Cleaning up the market

Goodnest.co.nz is a young cloud-based virtual platform that simplifies and cuts the cost of domestic cleaning. Co-founder James MacAvoy talks growth plans and strategy.

You may remember him as the co-owner of daily deal site Treat Me and online movie renter Fatso. Now the latest venture for James MacAvoy is Goodnest – a cloud-based virtual marketplace which simplifies and reduces the cost of domestic cleaning – a company he co-founded in April 2014 with high-school buddy Richard Humphries (of online shopping site Trade Tested fame) with additional funding from Sam Morgan and sister Ruby.

Humphries had also been a part-owner of Treat Me, and the pair had noticed the increasing popularity of service deals, such as carpet cleaning, house washing, roof painting and gardening.

“But we felt it wasn’t the saving so much that was driving people to these online services, it was because it was removing friction,” says MacAvoy. “They could easily pay by credit card and they knew that service providers had been vetted.”

MacAvoy and Humphries had witnessed the move to uber and other similar sites in the US, and the rapid acceptance of online service sites, accessed through mobile phones and credit cards. They also noted the success of US service provider Homejoy, which recently raised US$38 million through Google Ventures.

“As people get more comfortable doing things on their smartphone, they pretty much expect more to be available on their phone,” says MacAvoy. He says users of the Goodnest service so far appear to be aged over 25. There’s a heavy skew towards females, and, because of the price point (an industry beating flat-rate of $20 per hour, of which between $16 to $19 goes to the individual cleaner), the service is popular across all suburbs, not just affluent ones.

The Goodnest platform also happens to be an opportunity for people to set themselves in the online-based home cleaning business.

“Anyone interested in using the platform to find work can go through the online application process,” explains MacAvoy. “That allows us to do all the necessary checks.
“We then review candidates, mostly face-to-face, put them through training and arrange equipment if required.” The final step is a supervised in-home assessment, and James says he’s even arranged for his own home to be used as a test-site.

Once accepted into the Goodnest service, performance feedback is monitored. Job selection then resembles a typical Trade Me page – jobs are listed and cleaners log in, as and when they want, to select the ones that fit their schedule. If the customer’s happy with the standard of work, the relationship is allowed to continue.

So far so good for Goodnest. Despite running at a loss in order to grow the business and get people using the platform, it has managed to secure a strong foothold in the domestic services market.

MacAvoy says the company has relied almost solely on Google AdWords, social media and good old fashioned ‘word of mouth’ to get the word out. Brand trust has been quickly established on both price and service.

“Around a quarter of sales come via AdWords and the rest is word of mouth. When I was younger, and slightly greener, I spent hundreds of thousands on billboards but never knew how much business we were getting off them. Now we spend a lot of time on Google Analytics so I know exactly what my return on investment is,” he says.
They’re constantly fine-tuning Goodnest’s ‘no middle man’ business model and introducing new features. “For example, we’ve started using Google Maps to allocate homeowners with a cleaner who lives nearest to them,” says MacAvoy. “It saves on time and driving costs.”

He’s not discounting introducing more home services to the platform down the track either.

Clean homes and jobs
Nowadays MacAvoy says Treat Me takes up less than 20 percent of his time, as the pair work hard to build Goodnest. What he likes most about the platform is the win-win aspect of helping people clean their homes and helping people find work.

To address criticism that its cleaners were only being paid the minimum wage, Goodnest decided to survey them. “The feedback was extremely positive, and the most common word they used was ‘flexibility’,” says MacAvoy. The survey also revealed that the pay was the same or better than other cleaning jobs. He says the cleaners come from all walks of life and absolutely love the platform. “They’re always quick to tell their friends.”

MacAvoy says the ongoing challenge with the business model is managing sustainable growth; as well as balancing the platform’s demand and supply requirements. He has also been surprised by the sheer scale of operational work that’s involved. Ensuring continuity and quality of service requires large amounts of personal interaction with clients, he says. And with every enhancement to the platform, more people are required to cope with the resulting extra business. There are already nine staff, and growing, and business growth month on month is between 20 and 40 percent. Over the past four months the business has grown by at least 400 percent.

Goodnest now operates in eight New Zealand cities – Auckland, Wellington, Christchurch, Tauranga, Hamilton, Whangarei and Dunedin – as well as Sydney, and the main centres will be the focus of growth for some time. At this stage, there’re no plans to go beyond Australasia. “There’s plenty of work cut out for us here, not just for home cleaning but other home services too,” says MacAvoy.

One lesson he’s learnt from the entire project is to never be afraid to ask for advice.

“Being open about things is not a risk. Measurability is the key to success too. Working out the lifetime value of a customer, for example, and cost of acquisition. You need a good hold on the numbers, particularly over the first few years.”

Taking a fluid approach to business development, and tapping into ‘people power’ to iron out processes has been the key to making the whole Goodnest experience magical for end users, he says.