Establish a sister company

I was thinking in the last few days about all of these customers that I didn't schedule because of the price, then Ryan posted his thread about one step rental emulsifyer, I was thinking about replying to his thread but thought about it, it's kind of a different matter, that prompted me to start this thread.
The reason is the same, we lost quite a few customers due to pricing, and on some weeks like last week I was a little frustrated with the way things goes, out of 15 calls average per day ( I usually get about 20 - 25 calls daily average ) I only scheduled 3 - 4 jobs ( usually the average is about 8 jobs scheduled ), prompted me to think about establishing a sister company that I can refer people that want a cheaper rate ( not super cheap ! ). The reason why is the reputation of my well established company is not jeopardized by non favorable reviews from those lower priced customers which we all know that they're a bit harder to please and expect more.
Now of course there will be kinks need to be worked out like firm policy needs to be in place in dealing with them, strict warranty guidelines, firm walk through expectations being put in place prior to pulling the hoses, slightly lower quality cleanings due to the price reductions ( no stains removal will be done, like red stains, rust stains, furniture stains, etc )
What do you think about this idea ? Or may be one or two of you already has this system in place willing to share the details ?
Before any of you go all negative, keep in mind I'm not talking about doing 10 cents / Sq ft cleaning here, I'm talking about 20 - 25 % discounted rates off of your normal rates, think about it, if you lose the job, you get nothing, by giving 20 - 25 % discounts, you get the job and possibly retaining the customer for future business and you're building another company that might worth some $$ in the next few years if you're succeeded in building it in the right direction.
Let's hear it   

I am in the early stages of doing exactly this, I started out under a different name so I will just use that name. I have the website, logo etc already in place so it just a turn key start up really. I will be watching this post for ideas. I will not do any advertising at all apart from a small yellow ad. It is already on the first page of google as I do all my own seo. Only implications is how to answer the phones and know who they are actually calling. Will need someone else taking those calls exclusively for sure.

My plan if I were to do this is not to advertise at all, virtually minimizing every fix costs, it's exclusively handling the customers that still want a quality service but not willing to pay the premium price that the mother company is charging.
One thing I was still searching for answers is how to direct those calls to the sister's company or should the sister's company just be active and call those customers up and offer the service but what if the customers ask how did they get their # ?

dp1 wrote:I was thinking in the last few days about all of these customers that I didn't schedule because of the price, then Ryan posted his thread about one step rental emulsifyer, I was thinking about replying to his thread but thought about it, it's kind of a different matter, that prompted me to start this thread.
The reason is the same, we lost quite a few customers due to pricing, and on some weeks like last week I was a little frustrated with the way things goes, out of 15 calls average per day ( I usually get about 20 - 25 calls daily average ) I only scheduled 3 - 4 jobs ( usually the average is about 8 jobs scheduled ), prompted me to think about establishing a sister company that I can refer people that want a cheaper rate ( not super cheap ! ). The reason why is the reputation of my well established company is not jeopardized by non favorable reviews from those lower priced customers which we all know that they're a bit harder to please and expect more.
Now of course there will be kinks need to be worked out like firm policy needs to be in place in dealing with them, strict warranty guidelines, firm walk through expectations being put in place prior to pulling the hoses, slightly lower quality cleanings due to the price reductions ( no stains removal will be done, like red stains, rust stains, furniture stains, etc )
What do you think about this idea ? Or may be one or two of you already has this system in place willing to share the details ?
Before any of you go all negative, keep in mind I'm not talking about doing 10 cents / Sq ft cleaning here, I'm talking about 20 - 25 % discounted rates off of your normal rates, think about it, if you lose the job, you get nothing, by giving 20 - 25 % discounts, you get the job and possibly retaining the customer for future business and you're building another company that might worth some $$ in the next few years if you're succeeded in building it in the right direction.
Let's hear it   

DP,

Absolutely Yes!

Here are easy first steps;

Get another DBA for the new business (about $30 with the O.C. clerks office).

Set up another bank account (need the DBA first to do this) under the new comapny name.

Print some new work orders that either have no company name or the name of the new business.

Buy a throw away phone with a message that has the new business name only (this may only be needed if you plan on doing some marketing)

Generate a new logo (also optional)

I have done exactly what you are talking about. Protect you quality name but scoop up some of that "value shopper" business.

I'm so glad to hear that other people agree that the "High End", "Premium" customers are not the only place where money can be made in this industry.

Keep us posted.

So... Are your service vehicles unmarked or are you willing to buy another JUST for this venture?

My gut says bad idea. I'd price tier first....

Thank you Bill, appreciate the infos, how do you divert the phone calls ? And how do you explain to the customers about this option ?
James, all of our vans are unmarked due to theft and fraud ( people brake on the freeway and ended up being rear ended and try to sue for injury and such ). So there's no problem there.
Regarding the bank account and stuffs, I think cash only in exchange for a fat discounts would be good to start, not planning to take checks at all, may be credit cards in the future if the pilot program works.

There is a high end auto body shop in my area that has been named as one of the top body men by "Hot Rod" magazine for the last decade. He normally only works on custom machines that run into 1/4 million dollar and above...but he has a secret.

He also knocks out budget work for a local dealership that specializes in $1500 or less car sales. The deal is that all jobs are paid in cash and nobody is to know who really did the work.

I think you have a valid idea there, but the question is, can you keep it seperate? If someone learns about your sister company, what will it do to your reputation?

The safer way, in my view, is to offer the lower tier cleaning with your current company. People trust your skill and experience plus your reputation is making that phone ring, so they would be much happier having you provide the "no frills" option.

Being directed to someone else is no insurance that they will book that job...why not shop around since they have no experience with the sister company? Probably able to find a known company out there already in that price range in your area.

I would keep your name on it and work on a pricing package. It is far less to manage and more honest in my opinion.

That's very true Rob, no guarantee that they will book with that company especially since that company have no reputation, that's a very good point.
Bill, did you actually do it or you just know someone who did just that ?

The only way it could work, in my mind.....

Run and gun. No garuntees. No prevac, no grooming, no pet damage, no nothing. Open areas only. No time for add ons that day. Carpet splash and dash ONLY.

Separate marketing, separate accounts, separate uniforms (cheap T shirts).

Use a special Google phone number for this business ONLY.

Encourage online bookings WITH a DEPOSIT from a provider. 25 bucks a room, 3 room min.

Maybe it would be better to find a young starving company that already operates his business on cheap and just sell him the referrals....take 20% or something.?

No headaches, no shadow entity, you would be helping a new cleaner and still making money without an investment.

dp1 wrote:That's very true Rob, no guarantee that they will book with that company especially since that company have no reputation, that's a very good point.
Bill, did you actually do it or you just know someone who did just that ?

DP,

We actually did it but all the lower end work was also marketed under that company's name.
We never marketed or received calls under one company name and then move them over to the other company.

So, i guess in that sense it's not actually the same as what you are talking about.

Sorry, guess I got a little excited there for a minute.