How the 37% Rule can apply to the cleaning industry.
Have you ever heard that “the relationship is the strongest part of any contract”? I’m betting yes. You can do a mediocre job but if the contract holder likes and believes that you have their back you are still hired. Or allowed to continue the work.
Why is that?
There is an interesting concept called The 37% Rule (also called The Optimal Stopping Problem, or The Sultan’s Dowry Problem, or Secretary Problem), mostly found in dating, but the concept is like what happens in contract cleaning.
Loosely put the Rule, backed by math and probabilities, see the article by CT Post, Calculate Your Exact Chance Of Falling In Love, based on Dominik Czernia’s (physics Ph.D student) calculator – is finding the best possible option from “sequentially observed random variables” (Desk, 2020).
What does that mumbo jumbo mean?
If you go on 100 dates and pick someone at random to be your mate, you have a 1% chance of finding a match. In the contracting world that would be a disaster. Any owner will tell you that this will not work. Any dater would be playing with fire looking for compatibility in the relationship.
However, if you use the 37% Rule, weeding out the first 4 out of 10 dates. In this case potential clients, your chances of finding a match increase by 37%. Imagine increasing your chances of finding a great client by 37%. That would be great, especially if the goal is to get repeat business and renewed contracts.
So how should we apply this dating rule to get better at choosing the right clients for our services?
If you have ten contracts you are thinking of bidding on, remove the first four contracts that do not meet the criteria of your ideal client (clarifying point for your organization). Bam! Your chances just went up 37% to finding the best client. It’s that simple, right? Nope! The Rule instructs to go on the dates of the first four first, then reject them as your definition of what a perfect match will be redefined. This helps you define the “ideal client.” That’s right, you need a few bad clients to get the ideal client criteria established, unfortunately.
Side note – if you are interested in using the actual calculator to find your perfect match click this link. It’s wild. https://www.omnicalculator.com/other/dating-theory#what-is-the-optimal-stopping-problem
And check out this Ted Talk video below from Hanna Fry, insert “client” for “date” as you watch: https://youtu.be/yFVXsjVdvmY?si=XcnmEy7zCzZut_Qv
Back to the problem at hand, finding the right client.
There are some variables that must be determined for this to work. The calculator is based on having no idea who to pick. So, for a new cleaning contractor this blog can be a guide to find out what your criteria are for supporting the best client. For more experienced clients, the criteria should have been defined already. Which only increases your chances of finding the right client exponentially.
Below is an example of the criteria to pick a perfect client:
Within the above Grid, you will have noticed that there are some empty orange squares. Those are the variables that need defining for your company/organization. For instance, other criteria may be:
1. the closeness of location to your office,
2. number of square feet cleaned,
3. stretch goal learning,
4. relationship of the client to the owner, etc.
These are orange for a reason, these must be met cautiously and should be watched for performance.
Green are ideal characteristics for searching for the right client.
Red square is the worst-case scenario, business will be troublesome. Both financially and culturally.
Take for example, there are 32.6 million businesses in the U.S. (Council, 2018). But you only want ones close (state of Illinois close for this example), reduce that number from 32.6 million to 1.2 million (you’ve just reduced your business clients to 3.6%). This reduction can be made down to the local streets near your business. If your boss only really knows 10 businesses (< 1% of businesses in illinois) or the number of square feet cleaned reduces it further. Your business might be in peril.
Instead try looking for qualities that are written in your mission statement or resemble the green box criteria.
The resulting situation should be aligned with your company’s mission or cultural values. Any indication that alignment is off will be a pain point for your company. Below is a list of pain points to be ready for:
Choosing the right clients will be challenging. Raising the stakes by 37% can only help your bottom line. Date carefully and choose clients even more carefully. Taking work just to take work or gaining market share to prove a point will only damage your core business. Michael Porter mentions that in a mature market, cleaning industry, “placing heavy attention on revenues is the maturing market instead of on profitability is a pitfall” (Porter, 1980). A better approach is to take a mathematical approach and remove the emotion. By doing this your organization will be able to train other staff to do the same and scale up based on process improvements.
Clean safe, and cash checks.
References
Council, S. (2018). Facts & Data on Small Business and Entrepreneurship. Retrieved from sbccouncil.org: https://sbecouncil.org/about-us/facts-and-data/#:~:text=Out%20of%20approximately%2032.6%20million,is%20a%20small%20business%20economy.
Desk, H. N. (2020, February 17). Calculate your exact chance of falling in love. Retrieved from ctpost.com: https://www.ctpost.com/news/article/Calculate-your-exact-chance-of-falling-in-love-15061712.php#:~:text=If%20you%20pick%20someone%20randomly,up%20to%2037%20percent%2C%20theoretically.
Porter, M. (1980). Competitive Strategy. New York: The Free Press.
