Past Issue

Measuring Success

By Anthony Analetto

12/30/13

Five to Nine Reasons to Cheer in 2014

With 2014 upon us, we have an opportunity to reflect on what we hope to accomplish in the coming year. Every successful car wash operator tends to develop a list of numbers and trends they watch to indicate the health of their business. While many glance at lots of numbers, most seem to gravitate towards a short list of favorites they value most. Ask any operator how they’re doing, and, after talking about the weather, they’ll immediately dive into an analysis of those top-line statistics nearest and dearest to their heart. Some focus on “lowest” with lowest chemical, water, labor, utility, and repair costs topping the list. Others lean toward averages such as net dollars, gross dollars, and coupons redeemed. Some prioritize daily numbers such as dollars-per-car, cars-per-hour, and labor-per-car. More recently, I’ve heard operators referencing social-media likes, or e-mail subscribers as the main barometer for their wash’s health. Personally, I have always been partial to concentrating on net revenue per car. So many operators seem to prioritize so many different performance indicators (PIs), which ones are key to understanding if your business is going in the right direction? Is there a magical set of numbers or data that if known, will lead you to success?

PERFORMANCE INDICATORS

Understanding the key performance indicators (KPIs) of your wash doesn’t just allow you to sleep easier at night. Measuring the right data can help you evaluate employee performance, diagnose problems, and execute actions to attract and retain more customers. Unfortunately, there are three things related to KPI monitoring that seem to trip up many operators.

First, if you don’t have clearly defined goals in place, don’t waste time measuring KPIs. The purpose of measuring anything is to see what effect your effort has produced. For example, you may set a goal to increase your average ticket by 75 cents. If you’re washing 7,000 cars per month, you pull out a calculator and determine that if you’re successful, you’ll add $63,000 per year in revenue. You develop a plan to invest in some combination of equipment, chemistry, marketing, and training you believe will achieve that goal. As you execute your plan, you monitor its impact on the KPI you’re using to measure progress — in this case, your average ticket. Very likely you’ll want to monitor a second, related KPI: your total monthly volume.

You now have two KPIs that you’re focusing on, which brings us to the second mistake made: trying to monitor everything at the same time. I remember reading once that phone numbers are seven digits — not counting area code — because the average person can remember between five and nine digits. You will of course monitor hundreds of numbers at your wash. Force yourself, and/or your managers, however to prioritize between five and nine key values, specifically related to the goals you’ve set.

Attempt to monitor everything, and you’ll be toasting 2015 wondering how time flew by so quickly. Does this mean that you will only closely monitor a few select numbers at your wash? Absolutely not. Owners and managers will normally focus on different KPIs. It’s a simple equation. More managers equals more KPIs that can be tracked — just make sure one of them is the labor cost of getting better information.

That brings us to the third pitfall: one size doesn’t fit all. Search online all day long for the perfect set of KPIs and you’ll come up empty handed. No two washes will have exactly the same goals at the same time, meaning they won’t ever be measuring exactly the same things.

MEASUREMENT SELECTION

Years ago, I broke my thinking about performance monitoring into two categories: “Blood-Test” PIs and “Goal Achievement” KPIs. It’s helped me keep my washes on track and I hope it helps you too. Let’s take a look.

“Blood Test” Performance Indicators

We all know this drill. You go to a physical. They take blood. The lab sends results. The doctor scans down the sheet. Each value in the left column is “in normal range.” Each value in the right hand column is “out of range.” This process, in addition to teaching me the difference between LDL, HDL, and triglycerides, provided deep insight into monitoring the enormous amount of information available from modern car wash POS systems and tunnel controllers. Carefully designed reports can call out spikes or opportunities that are “out of range” and warrant attention. These are monitored continuously. Several, if not all, may be included on the short list of five to nine KPIs. The difference is that they only become a KPI, a number you know off the top of your head, if they measure progress towards achieving the goals you have set.

“Goal Achievement” KPIs

Set goals, take action to achieve them, and identify measurements that determine progress. That’s the real opportunity that each of us has with our car wash. Sadly, saying the following sentence out loud as you toast the New Year — “I want to serve more customers that come back more frequently, refer more friends, spend more during each visit at a higher profit margin than last year” — does not constitute goal setting. You must measure the potential impact of various activities you can do to improve your business, compare investments of time and money, prioritize, and create goals with clear deadlines and identified resources to get them done.

KPI RULES

First and foremost, if you can’t measure it, it’s not a KPI. You may have a goal to increase customer satisfaction. You can develop an action plan that includes anything from landscaping, staff training, to implementing a free towel program. But the KPI that measures success can’t be that you have more satisfied customers. One option is to survey them before and after and compare results. Another possibility is to measure wash frequency, provided you use a reliable tool such as license-plate tracking, or club card use. Whatever you do, make sure you have a measurable KPI in place to track progress on your goals. I recall having this conversation once with a colleague who owned a restaurant. His comment was that he didn’t bother with all this stuff. If he was making more money things were good. Can you run your business like that? Of course you can. Just make sure to keep your real blood tests up-to-date to make sure you’re healthy, because it’s a stressful way to live.

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.



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