Most experts will tell you that, in order to survive in today's carpet cleaning business world, you must offer specials and discounts in order to compete with the big boys whose ads dominate the various media.

Experience tells me that if you are an owner-operator (hereinafter "David"), the experts would be wrong.

Not only will that strategy not work, it might just cripple your company's ability to effectively set itself apart from the competition, especially the big-boy competition (hereinafter "Goliath").

Business models and differentiation

The key to understanding why this is the case is to understand that the Davids of the industry are not in the same business as the Goliaths.

The Goliaths of our industry, for the most part, operate a commodity business model. They know that, for many consumers, a low price is a strong incentive to buy, so they cater to that demand. They advertise low prices — offering specials, sales, deals and bargains — to entice price-conscious consumers to schedule an appointment.

Once an appointment has been made, the upselling begins. You see, Goliath has no desire to do the job for the "special" price that prompted the call to schedule the appointment. Goliath's office staff and technicians are trained to sell value-added services such as deodorizer, protector, upholstery cleaning and so on. Goliath's business model depends on two things: Upselling and a relatively high sales volume.

Goliath doesn't do the work himself. He employs technicians. He needs to get enough work to keep several technicians busy in order to earn a good living. This means he needs to generate 20 to 30 jobs per day, minimum.

Now let's look at the owner-operator, David. I understand David pretty well because I am he. I was also a Goliath at one time.

David's business could best be characterized as high touch. David is "chief cook and bottle washer." He schedules the appointments, does the work, perhaps with a helper, and follows up to ensure satisfaction.

David is, of course, also in charge of marketing and sales. When he's busy, he often neglects this aspect of the business, which means that he usually only focuses on it when he's not busy. It's really not a very good way to handle marketing and sales, and he knows it. We'll return to this aspect of David's business shortly.

In contrast to Goliath, David only needs to do three or four jobs per day to make a reasonably good living because he does the work himself and consequently enjoys a very high gross margin.

Most of his business is repeat or referral. If he's good at what he does, he's often booked a week or more in advance.

David's undoing

Sometimes, David looks at Goliath with envy. Usually this is when business is slow and he thinks of all the jobs that Goliath's company is doing.

He notices that Goliath does a lot of advertising and that his ads always include some sort of special offer or "hook." He thinks of the calls he gets from shoppers, as opposed to repeat or referral customers. Always, it seems, they ask, "Do you have any specials?"

Since he's not busy, David puts on his marketing hat. He needs to fill the schedule, so he calls the Val-Pac rep... Or the SEO rep... Or the radio station rep... Or the newspaper rep... Or the Groupon rep... Or the Yellow Pages rep... Or all the above, and he says, "I need to book some jobs, help me!"

And, of course, the rep or reps are happy to oblige. They tell David, rightly so, that if he wants to book jobs, his advertising needs to have a "hook" to prompt people to call. To be successful, David needs to do what Goliath does and run a special.

The payoff

At this point, one of two things happens: Either David's special is a flop and he doesn't book enough work to pay for the advertising (a bad thing, to be sure); or it is "successful" in the sense that David books and completes enough work to pay for the ads and, perhaps, even make a few dollars.

This second scenario is, in my view, even worse than the first, for it lends support to the view that David can borrow Goliath's means to build a successful high-touch business.

In fact, it retards and undermines it. David's business is structurally different than Goliath's. A large gross margin is required for it to be successful. When David adopts Goliath's marketing methods, the result is significantly reduced margins, thus trapping David in a "working for wages" business that compensates him as a technician rather than as an owner-operator.

The economic impact

My fellow Cleanfax contributor, Steve Marsh, has documented the potentially tragic economic impact of this strategy. Marsh estimates that gross margins for owner-operators are reduced by 50 to 70 percent on jobs obtained using a discount marketing strategy.

Equally important, these "special" customers are much less likely to become regular customers — the bread and butter of David-type businesses — than are those acquired by referral.

Another factor is the impact it will have on David's existing customers.

Likely, some will feel cheated if they had cleaning done at the regular price only to find that others are paying less. The result will be lost trust, which is likely a foundation of David's business success.

Others, upon seeing the special, will simply be trained to wait for deals before scheduling future services, thus further eroding David's margins.

This can be the start of a vicious cycle in which advertised specials increasingly dictate sales, and margins continue to decline.

What's David to do now?

David's mistake, of course, was to adopt Goliath's marketing strategy for his owner-operator business. In essence, he's forced a square peg into a round hole.

At this point he has two options:

1. Abandon the strategy, or
2. Change business models and build a Goliath business.

If he decides to go with the first option, he should do it cold turkey, all in and no looking back. It was a mistake, an aberration, and the sooner and more completely he moves away from it the better.

Yes, there will be damage to the business that will need to be repaired. It will take some time, but it can be done.

For some, the second option may be the right way to go. The way of the owner-operator isn't easy and it's not for everyone. Of course, neither is it easy to build a successful Goliath business.

But for many, including myself at one time, a high-growth strategy seeking market dominance needs to be pursued.

An alternative course

As mentioned earlier, most David businesses are more-or-less neglectful of their marketing responsibilities when business is good. It is this neglect that leads to slack periods in which the temptation to "Do something now!" can be overwhelming, and destructive.

The solution to this problem, of course, is to be proactive rather than reactive in your marketing efforts.

For David businesses, the most important and effective marketing activities involve communications with existing customers in order to maximize repeat business and build referrals.

This is accomplished in a variety of ways; for example, Thank-You notes and other expressions of appreciation, newsletters, reminders, etc. It need not be elaborate, but it does need to be consistent.

For many David businesses, this has traditionally been an Achilles' heel because, as previously noted, execution is often inconsistent because, when David is busy making money, he doesn't take the time to do these things.

With the technology available today, there is really no excuse. And, if David doesn't have time to do it himself, he can hire someone.

Many marketing-support companies have sprung up over the past several years to provide these services. Some are local and serve diverse industries. Others are industry specific and serve professional carpet cleaners nationwide.

It's up to you. Be a David. Be a Goliath. But don't try to be both. It won't work.

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John Downey is the owner-operator of Downey's Carpet Care of Granville in Granville, Ohio. When he's not scrubbin' rug, his wife, Cecilia, lets him help out his brother, Tiger, owner of Perceptionist, an appointment scheduling service for small service businesses (www.MyPerceptionist.com), or assist Dr. Michael Berry in his efforts to bring science-based environmental management practices to the cleaning industry. John can be reached at JDowney@JohnDowneyCo.com.