basic, unavoidable costs like fuel and payroll for the non-billable time of the job.

Right now we do the latter: zone/truck fee plus low hourly rate. The idea is that our hard costs are covered, and the customer has control of the overall time it takes to do the job by being prepared. Prepare well: fast, inexpensive job. Don't pack: the job takes longer and costs potentially a hell of a lot more. To help customers keep costs low, we provide a free Moving Guide that shows them how to be as efficient as possible, thereby saving money.

Still, we're debating whether we have the best possible system right now. We're considering everything: minimums with and without raising rates, base rates plus our standard hourly labor rate, etc. We like the idea of being able to present the customer with just ONE simple, affordable rate. On our end, we like it because we don't have to calculate distances and give zone fees, which about 25 percent of our customers push back on. It's a completely legitimate, defensible charge, but the fact that I have to explain that immediately calls that claim into question.

So, thoughts? When you contact moving companies, or any service-oriented company, what do you expect? What raises the alarm bells? Your thoughts are greatly appreciated.

Thanks!
Chris

MTB at Five Years, and et cetera

So, a couple of weeks ago, My Truck Buddy hit the five-year mark. Back in October I had grand plans to invite the 10,000 customers in our database to some sort of picnic, but several harsh realities intruded:

No money
No time
No permits

Re: that last point, as it happens, getting a permit for a 10,000 person party in a public space is not only expensive, but impossible unless you can buy a congressman. U.S. congressman preferred, but even a state rep will do. We'll shoot for a 10-year blow-out party. Alas...

I haven't really had a lot of time for reflection, but I did note something with some amusement the other day. I was driving back from our quarterly Shenandoah company camping trip. I passed a sign for Marshall, VA and moment of mania -- I simultaneously laughed out loud and fought off tears. Marshall was the site of my very first moving job way back in 2007. It was the first one I did with my little pickup truck, grossly overestimating the amount of stuff it could handle, and grossly underestimating the distance from the destination: Arlington.

The job: clean out a 10X10 storage unit and deliver the contents to a place near Columbia Pike. The customer had found me on Craigslist and couldn't resist my "introductory pricing." I was such a terrible capitalist I felt terrible actually asking for money. So, I charged $35 for the first load, and minus $5 per extra load if necessary.

Long story short: I lost my shirt. A packed 10X10 storage unit is a huge amount of volume. I managed to manhandle a washer and dryer into the back of my truck, by myself, and that was it for load #1. After the second trip I realized I was outrageously understaffed and under-equipped, so I rented a Budget truck (cost: over $100). The customer and I got a lot more of it in there, but my packing skills were...in an embryonic state, you could say.

The customer was very understanding. She knew she was getting a good deal. She even tipped me over $100, but I still didn't make a profit unless you count cash-in-hand as "real money" and expenses paid by card "phony money," (which, I suppose, a lot of people do).

My wife was at a real estate investment (REI) conference that day, and sat next to a friend of mine. When she told him what I was doing that day, he laughed and said "Entrepreneurs don't do the work!" It stung when I heard about it, but I knew he was headed for a reckoning of some kind. He'd spent, by his estimate, about $100,000 on various REI products just as the market was crashing. I don't know what happened to that guy, but I can tell him that entrepreneurs do MOST of the work, and the slow grind is much better than the fast buck most of the time.

Anyway...

Five years. Over 10,000 customers in our database (Of course, we've only had the capacity to serve about half of those in the last five years, but still that's more than I ever imagined.) We have about 340 Yelp.com reviews, dozens of Angie's List reviews, and the vast majority of those are 5-stars and A's, respectively. (I'm not sure if I can mention that about Angie's List, but I'm sure they'll notify me if it violates their rules...) We earned the Washington City Paper's "Best of" runner-up award in the Movers category. And finally, I've received hundreds and hundreds of private emails thanking us for the service and complimenting our guys for their hard work and integrity.

Again, this is beyond my imagining.

You might surmise from these infrequent blog posts and Facebook status updates that I walk around starry-eyed in a state of constant awe and amazement. Actually, I often do. But then reality tends to clock me upside the head with a crisis or two.

Lots of work ahead. We're always streamlining our processes -- from estimates to post-move follow-up, we're always arguing about the best, most efficient system that doesn't kill us and makes it easy for people to move. Truck Buddies David and Jeremiah are principally responsible for that right now, but many others have helped move this stone up the hill.

I guess now that we've made it to five years, we'll have to shoot for ten. Why not? I don't have anything else going on.