It’s what every car wash owner wants…more revenue! By utilizing proven strategies around effective menu design, packaging, pricing, and signage, you can boost your revenue today.
There are three ways to increase revenue at your wash:
1. Increase the average amount a customer spends per visit. Typically, this is the easiest way to impact revenue quickly through pricing, menu and offering management, and buy-up promotions. This tactic requires minimal expense to implement and can be easily measured.
2. Increase the frequency of visits your current customers make. Keep current customers returning through loyalty programs and promotions. Success can be measured by identifying your total customer visits per month, annually, and measuring the lifetime value of the customer.
3. Gain new customers. Attract completely new customers to your site. While important to continued growth, gaining new customers is typically an expensive tactic. The old adage, “it costs 20 times more to gain a customer than it does to keep a current customer” is true. Consistent outbound communications is required to make an impact, and can be tough to accurately measure.
MENU DESIGN AND MANAGEMENT
President of the marketing firm Yankelovich, Jay Walker-Smith, says we’ve gone from being exposed to about 500 ads a day back in the 1970s (before Facebook, Twitter, YouTube, etc.) to as many as 5,000 a day today. That’s nearly a 700 percent increase over the past 40 years. Grabbing the attention of your customer is becoming more difficult, and we are challenged with finding new ways to sift through the clutter.
Nowhere is this more important than on your car wash menu. Your car wash menu is a critical tool for increasing your average ticket per wash. Effective menus that are designed to increase revenue have colors and images that attract, are easy to read, and are organized to guide consumers to a specific package. Common problem areas in developing a car wash menu are package order, package quantity, color, size, pricing, and naming.
Always place the package you want to have the highest sales where it will be seen first. For most washes, this is your top wash excluding detail services. People read from either left to right or top to bottom, so ordering your wash packages from the best to the most basic in the order that people read will gain better results. For example, in a horizontal menu your best package will be on the left with your basic package on the right. In a vertical menu, your best package will be at the top with your basic package at the bottom (see Figure 1).
Your best package should also be the most visible. Make it bigger, taking up the most space, and in a bright color so that it stands out. Indicating that it is your best value will help guide customers to this package. Conversely, your lowest-priced package should be your basic wash with no frills. Don’t give more than a basic clean in this package so you can clearly differentiate higher packages.
Clearly distinguished wash-package names that emphasize the value will resonate better with consumers and guide them to the best selection. Try descriptive package names that indicate the benefit of each offering.
Four or fewer packages on a menu will provide better revenue results. More than four packages can become confusing and cause anxiety with customers. Generally, average ticket for three packages will net better results than four, typically by 5 percent or more. Let’s take a deeper look below.
Bob’s Car Wash currently has four packages. As shown in Figure 2, below, the menu packages are ordered from the most basic to the best top to bottom and the packages are all the same size and color. His current prices and take rates are as follows: • Basic Wash: $7 with 33 percent take rate • Express Wash: $8 with 20 percent take rate • Deluxe Wash: $9 with 26 percent take rate • Premium Wash: $11 with 21 percent take rate
Today, Bob’s Car wash is averaging $8.56 per wash.
Now, let’s look at eliminating a package, updating the look of the menu, and optimizing price to increase average revenue per car.
When eliminating a package from a current menu, consider take rates of each package. Most often, the lowest take rate will be in the “middle washes” where value can be confusing. When eliminating a middle wash package, typically two-thirds of customers will choose a higher price offering and one-third will choose a lower.
Based on the 20 percent take rate in the Express Wash package, we’ll eliminate the $8 package. We also know that customers prefer even-priced washes, so, unless there’s a business reason, move odd price points to a higher and even price point. In this case, we will move prices on the remaining wash packages by $1. We’ve also changed the order of the packages to read from best to basic, and made the best package more visible through bigger package sizing and brighter colors that attract. The result can be seen in Figure 3, below.
Take Steps to Increase Your Revenue Today1. Update Your Menu:• Create a clear #1• Maximize packages to guide customers• A new look will stand out2. Evaluate Your Pricing: • Take an increase — even if it’s your middle wash only• Round your price points to even/near break points 3. Modernize Your Offering: • Try a new product or packages• Offer theatre and customer validation4. Protect Your Customers: • Reward loyal customers with an effective repeat purchase program
Take Steps to Increase Your Revenue Today 1. Update Your Menu: • Create a clear #1 • Maximize packages to guide customers • A new look will stand out 2. Evaluate Your Pricing: • Take an increase — even if it’s your middle wash only • Round your price points to even/near break points 3. Modernize Your Offering: • Try a new product or packages • Offer theatre and customer validation 4. Protect Your Customers: • Reward loyal customers with an effective repeat purchase program
Effective menu pricing is key. Today, $15 and $20 are “benchmark” price points on menu packages — meaning, when breached for the first time, the package take rate can suffer due to the “rounding up” mentality. For example, $15 will net a higher take rate than $16 because people think of 16 as closer to 20 than 15, so in this instance an odd numbered package may be preferred. And, it’s best to avoid pricing any package at $13. Just like most hotels do not contain a 13th floor, people will steer clear from a $13 wash.
