Reinvention - Stay Competitive and Remain Profitable
By Trent Walter |
Over the past decade, car wash owners/operators have seen many changes and innovations in the car wash industry. Advancements in technology, social media, and marketing have changed the car wash landscape, impacting how we do business on a day-to-day basis. To stay competitive and remain profitable, you have to embrace these changes and integrate them into your business plan, especially if you are a self-service car wash owner/operator. The evolution of express tunnels and in-bay automatics has drastically cut into the market share once dominated by the self-service industry. As these business models have evolved, so must the self-service operators. The days of purely collecting quarters and washing bays down are behind us. It takes much more effort in today’s economy to be a successful self-service operator. Let’s review some opportunities available to the self-service operator and discuss how to stay ahead of the curve.
Just as other car wash disciplines have evolved and come to integrate technology into the business so must the self-service industry. Whether trying to cut expenses or increase revenue, there are advancements that serve both of these needs.
With operational costs continually rising, efforts must be made to control utility bills. Natural gas prices have been on the decline since a peak rate in 2008, which this past winter has drawn many operators’ attention. The winter’s freezing gridlock has driven up natural gas usage and hence heating bills. Operators are using hot water heaters, boilers, and room heaters more due to the unusually low temperatures. If you are using an older heating system, chances are the equipment’s efficiency is very poor. Scaling or build up on the unit’s heat exchanger can reduce the operating efficiency from when the unit was new. If the unit is 10 or more years old, chances are it is less than 70 percent efficient. While you can have the heat exchanger cleaned, it might be worth looking into buying a new high-efficiency unit. Depending on the brand or style, new units offer 95 percent or better efficiency. Based on your gas usage this could result in a 30 percent annual savings on natural gas while creating a quick payback on the investment.
Electric usage can also be reduced through a few simple improvements. In some cases there are subsidies available to pay for a portion of the upgrades. Depending on your geographical location and electric provider, there may be subsidies available to help pay for the lighting upgrades. Many electric providers have plans that offer either credit or rebate checks to any business that cuts back on the consumption of electric. In some cases, the rebates can be as much as 50 percent of the cost to replace. If you have existing metal halide or fluorescent lighting systems, there are major incentives to replace with more efficient LED lighting. The LED lights will reduce the electric bill and require less maintenance such as bulb and lens replacement. In addition, the upgraded lighting will accent the location and help draw in customers during off hours.
Operators must continually drive value to existing customers and find creative ways to entice new business.
For example, tunnel washes use the “$3 Express Wash” or “Free Vacuums” while in-bay automatics use “Two Dollar Tuesday” or “Buy 4 Washes Get 1 Free” marketing ploys. Self-service operators must create a similar marketing edge using available features. Self-service car washes must find ways to bring a wow factor to the experience — e.g., combine the use of fragrant chemicals, music in the bay, and other features to create a valued experience.
Most self-service car washes give the customer the option to pay with quarters, tokens, or bills. To stay competitive in today’s car washing market one must offer credit card acceptance in the bay. Regardless of transaction fees, monthly reporting, or DSL costs, the benefits of having credit card acceptance outweigh them all. Typical credit card systems can be set up to have the timer count up, versus the standard cash option of counting down. This allows the customer to swipe once, put his/her wallet away and wash the car. When cash is used the customer may put in the minimum start amount. Then as time runs down, the customer has to decide, “Do I want to spend any more money?” as the last minute alert “beep, beep, beep” sounds. Over the years, self-service operators have conditioned customers to hurry up and finish washing when they hear the beeping sound. With a credit card system and count-up timer, the customer washes his/her car and pushes a stop button to end the transaction. This progression supports customers taking their time, doing a better job washing their vehicle, and, in turn, spending more money. This is not speculation; rather, it’s a fact that customers who use credit cards spend a minimum of 20 percent more time washing their car than those who use cash to start the transaction.
Whether you have an existing credit card system or are looking to install a new system, make sure to advertise the change. Most systems come with small instruction signs that do not appropriately market the upgrade. Invest in signs that will tell customers about the new feature and how to use it. Not only should there be instruction signs in the bays, but also banners, wind signs, or something similar that should be placed at the entrance to the property.
After the customer is drawn into the bay and starts the meter box, what selections do they have available to choose from? Are the meter box selections up to date with today’s offerings? Standard selections aside, there are other options that need to be available for customers to consider — for example, in-bay dryers, low-pressure clear-coat protectant, medium-pressure spot-free rinse, super-high-pressure rinse, and tri-foaming brush. Updating or “refreshing” the rotary switch with new options is a must. Operators who are on a tight budget and cannot afford to spend money on new options can start with simple changes such as adding a new chemical with fragrance and color.
In most cases, there are one or two selections that are not used frequently by customers. Take advantage of the existing equipment, change the selection to a different chemical, and market it to customers. For example, an operator has low-pressure engine cleaner and sees little use of this function. Use this for a new marketable chemical such as low-pressure wax. It is a very easy change, requiring no more than a chemical switch, new decal, for the meter box, and a sign to market the chemical in the bay. Once again, it is as simple as taking advantage of something not being used and converting it to a new, more profitable function.
Another low-cost solution to help drive business to the wash is social media. Many operators have gone to this style of marketing to let their regular customers know about specials or events going on at the wash. Using Twitter or Facebook to alert customers that special pricing or discounts are available is a low-cost marketing technique. In addition, it supports brand loyalty and drives value to the customers who use the wash on a weekly basis. Again, there is only a time investment associated with having a Twitter or Facebook account. Using these media will help drive the wash’s competitive edge in the market.
Wash owners who operate in highly competitive markets will find there is value not only in knowing the competition but also meeting with them to discuss market strategy. Instead of engaging in pricing wars and reducing the amount of available profit, try working together and set standards that allow everyone to compete fairly. While this may prove to be very difficult, finding common ground and working together will help everyone involved.
In any market, staying ahead involves continually reinventing your business, offering the best value to your customers, and doing so while controlling expenses. The self-service market has its place and will continue to thrive as operators continue to follow this process. The time and effort invested by operators will be rewarded with repeat business and continued success. There will always be a need for self-service washes and operators who strive to run the finest facilities.
Trent Walter is general manager of Ashland, OH-based National Pride Equipment Inc. You can visit the company on the web at www.nationalpridecarwash.com.