Clean, Shine, Protect - Does Added Value Mean Added Profit?
By Robert Roman |
The main purpose of a commercial car wash is to remove the grime that coats the exterior surface areas of motor vehicles, which consist mostly of paint, glass, and rubber.
Untreated paint and glass are fairly wettable surfaces. Wettability describes the ability of a liquid to spread over and penetrate a surface and is measured by the contact angle between the liquid and the surface.
Untreated glass has a surface contact angle of less than 25 degrees. So, when a drop of water hits the glass the drop flattens out and spreads or sheets instead of beading up. This effect is undesirable for windshields and paint, and makes drying of vehicles at a commercial car wash more difficult.
There are numbers of cleaners, polishes, waxes, and sealants on the market to enhance and protect glass and paint. These products can increase gloss and depth of color, protect against UV, and make surfaces easier to clean by shedding and repulsing water (hydrophobic or water-hating property).
However, hydrophobic substances are easily adsorbed on glass and paint, which makes bonding and coating more difficult. Therefore, it’s necessary to thoroughly clean surfaces using chemical methods. To illustrate, we examine two conveyor car wash systems.
System A represents conventional clean-shine-protect menu merchandising. System B represents the new paint-sealant-process merchandising system. Both systems — A and B — offer four wash selections beginning with “basic” and graduating upward based on value added. Here, basic means a product that is virtually transparent in terms of its suitability with customers.
The purpose of the basic wash is to clean exterior surfaces by removing dirt and grime from paint, glass, tires, and rims. Thus, we need to apply soap (pre-soak), tire cleaner, brush detergent, drying aid, and rinse water.
Table 1 contains the recipe and active ingredients for the basic wash for systems A and B. Cleaning is strong alkaline followed by neutral lubricating soap, drying agent, and setting rinse of spot-free water. Basic requires a total of 1 ounce of product per wash at a cost of $0.85. Mineral oil has a contact angle of 80 degrees, so water beads up and gravity and a forced-air dryer strip excess water from the vehicle.
The purpose of subsequent wash selections is to deliver customers an increasingly better car wash experience. This is achieved by combining the basic wash with value-added products that clean better, shine, and protect as well as increase revenue per car.
Table 2 contains the recipe for the good wash. System A adds clear coat (sealer wax) to the basic wash. Total product use increases by 0.5 ounce and cost by $0.20 per wash. System B adds to the basic wash: tri-foam conditioner, rain repellant, and tire shine. Total product use increases by 2 ounces and cost by $1.40 per car.
Table 3 contains the recipe for the better wash. System A adds to the good wash: wheel brite, tri-foam, and tire shine. Total product use increases by 2.5 ounces and cost by $0.80 per wash. System B adds to the good wash: clear coat, underbody, and hot wax. Total product use increases by 9.5 ounces and cost by $1.75 per car.
Table 4 contains the recipe for the best wash. System A adds to the better wash: underbody and rain repellant. Total product use increases by 3.5 ounces and cost by $0.55 per wash. Hot wax is offered as an up-sell and increases total product use by 6 ounces and cost by $1.50 per car.
System B adds to the better wash: tri-foam and glow-foam chemicals. Total product use increases by 9.5 ounces and cost by $1.20 per car. Hot wax is offered as an up-sell and increases total product use by 6 ounces and cost by $1.50 per car.
Consumers judge the durability of polish, wax, and sealant based on the length of time products support a water-beading effect. However, claims in relation to performance are usually subjective. Moreover, application techniques and environmental conditions can affect durability.
Contact angles of materials that appear in Table 5, below, were obtained from the literature. In judging durability, we relied on manufacturers’ performance claims and scientific evidence of the average film thickness of spray and hand applied products. Durability rating is based on an index of 100, where 100 represent 30 days.
For example, researchers find rain repellant gradually loses its water-repellent properties through acidic corrosion and must be reapplied regularly, every several weeks. So, we assigned a durability rating of 75 to 100 for rain-repellant.
Table 5 contains an analysis of systems A and B based on wash selection, price, and contribution margin in relation to contact angle (beading effect) and durability. As shown in Figure 1, the performance of system B as compared to A is achieved by applying, on average, twice as much product at twice the cost of A. For this, B would expect an average price 1.4 times greater than A.
Benchmarks suggest average revenue for express wash is between $7.50 and $8.50 with $10 as upper bound. Thus, for an additional $5, System B provides, on average, a 9 percent increase in beading effect and 25 percent increase in durability as compared to System A.
Researchers Chesbrough and Rosenbloom find a good business model draws on economics, entrepreneurship, finance, marketing, operations, and strategy. The business model itself is an important determinant in the profits to be made from an innovation. However, a mediocre innovation with a great business model may be more profitable than a great innovation with a mediocre business model.
Perhaps we are seeing this notion at work with the trend toward reducing vehicle shine and protection to the push of a button. For example, our estimate of benefit cost for a 4-minute express wash and wax at system B is $0.66 perday as compared to $0.83 per day for conventional 20-minute express hand wax. Seventeen cents a day isn’t a lot of money but that’s not the point.
The point is: Will everyone play along? For example, consider the time and effort spent teaching consumers the value of regularly washing and hand waxing their vehicles and operators the value of building brand identity and price doing it. Next, consumers and operators were taught to buy/sell on price alone. Now, we are trying to teach both that something else is possible.
Of course, this is what a great business model should overcome. Its product should address customers’ problems, unlock potential of innovation by targeting different segments, deliver more value to customers, and provide advantage by means of differentiation or niche strategy.
Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at email@example.com.