At the Tremendous Maid’s office WE ARE ALWAYS surprised when we get potential clients calling or emailing us and telling us that our cleaning services are just WAYYYY toooo expensive! I think we are surprised because our rates are very reasonable when compared to the market place. We’ve done some research to proof that – and in our 2014 pricing research, we found companies charging over $60 per hour per cleaner to service a home or office!
At Tremendous Maid, we are very interested in always learning, learning about new technology that may help us to better serve our clients, that could help us be more efficient, that can help us become better employers,etc…we love learning about our competition, seeing if there is a way to cooperate (yes cooperate) with some competitors to (again) BETTER serve our clients! But in 2014 when I found out about HOMEJOY and then Handy I wanted to scream! I was so upset with how Homejoy & Handy’s way of doing business. They were advertising cleaning service for $19 per hour with 1 cleaner! That’s insane! No company can be doing business properly ‘legally’ and sell their services for $19 per hour! I felt powerless because these companies have millions of venture capital (from Google & Paypal) helping them spread like wildflower throughout the country.
My #1 concern was that our clients expectations may be influenced by these companies super low rates therefore impacting us negatively along with the other millions of local cleaning businesses throughout the nation. Cleaning is an industry where EVERYONE thinks they know how to clean so there is limited room for being creative and therefore the cleaning companies have little play room to become indispensable. At the end of the day the cleaning industry is largely plagued by low-prices! So I did what I did best, I started freaking out quietly, I kept track of both Homejoy & Handy closely -spend many nights researching til 2am to ensure I wasnt missing anything important…always reading of their situations, etc – including employment lawsuits, reviews, press releases etc…and then in 2015 kboom! Homejoy decides to close their doors! BTW It was one of the happiest days of my life! Here is a blog from that day 😉
Anyways, the reason for this post is because I found this article that discusses how in reality Homejoy didnt just close just because of the EMPLOYMENT LAWSUITS but because of terrible customer services, high acquisition costs (they were giving the cleaning services practically for free to become well known faster), poor training of their staff, lack of detailed attention to their algorithm, etc!
Here is my absolute favorite part of the article because it proves $19 cleaning rate per hour is insane and unsustainable, also the poor service was the real reason why Homejoy was not making any money – customers tried them but did not use them again!
“The key problem is that we weren’t making enough money on our customers,” recalled Daniel Hung, the second full-time engineer to join the company. “We were spending a lot of money to acquire them, but not really retaining them.”
At the same time it was racking up steep losses to churn, in the first months of 2014 Homejoy cut its standard prices drastically to attract customers in dozens of new cities and drive growth.
Cost was not the only problem. According to Zietsman, Homejoy also struggled to create a reliable service. Many first-time customers were not satisfied with the cleaning, or experienced a last minute cancellation. “We didn’t figure out how to deliver a consistently high-quality service,” he said.
By the time the founders began to explore strategies for improving service and alternatives to Facebook ads and Groupon bargains to yield higher retention rates, it was already too late.
If you are interesting in reading the full article on some of the REAL reasons of why Homejoy closed their doors -here its https://backchannel.com/why-homejoy-failed-bb0ab39d901a#.ygysnzwy7
p.s. yes, Homejoy owners apparently are at it again and have opened another ‘tech cleaning services’ – i’ll share more on that next week.