Washing by the Numbers

Read on for crucial metrics and practices that will elevate car wash.

Samantha Oller, Senior Editor/Fuels, CSP

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Ask the average car-wash operator how many cars he washes per day, and he likely will have a ready number. Units sold is the bedrock of car-wash metrics, and basic enough for the smallest operator to track. But if you ask industry experts, it is a woefully inadequate measure.

“It doesn’t tell the whole story—it’s not in context,” says Kyle Doyle, president of Blue Sky Image Group Inc., King Park, N.Y., a marketing firm specializing in the car-wash industry. “At the end of the day, we as business owners care about how much profit we have and how sustainable the profit is. “… Just looking at that, car numbers don’t tell you that. I know lots of people who have switched models and went from 50,000 to 150,000 cars and lost money.” From Doyle’s perspective, operators need to track three numbers to get a more solid sales picture: number of cars washed, dollars per car and gross sales. And even here, the numbers need context. For example, dollars per car can be misleading if price changes are not taken into account.

For retailers who want to move beyond units, following is a roundup of metrics and practices that offer a powerful indicator of car-wash performance and a predictor of future growth.

Capture Ratio. For Mike Perry, a Georgia-based car-wash marketing consultant, capture ratio—the percentage of fuel customers who buy a car wash—is the best measure of a car wash’s success and future potential [CSP—June ’10, p. 34]. The figure is determined by dividing the numbers of gallons pumped at a site by the typical gallon fill-up, then multiplying that figure by a targeted captureratio percentage.

What should your target be? Perry says to aim high. “To me, a 12% capture ratio is the minimum,” he says. “Anything below 12%, going forward in 2012, does not generate enough after-expense revenue for us to stay in the car-wash business.” For automatic car washes at c-store sites pumping 200,000 gallons a month or less, he considers a 12% ratio as good, 15% as better and 18% as strong.

Check the ratio at least once a month, he advises, comparing the metric’s predictive power to that of the first-pitch strike in baseball. “The first pitch you throw a batter, if it’s a strike, the opportunity for the pitcher to get the batter out is 60% or above—even higher,” says Perry. “A capture ratio is comparable to a first-pitch strike for a pitcher—in that not only is it an indicator, but it’s a predictor.”

 Thorntons Inc., Louisville, Ky., tracks number of washes per store per day as well as average wash price, says John Zikias, vice president of marketing. The 165-store chain has eight overhead car washes, most of them in Illinois. With Perry’s guidance, it recently started measuring capture ratio as well.

“Just the metric of washes per day doesn’t put [car-wash performance] in any context,” says Zikias. The chain is still mastering the metric. “We already know how many gasoline customers we have,” he says. “We know how many washes. Where it gets tough is when we have self-serve bays as well.” On the plus side, Thorntons has been measuring a capture rate of 19% for the past few months, he says. On the self-serve side, it is running in the single digits. “It’s probably below where we would like it to be, but we will continue to measure it and grow it,” he says. Customer Satisfaction. The other issue with cars washed per day? It lacks predictive capability. Here is the value of measuring customer satisfaction, says Doyle. “Every car-wash guy knows cars washed, his revenue, dollars per car. That tells you what you’ve done so far, but it really gives you no inclination as to the future,” he says. “Customer satisfaction is a good report card. The logic follows that if you’re satisfying customers consistently, then you’re going to grow or at least you’re doing the best you can within your market and the economy.”

Feeling out the figure can be as simple as asking car-wash users a single question: “On a scale of one to 10, how likely are you to recommend us to friends and family?” An employee with strong people skills can hand out the question, printed on cards, to customers as they go through the wash. The number of responses required to get a good baseline depends on the type of wash, but it can be as little as 100 each month.

“That same question, if you’re using it over time, should provide a good baseline to look at,” says Doyle. “It’s your ongoing progress [that is important]— not what the number is today, but where is it today compared to a month ago compared to a year ago, compared to three years ago.”

A more sophisticated approach involves posing the question in a textbased survey. For example, one of Doyle’s clients has put up signs that offer customers $3 off their next car wash if they fill out a survey. To register, the customer texts “Wash 1” to a number provided on the sign. The question bounces back, the customer responds, and then he or she receives a coupon code for the next wash.

“It will require a POS solution that allows you to track the code,” says Doyle. “It’s going to cost monthly fees. But if the operator sees the importance of gauging how satisfied customers are over a period of time, then it might be worth the money.”

