Why Does Customer Segmentation Matter in the Commercial Laundry Industry?
Commercial laundries have customers that range from a variety of industries. With a diverse assortment of customer types and needs, the emphasis on your go-to-market strategy is worth focusing on. With a broad range of customers hailing from varying industries, the importance of understanding and analyzing these customers, and their purchasing behavior cannot be overstated when putting together a marketing and sales strategy. In this blog post, we'll delve into why customer segmentation matters in the commercial laundry sector and how understanding this can impact your company’s growth.
Diverse Customer Base:
As stated above, any given laundry caters to a diverse clientele, ranging from hospitality and healthcare to manufacturing and food services. Each of these industries requires specific types of uniforms, linens and facility service needs. These SKUs can vary significantly in terms of size, material, and usage frequency. Customers from different industries rent or purchase distinct SKUs based on their unique needs.
Varying Margin Opportunities:
The choice of SKUs by customers translates directly into different margin opportunities for a laundry business. Certain items represent larger profit margins and it is in a laundry’s best interest to capitalize on these margins and the promotion of those items.Therefore, understanding which SKUs are most in demand within each customer segment is crucial for optimizing profitability.
Logistical Challenges:
In addition to varying SKUs, certain customer industries present more significant logistical requirements. This includes the need for extra trips, dealing with higher garment wear and tear, and maintaining a higher level of responsiveness from your service team. For example, the healthcare industry may require more frequent pickups and deliveries or other precautions to be taken due to its more rigorous regulatory standards for cleanliness and safety. These specifications can increase the cost of serving these customers but also demand a higher level of operational efficiency.
Cost-to-Serve Analysis:
In order to truly maximize the impact of customer segmentation, businesses should also perform a cost-to-serve analysis. This involves calculating the total cost of acquiring and serving a customer, factoring in both SKUs and logistical requirements. Not all customers are created equal in terms of profitability. Some may yield higher returns despite requiring more effort and resources, while others may offer lower lifetime value due to lower margins and easier logistics.
Lifetime Value Considerations:
When evaluating customer relationships, it's essential to consider their overall lifetime value. While all customers contribute to a laundry business's revenue, not every customer's contribution is equally as profitable. By segmenting customers based on their needs, preferences, and profitability, laundries can allocate resources more effectively, tailoring their services to meet the specific demands of each segment.
Strategic Decision-Making:
Customer segmentation empowers laundry businesses to make strategic decisions that can significantly impact their bottom line. By identifying the most profitable customer segments, they can allocate marketing resources more effectively, develop targeted service offerings, tailored messaging, and prioritize customer acquisition efforts accordingly. For instance, the way a sales person approaches or speaks to the head of environmental services for a hospital is going to be different than the purchasing manager for a manufacturing business because what they each care about is very different.
Understanding the unique needs, SKU preferences, and logistical challenges of different customer segments allows laundries to optimize their operations, improve profitability, and enhance customer satisfaction. By recognizing that not all customers are equally profitable and tailoring sales messaging and service accordingly, laundry businesses can position themselves for long-term success in a highly competitive market.
Cosgrove Partners is an expert in the Commercial Laundry space, having taken several businesses to successful growth targets. If you’re interested in learning more about what we offer, contact katie@cosgrovepartners.com.
