Finishing Line - September 2008

Business Booster: Don't Ignore
the Power of the Web
By Robert Roman

For decades, car wash operators have relied on tried and true methods of growing and sustaining their businesses. In the self-service and exterior segments, this has included relying on the old-school philosophy of “build-it-and-they-will-come.” Other operators prescribed to the lower-return-per-customer approach — the operator focuses on costs and learns how to make money by selling low price to a wider audience. In the full-service segment, this has included locating washes near shopping destinations and selling products and services to the “baby-boomer” generation with a higher-return-per-customer philosophy that focuses on service and how to make more money from customers and keep them longer.

Similarly, many car wash operators have relied on proven methods of reaching their target markets. Primarily, this has included things like ground signs, direct mail coupons, the Yellow Pages, newspaper and radio advertisement, and, to a lesser extent, TV ads.

During tough economic times in the past, operators would pull themselves up by hunkering down and focusing on controlling costs, reducing prices, and looking to the car wash equipment manufacturers for innovative technical solutions. Consequently, this strategy required car wash operators to make better buying decisions.

Today, we face an economic situation that has led to an overall decline of activity in terms of car wash sales volumes, new car wash development, industry trade show attendance, and vendor sales. The state of the economy has also shaken the long-held belief that the car wash industry is recession proof. Many car wash pundits blame this on things like rising fuel, energy, and food prices but there is also something called the age-wave theory that should be considered.

Age wave is a theory that was popularized by economist Harry Dent around 2002. Dent surmised that the U.S. would face an impending economic slowdown when “baby-boomers” (people born 1945 to 1964) began to retire during 2007 to 2009. Dent’s theory is based on his observation that consumer spending tends to peak at around 50 years old. Even if Dent’s theory is incorrect, the fact that the wealthiest ever generation of consumers is beginning to retire is becoming more important to retailers.

As baby-boomers head towards the sunset years, their ranks are increasingly being replaced by Gen-X and Gen-Y consumers. Gen-X (born 1965 to 1982) number around 48 million and are generally described as self-centered, fickle, and impractical — a direct contradiction to baby-boomers. Gen-Y (born 1983 to 1997) number around 70 million and spend an estimated $172 billion a year. Gen-Y consumers are often described as demanding, impatient, and bad at communicating. These people are the “I have to have it now” Internet generation. Over 90 percent own a computer and cell phone, over 75 percent use instant text messaging, and over 30 percent use websites to get their news. More importantly, the web has now become the medium that Gen-X and Gen-Y turn to first when making a purchase decision. These statistics have not been lost on the business sector.

In order to separate themselves from the look-alikes and make a transition from a price-based value proposition, more and more retailers are employing technology that is designed around the selling process to support core business functions and better connect with their potential customers. This includes 24/7 web access and increasingly direct e-mail marketing. For example, market researchers have discovered that over 80 percent of Gen-X and Gen-Y open their e-mails the day it arrives. Moreover, 70 percent of Gen-X and Gen-Y are direct e-mail readers and have used coupons received via e-mail.

However, these statistics appear to be lost on many car wash operators. According to most of the industry benchmarking survey reports, over 80 percent of car wash operators have access to the Internet but only 17 percent of self-service, 25 percent of in-bay, and 32 percent of conveyor operators have a website presence. Arguably, even less use direct e-mail marketing. If the survey responses are any indication of what is happening out in the field, the results suggest that car wash operators need to make the right decisions about marketing and promotion rather than focusing on making better decisions about buying car wash equipment.

Bob Roman is president of RJR Enterprises — Consulting Services (www.carwashplan.com) and vice president of Bubble Wash Buildings, LLC. You can reach Bob via e-mail at rjrcarwashplan@yahoo.com.

 

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