Based on these changes, Bob’s Car Wash’s new prices and package take rates are: • Premium Wash: $12 with 30 percent take rate • Deluxe Wash: $10 with 32 percent take rate • Basic Wash: $8 with 38 percent take rate
Together, these steps raised our average revenue per car to $9.84. That’s a $1.28 increase per wash. If Bob’s Car Wash washes 70,000 cars a year, that means Bob’s Car Wash will gain $89,600 more in revenue every year.
Add a New Offering to Your Menu
Once you have your menu value and prices designed, it’s easy to introduce a new option at any time. Testing a new solution doesn’t have to be difficult or expensive. Simply start by introducing this new offering as a promotion or managers special with a cost-effective windscreen. A 3 percent to 8 percent take rate can be expected just by adding it as an off-menu package.
Once you’ve found the offering is performing well and gaining new revenue, then look at adding the offering as a new top package without changing your current menu packages. Creating an additional package on your menu means your customers can still get the packages they were used to, but now they have another option. In six months to a year, revisit your take rates and determine if you should eliminate a package once again.
In Bob’s case, a new top package was added featuring Extreme Shine Wax priced at $15 (see Figure 4, right). We’ve supported the value to consumers by adding onsite marketing signage, effective dispensing, and bright LED lighting inside the wash. Assuming a minimal take rate of 10 percent, Bob’s average revenue per car is now $10.24. That’s an increase of $117,000 from our starting menu and an increase of $28,000 from the prior menu update.
Offer Innovative Options
Make sure your wash is using the newest innovative products and industry trends to create high value for your customers. According to the 2014 ICA consumer study, consumers are willing to pay extra for wax/paint protectants and sealants, so offering this provides extra value to your customers. Studies also indicate that consumers prefer to buy brands that they know and trust. Trusted consumer brands in your menu can also create a high value to your customers.
Figure 5 Grand Entry Arch
ADD SOME SIZZLE
A major trend in today’s market focuses on “theater” or show. Exciting colors, scents, and lights will highlight the value received at your wash. Consider a grand entry arch, lighting, high impact chemistry, or other programs that offer consumers a great show and validate the customer’s purchase. Wash packages that promote enhanced protection and shine such as new waxes, protectants, and waxes that can be polished in by friction, create high value and satisfaction for your customers and increase top package sales for you.
When done well, a good loyalty program can make you money and can keep customers coming back to only your wash. An unlimited wash program priced from $20 to $50 a month can be very effective. An advantage of an unlimited program is that it allows you to garner a monthly income regardless of weather. To successfully implement this type of program, you’ll need to determine what percentage of your business you want to be part of your unlimited program. Typical redemption rates average from 2.5 to 3.8 times monthly, with 15 percent to 30 percent of overall wash volume coming from a mature loyalty program. Once you determine your target price and mix, you’ll need to aggressively market your program so customers see the offering and value.
Another effective loyalty program is the clean car guarantee, sometimes called a rainy day guarantee. Typically marketed with top packages, it invites the customer to come back two to five days later to rewash if their car gets dirty. Consumers perceive this as high value; in reality the average redemption rate is around 3 percent.
Experiment with new promotions, products, pricing, and offerings for your customers to create new revenue. Programs can be introduced as a limited-time offering. Don’t be afraid of starting with a simple time-bound offer, and determine later if you want to incorporate it long term. Engage others in the industry: ICA, other operators, and for sure suppliers can help with ideas and sharing best practices.
Chelsea Beyer is senior vice president, sales and service for Zep Vehicle Care. She can be reached at Chelsea.firstname.lastname@example.org.
Take Steps to Increase Your Revenue Today
1. Update Your Menu: • Create a clear #1 • Maximize packages to guide customers • A new look will stand out
2. Evaluate Your Pricing: • Take an increase — even if it’s your middle wash only • Round your price points to even/near break points
3. Modernize Your Offering: • Try a new product or packages • Offer theatre and customer validation
4. Protect Your Customers: • Reward loyal customers with an effective repeat purchase program