Thorntons is examining how to better gather customer-satisfaction information; the retailer provides a phone number on receipts that customers can call with comments, and it has started to gather the feedback. It is also looking at a reward or loyalty scheme wherein it can offer a discount to customers who buy multiple washes. “We’re trying a number of things—what’s going to resonate most with customers?” Zikias asks.

Promotional Success. Another area with little measurement history within the industry is the success rate of promotions. “If a direct-mail piece went out to 10,000 people, what percentage converted it? What was the capture rate on that?” Doyle asks. “Most car washes do some type of promotions, something on social media or even something at the pumps—but they look at how many coupons they received, not necessarily what percentage of people who were converted with them.”

It is also important to measure whether the promotion is drawing new customers or incentivizing existing ones. This will require some POS capability, as well as a license-plate or customer tracking system, Doyle concedes, but it is a hugely valuable number.

A redemption rate is helpful, he says, but without determining the promotion’s ability to win new customers, a promotion on a wash could simply be discounting price while boosting purchase frequency slightly among regular customers. “My philosophy is: Figure out your budget and then track as much as you can to give you the big picture,” he says.

Wallis Cos., Cuba, Mo., has 32 car washes equipped with touch-free and soft-touch systems from PDQ Manufacturing. When the company runs promotions, it tracks the percentage of top washes purchased. “For a promotion, we set a target of trying to sell more of the top units,” says Rachel Andreasson, executive vice president of marketing.

Review the Numbers. For Wallis, tracking car-wash metrics is a daily, weekly, monthly and quarterly job. A balanced score card at all locations allows the store manager to review how his or her car-wash sales are tracking vs. the budget. On a weekly basis, a sales report on all stores goes out that compares car-wash sales to budget.

The company considers gross-profit dollars and units its primary metrics. Like Thorntons, it is chasing capture ratio as the next new metric, but it is still working out the logistics of measuring the figure through its back-office system.

Megan Loch, vice president of marketing, vehicle care, for Ecolab, St. Paul, Minn., suggests operators review their key metrics each month, and on one-, three-, six- and 12-month trends vs. the prior year. On a quarterly basis, operators should look closely at operational expenditures, including water, chemistry, maintenance costs and utilities such as lighting. A retailer may not have isolated figures for the car wash because they may be rolled into c-store utility bills, but it should have a rough estimate of what the utility costs and water usage should be for the wash.

“Pay attention to outliers,” Loch says. “If a number goes beyond what is reasonable, then dig in and find out what’s going on.” Here, equipment manufacturers should be able to provide how much water is consumed in each wash package. Plug the figure into the wash volume; if the water usage figure is too high, then it is time to investigate.

When it comes to chemicals, Loch advises retailers focus on cost per application rather than cost per gallon of chemistry. “Every product is different, with different concentrations and application rates,” she says.

Access to Success

Sometimes for customers interested in purchasing a car wash, the simple act of getting out of a car and walking into a c-store can seem as insurmountable as scaling a 12-foot wall. For Wallis Cos., Cuba, Mo., it was a challenge apparently overcome with an investment in car-wash loyalty technology.

The company installed the Access Customer Management System from PDQ Manufacturing Inc. at 21 of its 32 wash sites. The system features a userfriendly interface, POS options, creditcard processing, reporting capability, and the ability to accept a range of payment options, among other details.

The results have been dramatic, according to Rachel Andreasson, executive vice president of marketing for Wallis Cos. Total car-wash sales at sites with Access sales were up 5.7% from January to August, compared to non-Access sites, where sales were down 1.9%. Sales at the Access box rose 54%.

Andreasson attributes the Access box’s success to the customer convenience of being able to participate in the retailer’s loyalty program without having to buy a car wash inside the store.

Before, Wallis sold washes in a fourpack for $29.99. Customers would have to enter the store each time to redeem a wash and receive a printed-out code that was good for 14 days. Now, customers receive a preloaded electronic card for use at the Access box, and they can load more than four washes at a time.

The system is also more convenient for Wallis, enabling it to track car-wash units and sales online.

The Access boxes have proven such a success that they quickly exceeded their return on investment. “When we put the investment in, we had to get a $1,200 increase in sales per site per month to pay off the investment in 15 months, and we’re exceeding that,” says Andreasson.

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