NEW ORLEANS — At some point in the life of a laundry/linen service, it will have the chance to service a new customer.
In that instance, two things must occur: a plan and contract must be put in place and the company has to take over service from the old vendor.
The keys to onboarding new customers are operation data and planning. A laundry service has to know everything that’s relevant to onboarding new customers, and it has to be prepared.
Three experts—Liz Remillong, vice president, strategic alliance, Crothall; Nicole Grubich, executive director, West Michigan Shared Hospital Laundry; and Suzy Ward, director of client services, Crothall—presented information to help guide laundry/linen services through this process in the healthcare market during the educational session Customer Migration: Be Prepared to be Successful at the Clean Show here in June.
PRICING, SERVICE PLAN
Remillong started the session by discussing developing the initial phase of a relationship with a customer—gathering information so a laundry/linen service can put together a pricing and service plan.
“Pounds and pieces obviously are important, and if it’s an existing facility with a service provider, they should be able to give you that information,” she says. “But as you know, sometimes they don’t, or they won’t, so then you have to be a little bit creative in how you get that information.”
For pounds processed, that may be as time-consuming as going through physical invoices to calculate poundage, but with all the technology available, there are varying ways to get that information, adds Remillong.
When it comes to pieces, one question to investigate is the client’s product mix, she says. Do they want rental, customer-owned goods (COG) or some kind of combination?
“You have to deep dive to know how they want it priced and what the expectation on method of delivery is and daily ordering methodology,” Remillong says.
Are they going to just order, are they going to be on a flat rate? Are they going to do an inventory, or are they going to use a software that makes a difference on the accuracy of that order?
“How they’re used to ordering is very important,” she points out. “Your language might not be their language.”
Another factor to determine is the client’s finishing requirements, such as packaging with hangers, plastic wrapped, bundle tied, not bundle tied, bagged, etc.
“It is very important to understand that, because that could make a difference if it’s different from what the norm in your plant is, and you can price accordingly and meet their expectations from that first delivery,” says Remillong. “And delivery requirements is a big one.”
How many times a week does the client expect delivery, and what’s the window of opportunity to deliver and pick up? Where will goods be delivered and picked up? How much time, on average, is the driver going to be at that location?
“It makes a big difference because, as you know, we’re all experiencing challenges with drivers,” shares Remillong. “The rates we’re paying for drivers is going up, and when you look at overtime and benefits for a driver in our business, it’s in excess of as high as 35-plus dollars. So, it makes a difference to understand the driver commitment time right off the bat.”
Other normal factors she shares that laundries need to gather from clients include length of agreement and payment methodology.
Besides what Remillong calls normal, or common, factors a laundry/linen service needs to gather to create a pricing and service plan, there will be other “not so generic” information, especially for acute-care facilities, that will be important.
“How are you going to handle extraordinary increases in your cost and what is included?” she says. “Is it electricity? Is it water? Is it fuel? And, most importantly, is that wages? And how is it defined?
“How’s it going to be measured, and how are you going to be able to pass it on? Obviously, one of the biggest ones for all of us is how loss is handled, and there are a significant number of ways, and growing, on how to handle that.”
Remillong also points out that service measurables are important. What is important to the customer?
“Is it the fill rate, on-time delivery and quality?” she says. “That list seems to be growing. Right off the bat, you want to know if you’ll have an expense related to that and what their expectations are. Based on that initial feedback, you’ll have a pretty good idea on how that customer is going to be to service.”
The customer may also want to push vendor requirements, such as encouraging the laundry use linen from a certain manufacturer because they have a relationship.
“Is there an expectation that you source your product from a specific vendor for that customer?” Remillong says. “Because that could change the way you do business and how you have to handle those goods through the plant for that customer and may increase price.”
The billing cycle is also key to determine. Will it be weekly? Monthly?
“That may make a difference to you based on how your operation is run,” she points out. “You may be used to billing weekly, but they want monthly, and that may also impact your contract and your pricing.”
Other factors to determine include penalties, savings credits, service expectations on-site, bundling expectations, reporting expectations and training. She says if it will add an expense, determine that before entering a contract in writing.
Remillong adds that are many “what if” scenarios that should be addressed. For example, laundry/linen services need to be aware of termination for cause factors: what it is, what it includes and the time period that makes sense.
“Usually it’s just for non-payment, but for how long and how much time do they have?” she points out. “That is important language.”
Remillong also points out there have been lots of mergers and closures, lots of activity in the industry.
“How easy is it for a customer to get out of an agreement?” she says. “They get bought by another entity, which happens quite a bit, is it your expectation that they hold through the term of the agreement? Are they going to use the termination for convenience and you have to make another agreement with the new owner?”
Beyond market changes, Remillong points out many changes take place in the industry that need to be addressed when determining pricing and service.
“They’re in your generic pool and they’re using your sheet and your towel, but they want a special spread or they want a special gown or special VIP linen and they commit to a volume and all of a sudden six months into it, they’re not using it,” she points out. “What are your options? And are you able to charge the difference again? It comes up a lot, especially if everybody wants something unique.”
Remillong suggests services get customers to commit in writing what the expectation of usage is and what happens if that volume drops to a certain percentage that would impact the laundry’s business.
She also says it’s important to determine early termination penalties.
“If you’ve got a lot of capital involved and you think you have a five-year deal and they want to cancel in year two, how much are you able to recoup should be stated in the agreement,” she shares. “If they leave early, they should know the dollar amount that they have to pay.”
End-of-contract costs should also be determined. This refers the options available to when a client leaves service and not all goods, such as linens and carts, are returned.
“Is there a clear understanding what happens when that contract ends?” she says.
Finally, Remillong discussed a service-resolution plan. What is the process when a customer has an issue? Is it clearly defined, contractually, and what is their expectation? Determine reasonable procedures and timeframes.
To make this information-gathering period as effective as possible, Remillong has several suggestions.
“Ask open-ended questions,” she says. “For example, ‘What do you like best about your current service,’ and then make them talk. What else? What else? What else? So, you’ll find out what’s important to them based on the things that they’re sharing, on the things they like best about their current provider.”
She also recommends asking about what the customer would like to see improved?
“The session is to get them to talk about the things that they have challenges with because that leads right into what are the pain points for you,” Remillong says.
“What does that mean? When this happens to you, is there usually cost or angst or something associated with those issues with service? By doing this, you can understand the current situation, you can identify the problems and hopefully provide a solution that doesn’t always come back to price.”
Check back Thursday for strategies to help with the actual shift from one laundry/linen service to another.
Have a question or comment? E-mail our editor Matt Poe at [email protected].