Fix It Until It’s Broken - Cautionary Tales of Trying to Grow Your Bottom Line
By Anthony Analetto
I find myself having the following conversation with alarming frequency. The operator’s car wash is growing. They’ve installed one of the high-end online pay-wax-and-buffing services and have seen dollar-per-car averages skyrocket. They’ve implemented an unlimited wash club and recurring memberships have exceeded their wildest expectations. They’ve installed video pay stations, eliminated prep, and customers are raving about their service all while employing only a handful of staff. And then, without fail, the conversation turns to what’s next — specifically, their plan to reduce the cost of the pay-wax service, raise the price of the monthly membership, and cut the hours of labor at the wash. It’s a fine line. Whether it’s ways to cut costs, improve wash quality, or raise your average ticket, I’ll admit, I’m a tinkerer. Finding ways to increase bottom-line revenue at a car wash excites me. I believe that finding a way to shave 25 cents from your cost-per-car average is a noble task. It does, however, demand great caution. When growth is based on giving customers more, finding ways to cut back on that value can have devastating consequences. Seemingly harmless refinements in chemistry, pricing, and staffing to increase profits can backfire.
Let’s take a look.
CHEMISTRY AND BRAND LOYALTY
It’s almost like self-induced amnesia. When looking to shave costs, many operators magically forget the tremendous effort they spent to dial in chemistry when the wash first opened. It’s tempting. Few things can reduce your cost-per-car faster than cutting back on chemistry. Once the memories of perfecting the dilutions and products against conveyor speed, water quality, temperature, and pressure have faded, it appears easy to convince yourself that turning down the soap might be a good idea. This practice has merit at a full-serve where the customer does not ride through the tunnel. Exit-end staff can manually correct any deterioration in wash quality and alert you that something is wrong.
Whenever the customer rides through the tunnel, however, cutting chemistry is risky business. Many of your brand-loyal repeat customers know every inch of your tunnel better than you do. What’s more, if you’re offering one of the latest group of high-end online pay-wax-and-buffing services, your loyal customers will have been the first to try it, and most likely to become regular
top package buyers. Sure, these multi-step systems wow the customer with a luxurious poured foam bath. Will a little less foam alienate them? Maybe. Maybe not. But these systems also apply foamed body protectants buffed in after drying with specialized brushes. This isn’t smoke and mirrors. With continued use, swirl marks are filled, shine deepens, beading increases, and customer satisfaction and loyalty grow. If nothing is broken and the numbers are leaving more money in your pocket each month, be careful when looking to fix something by shaving costs here. If you fix it until it’s broken, you’ll never regain trust in the service and sales will plummet permanently.
RAISING MONTHLY MEMBERSHIP PRICES
A few years back, most operators tended to price a monthly, unlimited pass at three times the package price — so $15 might buy an unlimited pass for a $5 basic exterior wash. It has been a win-win across the country. Customers wanting to wash once a week basically buy three and get one free. In exchange, by being able to automatically bill a credit card each month, the operator has a predictable revenue stream regardless of weather. RFID tags and POS systems have helped ensure only the registered vehicle is washed, and many customers wash fewer than three times per month, offsetting the expense of those that wash more. Once again temptation creeps in. Some locations have hundreds or even thousands of members and contractual clauses that allow for rate increases. Few things in life are as annoying as looking at your credit card statement and realizing an automatic payment has increased.
So, before irritating your most loyal base of members with a rate hike, consider the other ancillary benefits of your club. The value of prepaid monthly customers is more than the predictable revenue they provide. Whether it’s a restaurant, or a car wash, prospective customers go to businesses that are busy. So if having a stream of cars entering and leaving your property all day long serves as an effective advertisement to draw new customers, how much is it actually worth? Is it worth more than a newspaper ad that nobody sees? Is it worth more than a cable TV spot that gets skipped with a DVR? Before potentially losing club members with a rate increase, try to calculate the promotional value of having a busier car wash. Do your math. Offering an even deeper discount such as a 2.5 multiplier on an $18 top package wash just might put more money in your pocket at the end of the month than raising the rates on your base club membership. Always be careful when looking to fix something to increase revenue from existing club members. If you fix it until it’s broken, you risk losing your most loyal customers, their friends, and their families.
Advances in automation at the car wash in the last decade have been staggering. Automated video greeters have eliminated attendants. Online equipment and chemistry improvements have eliminated prepping. According to the exterior survey in the July 2014 edition of this magazine, an express-exterior wash on average employs fewer than three full-time employees. Many operators safely run with two attendants on slow days. Avoid the temptation to dip to a single attendant on slow hours, and yes, that includes you and your manager. Safety for yourself and your staff must trump any other decision at the wash. Staffing one person at the wash risks a minor accident turning into a serious injury when there isn’t a second person to shut off the equipment.
MORE IS MORE
I’m a big fan of using labor, chemistry, and utilities with miserly efficiency. But when you have a successful location, always remember that you most likely earned that position in your market by delivering more value and a more engaging experience more consistently than your competition. More is more. Less is never more. If you’ve built a loyal base of customers addicted to purchasing the luxurious foam, flashing lights, scents, and wash quality in your top package, does it make sense to shave away from what made you successful? If you’ve built a monthly club with hundreds of pre-paying loyal members keeping your site consistently busy, does it make sense to alienate them with a rate hike? And if you’ve built a business that is exceeding your proforma, turning a solid and predictable profit, does it make sense to risk safety by having a single attendant for an hour or two? A penny saved may be a penny earned, but being penny wise can be dollar foolish. Growing a successful car wash is a good problem to have. Just make sure that your plans to increase the bottom line never inadvertently fix something until it’s broken.
Good luck and good washing.
Washing cars for over 30 years, Anthony Analetto serves as president of SONNY’S The CarWash Factory, creator of the Original Xtreme-Xpress Mini-Tunnel, and the largest manufacturer of conveyorized car wash equipment, parts, and supplies in the world. He can be reached at Aanaletto@SonnysDirect.com or at (800) 327-8723 ext. 104.