Raising the Bar — Without Raising the Price
To me, the single greatest challenge of our current economy is that it is less predictable. Markets and demographic customer profiles are changing differently, at different times, and in different directions, making it more difficult than ever to run a business. One day you’re beating proforma estimates, the next, your business isn’t meeting targeted growth objectives. That’s exactly what was happening at two car washes in western Florida where I have an investment. Below, I interview my partner, Marc Taglienti, who actively manages the washes, as he details the steps he took to turn things around. Not all customers are created equal. Marc’s insights turned this truth to the advantage of our business — let’s take a look.
ANALETTO: What was the most significant problem you were facing?
TAGLIENTI, owner, Blue Lightning Car Wash, Pasco County FL: Two years ago, we hit a wall. Four years before that, we opened our first $3 express exterior with free vacuums. Volume was growing according to plan and a year later we opened a second, nearly identical location, only 13 miles away on the same highway. What attracted us to the area was that it had strong retail activity in an economically depressed area. This demographic has worked well for other value-priced express-exterior washes. Volume was growing quickly and the percentage of $3 washes was starting to drop. Our proforma estimated that the $3 wash would start at 50 percent and steadily reduce as a percentage of our total washes sold. Unfortunately, when the economy took a hit, our $3 wash started to edge higher, hitting 55 percent to 60 percent and volume started to soften at the same time. Our plan was for the $3 wash to be at 40 percent and for volume to accelerate dramatically, so we had to create a new plan to hit our objective.
What was your dollar per car average?
We fought tooth and nail for four years to increase our dollar per car average and had to battle for every penny. With three lanes we were able to experiment with different menus and survey customers after their purchase with one question, “Why did you select the wash you did?” What we learned was that customers in our market reacted
differently to incremental value than we anticipated. In our experience, when presented with a good, better, best scenario, 40 percent or more select better. Instead, our customers seemed to select all or nothing, either getting the best we had to offer at $12, or the cheapest wash on the menu at $3. Frustrating at first, things started to improve when we added a $14 top wash and adjusted the differential amounts between packages. Immediately over half of our $12 customers moved to $14. In addition, upon selecting the $3 wash, the kiosk offered an a la carte Rain-X service for an additional dollar. Combined with the additional Rain-X service, our average jumped 75 cents per car to $5.60.
Your $3 wash has dropped from 60 percent to 29 percent at one store and from 50 percent to 15 percent at the other with no decrease in volume, how did you achieve that dramatic change?
What we learned when surveying our customers was that many of them came with exactly $3 in cash to the wash to put into the machine. You have to realize that for four years we advertised on huge billboards $3, 3-minute car wash with free vacuums. We were making enough profit at $3 to keep the business running and couldn’t risk losing half of our customers. Volume started to soften with the economy. We decided that instead of raising our prices, we would gradually reduce the availability of our $3 wash to customers. Everything was done in stages over a year. First we changed the billboards to 3-Minute Car Wash, dropping the $3. Next we took the $3 off our menu but left it as an option on the kiosk only. We kept it like that for nearly a year before aggressively advertising that we now offer the $3 car wash every day from 8 a.m. to 10 a.m. and all day on Tuesday. We updated the kiosks to reflect the change. Even then, attendants had the authority to sell the $3 wash, and were trained to educate customers by saying “we value our customer’s loyalty and haven’t raised our prices, but had to limit the $3 car wash to 8 a.m. to 10 .a.m. every day and all day on Tuesday.” At first, we actually offered the $3 car wash in the evening as a “happy hour,” which was a disaster. Customers lined up and blocked the entrance waiting for the clock to change. Now, there is a nice surge of traffic each morning. Tuesday is one of our busiest days, and Saturdays have a higher ticket average with no bottlenecks. The big story is that my overall ticket has jumped $1.14 at one location and $1.25 at the other while the wash volume has continued to grow.
Your one store still has nearly twice as many $3 wash customers, 29 percent versus 15 percent. To what do you attribute the difference?
Demographics. The two stores are nearly identical, and are only 13 miles apart on the same road. Average household income at the 29 percent store, however, is approximately $20,000 less per household than the other. Both income targets have performed extremely well for other express-exterior locations, but having spoken with many other express owners since, other demographic variables can dramatically effect capture rate and average wash ticket.
Other express-exterior operators are experimenting with higher top package offerings. What services did you offer to achieve a $14 price point?
To me, the express model is all about efficiency. I believe you have to deliver a perfect car in your base package. In our market, the challenge isn’t taking market share from competitors — it’s getting people out of the driveway. To make customers not only loyal to our wash, but loyal to using a professional car wash, I believe I must deliver a consistently clean, dry, and shiny car every time. Our $3 wash includes wheel cleaning and a spot-free rinse so the customer is always satisfied at any price. I also believe your top package has to provide a visible show for each extra service you charge for. Our top package includes extra high-pressure, extra flashing signs, additional wax applications with vibrant colors, and additional in-tunnel polishing —we don’t skimp. I can’t afford to give any reason to a customer to try another wash.
What do you wish you could have done differently?
I’m glad that we started out promoting a $3 wash package. It helped build volume quickly, but I wish I had restricted its availability sooner. I also wouldn’t have featured $3 on our monument sign. Promoting it on the billboards and in our advertising would have accomplished the same thing without making it the focal point of our entire brand. On a positive note, changing my monument sign after only a few years forced me to really research more affordable sign options. We found a flex-faced vinyl material at a fraction of the cost of a traditional injection molded panel. It’s brighter, looks nicer, and allows me to update the sign every couple of years. Everything I can do to make it look like there’s something new translates to increased wash volume.
Questions can be sent directly to Marc at firstname.lastname@example.org.
Washing cars for over 30 years, Anthony Analetto serves as the president of SONNY’S The Car Wash Factory, creator of the BayWash i5 and G2 rollover in-bay automatics, Xtreme-Xpress Mini-Tunnel, and the largest manufacturer of conveyorized car wash equipment, parts, and supplies in the world. Anthony can be reached at (800) 327-8723 x 104 or at AAnaletto@SonnysDirect.com.