At the outset, let me confess my fundamental, governing biases. Though an incurable optimist, I believe completely in the veracity of the encouraging observation made by business writer Jim Collins, author of “Good to Great. Why Some Companies Make the Leap…and Others Don’t.” He confidently writes, “You absolutely do not need to be in a great industry to produce sustained great results. No matter how bad the industry, every good-to-great company figured out how to produce truly superior economic returns.”
I firmly believe that a well thought out and implemented marketing program for many types of businesses, and especially retail businesses like carwashes, cures many ills.
And finally, I acknowledge that the carwash market currently is in the throes of unprecedented change, and therefore, I believe this very turbulent environment will create surprising new opportunities for many growth-oriented operators and performance-oriented suppliers.
“Interesting points,” you may say, “but why should I care?”
You should care because the success of your carwash business certainly will be impacted by your ability to understand the underlying changes in this still-uncertain market and your willingness and ability to adjust your business model accordingly.
In particular, as an operator, your business will change in two critical areas in the next few years:
1) How you select and interact with your suppliers and business partners; and
2) How you communicate and connect with your retail customers.
Choosing the right equipment manufacturer
It is completely understandable that both new and experienced operators wish to work with a leading equipment manufacturer. And, given the size of the equipment investment and the necessary post-sales support which most operators will require, smart investors will want to minimize their risk as much as possible and make the most intelligent choice when it comes to choosing a major supplier.
This decision is not as easy to make as many might expect, however. In addition to clearly establishing and communicating realistic supplier requirements upfront in evaluating their purchase options, investors also need to consider regional differences among the many potential equipment suppliers. Here the purchase decision becomes much more problematic.
Industry veteran and consultant Steve Gaudreau addressed this complex issue several years ago. Writing in November 2002 for this magazine, Gaudreau identified four specific tasks or skill sets which “the best” equipment suppliers will provide to all their current and potential customers. These four critical areas of technical support and service competencies by carwash suppliers merit special attention even now.
There are, Gaudreau noted, several manufacturers whose equipment provides an acceptable wash, but to maximize the equipment investment, each investor/operator must also evaluate the potential suppliers on issues other than wash quality.
These four “best in class” services from 2002 are:
Gaudreau ends this helpful review by noting that the “best equipment manufacturer” is the one who has a distributor “who can best install, train and service your wash to help keep it running well.”
Revenue: The most important (yet neglected) differentiator
These are very valid and useful insights, and industry veterans and suppliers quickly will add that, just as the performance of their equipment has gotten better, other improvements in the industry since 2002 have made the decision-making process of selecting a primary equipment supplier/partner even more challenging. For example, many leading OEMs continue to sell direct to their customers, while in many markets, experienced distributors now service multiple equipment lines and chemical products. Also, leading suppliers today are active in searching out the best retail sites for their prospects and in identifying potential funding sources. These important, value-added services surely help differentiate a “world class supplier” from the pretenders.
From my own research, it is frighteningly apparent that fewer than 20 percent of carwash owners have assigned an experienced person who fully “takes ownership” of their carwash revenues, or who have a written marketing plan. Many companies, of course, have made great strides in managing and reducing their costs, but how many operators and suppliers have placed as much emphasis on top-line growth?
As we know from our shared experiences over the past five years or so, in today’s topsy-turvy economy, most successful operators need great support, especially marketing support. Experienced players will agree that owners of washes need to market and promote them much more professionally and consistently.
Consider the following scenario, which has severely ravaged the carwash industry for much of the past decade:
Nothing creates more stress and upset in the carwash value chain (manufacturer-distributor-operator-consumer) than declining carwash revenues in the field. And over time, a listless, inconsistent and impotent marketing effort at the retail/operator level migrates upward, and this hidden and rarely diagnosed malady will surely and relentlessly attack and erode both the image and service capability (and ultimately, the sales and profitability) of even the best and most well-established manufacturers and distributors.
Two emerging market leaders
Moving into the second half of what could well be a breakthrough 2011, executives, one old and one new, at two market leading companies have embraced the revolutionary concept that they need to be more responsive and proactive in helping their customers make more money. Every carwash manufacturer, to be sure, sets out to design, build and market useful carwash systems, and ultimately provide the vital support services necessary to help operators in the field increase their revenues and build a durable customer base.
In discussing the International Carwash Association™ sponsored Executive Leadership Conference in 2009, Paul Fazio told Professional Carwashing & Detailing, “there is a lot of change happening now and it will continue for the next 18 to 24 months as companies re-evaluate where they want to be five years from now.”
In particular, Fazio stated that the most advanced and successful carwash suppliers will consciously decide to help drive their customers’ businesses to the next level. “I didn’t say it would be easy, but I do believe it will be necessary and better yet — valued,” he said.
And from the still stagnant in-bay automatic market segment, recently announced Ryko Manufacturing CEO Steven L’Heureux expressed his clear intent in stating, “We plan … to bring forward creative technology and support packages that enable our customers to grow their carwash revenues and profits.”
Businesses in other maturing industries frequently “broaden the pond” to extend their reach and grow their revenues. This is an astute strategy. In helping their customers achieve better business results, customer-centric suppliers seek to build closer relationships to improve their profits and increase their market share.
Defining the new paradigm
Writing a year-end review of the carwash market in 2007, I proposed the following thesis:
“Increasing carwash revenues in the field (at the operator level) with a dedicated and professional marketing support program, will lead to better operators and more successful distributors, and consequently, will produce healthier and more profitable manufacturers who can better support the labor and overhead which they must carry to design, build and improve upon their carwash systems.”
As Collins correctly noted above, the “good-to-great” companies and leaders will aggressively seek out and implement new growth-oriented services and strategies to produce better results this year and gain a sustained competitive advantage moving forward.
A decade ago, carwash operators wanted to know what was the best equipment to buy. In 2011, a more important question that savvy operators will ask is this: “What company will help me make the most money?”
In a follow-up article, I will discuss the “Hedgehog Concept,” as developed by Jim Collins, and explain how this empowering mindset will help operators develop a powerful method to position their businesses and communicate more effectively with their customers.
Mike Perry has more than 30 years of experience in business-to-business sales and in retail marketing. He can be reached at email@example.com, or at 770-330-2490.