Market share is a function of a store’s customer attraction rate and customer loyalty rate. Improving a store’s attraction and loyalty rates can lead to a greater share of the total available market.
By Robert Roman
Attraction refers to drawing interest to a company’s products or services using various marketing techniques. The goal is to attract potential customers to the way the item can solve their problems.
For example, many express washes have a tower component and color scheme that helps give the building perspective in addition to signage that emphasizes speed, price, and/or value (e.g., 3-minute wash, free vacuums).
Store attraction rate can be calculated as follows:
Store attraction rate (SAT) = NC t1 – t0 / C t0
NC t1 – t0 = number of new customers acquired in period
C t0 = number of customers at beginning of period
After attracting new customers, the goal and objective is to make them loyal customers. Loyal customers come from satisfied customers.
Let’s assume an operator determines that a satisfied customer is one who would visit at least 12 times a year. Based on this, loyalty rate would be calculated by taking the number of customers that visited at least 12 times and divide it by the total number of customers in the same period.
On the other hand, the participation rate can be used to measure the performance of a loyalty rewards program. Participation rate is calculated by dividing the number of customers who are enrolled in the loyalty program by the total number of customers.
In reality, it takes more than knowing patronage rates to evaluate customer satisfaction. For example, new car dealerships use five different measures and weightings to evaluate the vehicle owner’s service experience. This includes service quality (27 percent), service initiation (20 percent), service advisor (20 percent), service facility (17 percent), and vehicle pick-up (16 percent).
According to Chris Sutton, vice president U.S. Automotive Retail Practice at J.D. Power, simple things like completing service right the first time, returning settings to where they were when the vehicle was brought in, and washing vehicles can affect perception of service quality.
However, Sutton said completing repairs right the first time is done 85 percent of the time, returning settings 81 percent, and cars are washed only 45 percent of the time.
The principal benefits of satisfied customers are they stay longer (retention), they pay less attention to the competition, and they are less sensitive to price.
Studies show retail customers will bolt most often when the service provider does not take sufficient steps in responding to product or service failure. Customers may also leave over issues related to accountability, reliability, or lack of assurances (e.g., guarantees, warranties).
Judging how satisfied customers are can be accomplished by surveying customers and developing a customer satisfaction index. This process provides a way for a car wash operator to learn more about customers and what they want.
To illustrate, I recently went through this process with an operator who wanted to reposition his traditional full-service car wash. Personal information collected included data such as customer’s distance from the store, vehicle information, tenure, age, sex, etc. Subjective information covered communication preferences, needs, quality, and questions related to satisfaction index.
Here are some of the key findings: Over 60 percent of customers came from within one mile of the store.
The store attracts a disproportionate percentage of luxury cars and compact cars, virtually no trucks.
Customers overwhelmingly prefer to communicate by e-mail and text, 60 percent indicated a preference for digital payment, and 44 percent would like a customer app.
In terms of satisfaction, customers were most satisfied with employee grooming, friendliness, and experience. Customers were least satisfied with the appearance of the facility, quality of purchase, and overall experience.
So identified, the operator can develop appropriate strategies and tactics necessary to mitigate deficiencies.