If you ask, any carwash veteran will tell you that the number of cars he or she washes today has decreased year after year for the last 30 years. New carwashes are opening in every city nationwide faster than demand. The pie is divided thinner with every new carwash that opens. As people are more and more limited with their time, washing cars is on the bottom of consumers’ daily to-do lists.
When it comes to having their cars washed and saving time, many customers typically go for convenience and use the carwash closest to their locations. This is especially true for express carwashes and for many full service customers. When it comes to auto detail services, customers are willing to drive past other carwashes and detail shops to go to whom they trust the most with their vehicles.
It’s becoming harder to make a profit year after year, yet alone to stay in business due to increased competition and the rise of expenses and labor costs. According to Bloomberg, 80 percent of businesses fail within the first 18 months; that is a whopping 80 percent crash and burn.
According to Fortune, nine out of 10 small businesses fail within the first 10 years, but nine out of every 10 franchises succeed over 10 years. Franchisors spend millions of dollars to systemize and automate in order to speed up the process, become more efficient and cut down costs. They spend millions of dollars more to create value as well as marketing strategies to increase the number of customers, frequency of visits and dollars per transaction.
Create a stack of daily rituals
The old way of doing business does not work anymore. To succeed in the past, one had only to work hard “in” his or her business and mail coupons and incentives to new and existing customers. Today, more than ever, carwash owners should learn from franchisors and invest more time, energy, blood, sweat and tears in increasing online visibility, loyalty, customer experience and profits by taking advantage of today’s technology to automate many of these processes.
Make it a priority to work “on” your business instead of “in” your business. Create your stack of daily rituals, and start your morning with the following:
- Saying hello to all employees
- Giving them a pat on the back or a hug
- Inviting one employee to your office, asking how that person is doing and how work is going
- Asking him/her to evaluate managers and employees
- Asking if employees have any ideas to improve process, quality and customer experience
- Meeting with one of your managers and then going through the same questions
- Reviewing the previous day’s wash packages and detail sales
- Meeting with your salespeople and going over the numbers and how to improve them.
- In addition to the above, review a pre-written set of questions to challenge yourself every morning to come up with innovative solutions to improve such areas of the business as employee loyalty, productivity, customer experience, frequency of visits, dollars per transaction, first-time customer visits, online ranking, positive online reviews and community involvement.
Create a team culture
People do business with people, not companies.
The most successful organizations are those that understand the true meaning of falling in love with the customers, not the company. It is your job as the leader to create a culture where everyone’s main concern is to serve the customer, appreciate their business and exceed their expectations, so that the customer will remember the experience and come back. Demand excellence from all staff. Empower employees to provide a great customer experience. Your business’ success depends on it.
Why is building a culture important to the success of your business? Consider the following statistics:
- It is six to seven times more expensive to gain a new customer than it is to keep an existing one.1
- Unhappy customers are highly unlikely to be repeat customers, as 89 percent of customers report having stopped doing business with companies because of bad customer service.2
- People are twice as likely to talk about bad customer service experiences as they are to talk about good experiences.3
- Nine out of 10 consumers say they would pay more to ensure good customer service.4
- Eighty-nine percent of consumers began doing business with a competitor following a poor customer experience.2
- A two percent increase in customer retention has the same effect on profit as cutting costs by 10 percent.5
- A five percent increase in customer retention can increase profit between 25 and 95 percent.6
In addition, the American Society for Quality conducted a study and concluded that 96 percent of the reasons clients stop doing business with a company is beca-use of lack of relationship. According to the study, 68 percent of clients are turned away by the attitude of the service provider; 14 percent were dissatisfied with the product or service itself; nine percent were lured away by competition; five percent were influenced by friends; and the small portion of those remaining either relocated or passed away.
Develop online visibility
You may be the best carwash operator who produces the cleanest and shiniest car at the fastest rate possible. If that’s all you do, then in today’s market, you are the best-kept secret. Search engine ranking and online reviews have changed the game.
First, you need to find out how your website ranks in comparison to your competitors’. You can use free tools, such as Nibbler, to test your website or your competitor’s website. Enter the address of any website, and you will see a report scoring the website out of 10 for key areas, including accessibility, SEO, social media and technology.
You can also invest in an app that is designed to improve your search engine ranking, positive reviews, frequency of visits, referrals, loyalty and push notifications to drive instant traffic.
Know your hourly break-even point
Sam Walton, the founder of Walmart Stores Inc., one of the world’s largest retail chains with over 10,000 stores worldwide, used a simple method to figure out how much income on a daily basis each store needed to break even and start making money.
Walton took the average total monthly expense of each store including labor, supplies and all variable expenses, and divided the total by 30. He shared that information with the store managers and pushed them to promote and sell every day until they reached that dollar number as early as possible in the day. All income after that point was pure profit. So, what lessons can you learn from Sam Walton?
Treat all yearly expenses, excluding your personal expenses and profit distribution, as fixed expenses. Next, divide that number by the number of days you are open for business, and then divide that answer by the number of hours you are open per day. This is your break-even point per hour. Your goal is to reach this break-even number as fast as possible every hour to start earning profit. Let us assume, for instance, that your daily break-even point is $1,500 and your business is open 10 hours per day. Your break-even point is $150 per hour.
Armed with this information, transform the dollar amount to the number of washes or details you must sell per hour to break even.
When was the last time you increased your base carwash price and all packages by one dollar?
If you have fierce competition and you cannot increase your base wash by a dollar, then redesign your menu and increase your packages by one dollar and your detail services by a few dollars. Invest in training your ticket writers on how to promote the top package and increase sales dollars per transaction.
Your top wash package should be the best-selling item. If it is not, then redesign your packages and add more value to the top package. If you wash 10,000 cars per month and you increase your sales per car by one dollar, that is equal to a $10,000 increase in net profit per month or $120,000 per year. If you increase your sales dollars per car by $3, that is equal to a $360,000 increase in net profit per year.
Remember that express detail is a great opportunity to upgrade to a full detail. As examples, upgrade an express wax to clay and upgrade seat cleaning to seats and carpet cleaning or a full interior detail.
The money is in your parking lot … you just have to learn how to find it. Setting up a wash to run by itself and then kicking back to relax is not going to make your profits grow these days.
Continue to reinvest in your business and review your policies and prices in order to make your carwash a business that drives repeat customer visits and upselling opportunities.
AJ Rassamni has over 30 years’ experience in the carwash business. AJ is a speaker, consultant and author of two books written specifically for the carwash industry: “Increase Business 30% in 30 Days” and “Dirty Cars Filthy Rich.” AJ helps carwash owners achieve amazing success by advising how to innovate and automate their operations to significantly increase profit. AJ is also the CEO of an innovative technology company, MyLoyaltyApps, the sole purpose of which is to create customized apps that automate the marketing strategy of a business to increase positive reviews, search engine ranking, loyalty, dollars per transaction, number of first-time customers and revenue. You can contact AJ via email at [email protected] or [email protected] or text (559) 284-1919.
2 RightNow Customer Experience Impact Report 2011
4 Customer Experience Impact Report by Harris Interactive/RightNow, 2010
5 Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy
6 Bain & Company