Competition - The Value Proposition Differentiates
I recently received a call from Bill Roberts, owner of Miriam South Car Wash in
Rollover vehicle polisher.
Lakeland, FL. Bill wanted to let me know he had just sold his business, how happy he was with the price, and that he was now retired.
Some years ago, Bill hired me to work with him to determine how to reposition his wash in the face of a new conveyor car wash that was to be built very close to his wash.
To make a long story short, Bill made a modest capital investment to implement some facility upgrades, a marketing strategy, and tactics, and he flourished despite the presence of the new entrant.
Unlike the brand-new $3 express with fully automated equipment and free-use vacuums down the street, Miriam South is a traditional full-service conveyor.
In contrast with the chain that looks for opportunity in any market, moves fast, and is willing to build next to existing sites, Bill has been at the same site location for nearly 40 years.
Unlike Miriam South, which has created sustainable competitive advantage by means of differentiation and niche strategy, the $3 wash competes on the basis of cost.
Arguably, the shoe is now on the other foot. Some evidence of this is pushback from operators looking to meter free vacuums, but mostly it’s from express operators who mention competition is nipping at their heels.
Of course, this is to be expected because over time trade areas eventually fill up with retail outlets until another new one cannot be absorbed. Once this occurs, the supra-efficient express has several options to expand — build more or buy existing washes, differentiate, or a niche strategy.
Some express operators try to be different by offering more products and services. This may include a self-prep area, free-use towels and window cleaning solution, and coin-operated vending and mat-cleaning machines.
Some express operators have conveyor attendants perform extra-pay prep services at the tunnel entrance, whereas others have people stationed at the exit end to towel dry vehicles. Of course, these extras must be paid for as well as maintained and, in some cases, involves added labor.
Another consideration is time. For example, experience shows an express wash has an average total guest visit time of eight minutes, which includes four minutes for the wash and four minutes in vacuum area.
So, operators would be concerned that the added time customers spend prepping, wiping down, window cleaning, and detailing vehicles could over-burden the vacuum area leading to congestion and waits.
Of course, this is not consistent with the notion of simpler, faster, and more efficient. Alternatively, a niche strategy express operators can pursue is vehicle polishing.
Automated polishing involves applying a specially formulated polish with a spray gun followed by a five-minute ride through a tunnel that is equipped with brushes made with special material. A rollover service takes 10 minutes.
An express wash in Tennessee offers a tunnel polish service in its $23 top package wash that also includes Rain-X and poly-wax. A chain in Georgia offers buff-and-shine for $20.
Whole-car polishers are designed to enhance shine and help keep the shine in between washes and waxes and can only be done on vehicles with non-oxidized paint.
Of course, the rub here is capital investment and additional labor. Another is marketing and promotion. For example, contemporary merchandising often features the top package. Normally, this includes lava bath, hot wax product, tire shine, dry/buff unit, and, recently, a multi-step sealant.
However, offering whole-car polishing at most express washes would be like selling electricity to alternative fueled vehicles at gasoline sites. The same applies to full-service and flex-serve sites in terms of express wax.
Finally, there is magic pass. For example, at the wash in Tennessee, $49 per month will buy unlimited Rain-X, poly-wax, and whole-car polishing. Perhaps this is one reason why whole-car polishing hasn’t gotten out of the barn in the car wash industry like it has in the new-car dealership segment.
Dealerships use whole-car polishing to sell paint sealant warranties for hundreds of dollars, and customers come back semi-annually for re-application whereas most washes sell it like an online extra service with a low price.
By comparison, a wash may get between $35 and $50 for express hand wax that takes two people about 20 minutes to complete. Most express wax applications will hold for up for 60 days or longer, whereas hot wax and Rain-X are 30-day products.
MEET THE COMPETITION
So what to do when the competition is nipping at your heels? Like Bill Roberts did, the first thing is to assess the situation well in advance. This starts by determining how saturated the market is. For example, aggressive entrants that come in and compete with a $3 price are usually in mature markets. This means the new guy is going to slice the whole pie into smaller pieces to some degree.
So, repositioning a wash means reaching out to expand the market range and generate new customers. Of course, this would come at the expense of the competing stores. Expanding market range means doing things to increase the customer attraction rate.
Ideally, the strategy and tactics to achieve this would result in more volume, higher average sales, and greater profits. An objective strategy of growth would require re-tooling the business model or profit engine. For example, a wash that offers assisted-services, car polisher, etc. has a different value proposition than the typical express wash because it addresses more of the customer’s problems.
This difference must be effectively communicated to consumers to unlock the market potential of the innovations. Arguably, whole-car polishing should not be merchandised like a commodity. Likewise, there is a lot to gain by monetizing smile attendants.
During the course of working with Bill, he was presented with a pallet of tactics to choose from. Some of these Bill dismissed as impractical or unworkable while others were adopted. In the final analysis, Bill grew his business significantly in the face of new competition and without the drama associated with a large crew, changing his business model, or making a significant capital investment.
Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at firstname.lastname@example.org.