Finishing Line

Committed Customers

By Stefan Budricks

08/01/18

It seems counterintuitive to be fretting about the next recession right on the heels of the announcement of second quarter GDP growth of 4.1 percent — all the more so in light of assurances by Treasury Secretary Steven Mnuchin that gross domestic product growth is sustainable for several years, if at a somewhat lesser clip. This is a sentiment echoed by the White House chief economic advisor, Larry Kudlow.

Not everyone shares in the optimism. The financial pages are filled with predictions of the next recession’s arrival. According to a poll conducted among economists by the Wall Street Journal, there is general consensus that 2020 will mark the start of that unhappy event. Are they being alarmist? No, they are being economists trying to make sense of all the indicators and trends, one of which is history. Recessions in the United States occur roughly every six years, on average. Some observers believe it is this datum that is driving much of the present speculation. Why? Because the current economic expansion is older than nine years. The conclusion: we’re overdue for a contraction.

You don’t turn 65 without having experienced some ups and downs along the way. And so it is with this magazine. For the past 65 years Auto Laundry News has, alongside the industry, navigated economic weather both fair and foul, reporting on and tracking the industry’s performance. One need only look back over our past surveys to realize that the car wash industry’s fortunes are tied as much as any other’s to the overall health of the economy. No one is immune.

Our 2007 survey of conveyor car washes found that 51 percent of participants had generated more income than in the previous year; 35 percent made less money. One year later, in 2008, regarded by many as the depth of the last recession, only 21 percent reported income growth, while 68 percent experienced reversals. Self-serve operators faced similar outcomes: In 2007, 35 percent reported income growth; 42 percent reported declining revenue. The picture darkened considerably in 2008: only 12 percent recorded advances; 59 percent saw income drop. Detailers have a comparable tale to tell. In 2007, 48 percent reported higher income compared to the previous year, while only 17 percent experienced reversals. In 2008, detailers with increasing revenues accounted for only 27 percent of survey participants; 41 percent reported less income.

No one can tell, with any certainty, when the next recession will be here. The important thing is to be prepared for its inevitable arrival. Obviously, you can’t control the recession, its timing, or its severity. You can, however, take steps to limit its impact on your business. Note that even during the worst of times, a fifth of conveyor washes was able to make progress. So, it can be done.

Writing at www.yastrow.com, marketing consultant Steve Yastrow advises that the best way to make your car wash recession-proof is to “motivate customers to be committed” to your business. You accomplish that by assuring that their “entire customer experience tells a clear, compelling, motivating story that differentiates you from the competition.” To which he adds that you cannot motivate committed customers without an inspired, committed team.

While not a cure-all, building a substantial membership in an unlimited wash club can play a critical role in sustaining a car wash through a challenging period. Turn to page 22 in this issue to learn how you can make it happen.



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