Sales/Marketing

May 1, 2012

15 Metrics Every Car Wash Should Measure

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For the casual fan, baseball conjures images of lazy summer afternoons, hot dogs and warm beer. However, for genuine fans, the major league game is often inseparable from the layers of statistics that come with it. They are almost their own hobby. Dedicated baseball fans have at least a rough idea of their team’s players’ batting averages, runs batted in totals, on base percentages, pitchers’ earned run averages, etc. Really intense fans are likely to know obscure stats, but even casual fans appreciate the bevy of statistics dispensed by broadcasters throughout the game.

Those who believe baseball is “boring” or “too slow” often do not appreciate the game’s statistical magic. What makes all those pauses in the game interesting is the analysis of the statistics and the anticipation they can create, such as two outs with runners on second and third, a 3-2 count and a batter hitting .275 with runners in scoring position. The statistics enable deeper appreciation, better understanding and a clear gauge to determine player and team effectiveness.

This is analogous to marketing in that statistics are the only way to know how a business is truly performing and can help owners appreciate the value of marketing. Just like in baseball, business statistics enable deeper appreciation, better understanding and a clear gauge to determine your marketing and business effectiveness.

To continue the comparison, watch any manager’s press conference after a baseball game to see the value of statistics. Reporters ask all kinds of questions about the game and the answers are almost always based on statistics. If the team lost and the manager is asked for an explanation, he could simply point to the obvious that the other team scored more runs, but he is more likely to provide useful game analysis, commenting that the team “got behind hitters” (threw too many balls early in the count), “left too many runners on base” or “failed to get hits with two outs.”

Moreover, these same statistics can help the coaching staff indentify trends over time and help guide decision-making and adjustments based on what is working and what is not. The point is statistics enable improvement because they give clear proof of the results.

Compare this to carwashing. When asked about a decrease in sales, the vast majority of owners will talk about the weather or the economy. That’s a simplistic answer because everyone already knows the economy is bad or the weather stinks. It is important to figure out specifically why sales are down. Is it because you’re losing customers? Is it because the average number of days between visits is going up? Is it because you’re not attracting as many new customers as you used to? To what extent are the answers to these types of questions affecting your business?

Understanding the statistics of carwashing is absolutely essential if you want to improve. Our goal is to get more customers to spend more money, and it is impossible to know which efforts are successful if we don’t have anything to measure against. There are 15 statistics or metrics that carwashes should measure to gain better operational insight and enable improvement.

Although you may have a great POS system, nothing beats a simple spreadsheet for tracking this stuff. Remember that the data in and of itself is useless; what we care about are the trends over time. You will want to assemble this data once a month.

Also keep in mind that there are only three ways to increase sales at a carwash: winning new customers, increasing customer frequency and getting customers to spend more per visit.

The Basics

The first four metrics generally are what most operators track. They are a great start but certainly don’t tell the whole story.

1. Wash volume. How many vehicles went through your tunnel?

2. Gross sales.

3. Dollars per car. It’s important to note when you change prices.

4. Sales mix. What percentage purchased a basic wash, middle tier, top package, etc.?

Customer Insight

The following metrics show the most value; unfortunately, few operators regularly measure them. The first three require customer tracking. Many operators have POS systems capable of tracking customer visits but fail to enter license plates because they’re not using the information. However, when tracking data is entered into a spreadsheet, the information can provide tremendous insights. Eventually, every carwash will use license plate recognition for customer tracking.

5. New customers. How many new customers do you attract each month? Is the number increasing or declining? Many promotions and advertisements are designed to bring in new customers. However, if you’re not keeping track of new customers, you won’t know what is working and what isn’t or whether the number is trending up or down.

Of the customers redeeming your promotional offers, how many are new and how many are repeats? During an educational seminar I presented at Car Care World Expo in May, I asked the 200 or so in attendance how many knew the number of new customers they were adding each month. Only one person could tell me, and I know 
from experience that this individual is one of the best carwash operators in the nation with more than 20 locations. The point is if you want to compete and survive, you need to know these numbers.

6. Frequency. What is the average number of days between visits for your current customers? Is it trending up or down? To illustrate how big an impact this can have let’s assume a carwash washes 60,000 cars a year, with an average transaction of $15 and the average number of days between visits is 112 (16 weeks).

If this carwash reduced the frequency rate to 98 days (14 weeks) it would add another $130,000 in sales without any customer acquisition costs. Even if it reduced the number by seven days, it would bring in an additional $60,000 in sales.

Unless you know what your current frequency rate is, it is nearly impossible to improve without spending a lot of money and simply hoping something works.

7. Churn. What percentage of your customers are you losing every 12 months? Improving this metric can have profound effects on your sales. If it is increasing, you can at least address the reasons for the losses and get in front of the problem. Without tracking churn, a lot of damage can occur before you notice the customer decline.

8. Customer satisfaction. Running your business based only on gross sales is like driving a car using only the rearview mirror. Gross sales are a measurement of what happened in the past. It is already behind you. A key indicator for future sales is customer satisfaction. If satisfaction is trending upward, sales will eventually follow. If it is trending downward, sales will eventually decline.

Customer satisfaction (which is related to loyalty) typically can be gauged through surveys. The question marketers have found to have the best correlation is, “On a scale of 1-10, how likely are you to recommend this carwash to a friend?” Customers who answer nine or 10 can be considered satisfied or loyal. Those who answer 0-6 should be considered dissatisfied or disloyal.

This may seem daunting to many operators, but it can be pretty simple. Print business cards containing this question and have a friendly employee approach 100 customers every other month. Provide a box with a slit for customers to submit the cards.

Make sure customers know the survey is anonymous and don’t give away anything for filling it out — both will skew results. Then enter the results into a spreadsheet. Track two numbers: how many people circled nine or 10 and how many circled 0-6. You will have a powerful metric to see if your marketing or operational efforts are succeeding or falling short of expectations.

9. Club sign-ups. If you aren’t able to track every customer, then opt-in clubs can provide a great sample to gauge activity. How many customers are signing up for the club each month? Typically, your club will be a group of loyal customers, so monitoring their behavior is indicative of your overall customer base.

10. Unique Web visitors. Unfortunately, the carwash industry is not known for a prevalence of Web sites. However, if you have one, use it as a sales tool. You should know how many unique visitors you have each month. This can be another good indicator of future sales.

The Next Level

In reality, the 10 metrics we have discussed are fairly basic. Once you are good at measuring them and gauging your efforts, there is another level of statistical sophistication that offers great value.

11. Customer profitability. The most common statistic in our industry is the number of cars washed. While this is obviously an important metric, it doesn’t tell the whole story. After all, we care about profit, not simply the quantity of transactions.

Let’s compare two customers. Bob comes in 10 times per year, buys the basic wash for $8 and redeems his loyalty card to get his 10th wash free. Fred comes in half as many times (five) but buys the $15 wash. In this scenario, even though Fred comes in half as often, he is worth twice as much profit as Bob. If you’re not measuring profitability, you would be happier with Bob because he represents washing more cars. This can have huge implications.

12. Weather. OK, we know the weather stinks, but how bad is it? Is it 10 percent worse than last year or 40 percent? Understanding this number will give you a better idea of how much declines or increases are attributable to weather. Track the weather. If you don’t want to do it manually there are resources on the Web.

13. Customer map. You should have a geographic understanding of exactly where your customers come from. This vastly improves direct mail campaigns.

14. Campaign take rate. What percentage of people who see a promotion act on it?

15. Long-term campaign ROI. How much new business did a particular promotion create in 12-24 months?

Just like in baseball, business and marketing statistics reveal the game within the game. Measuring you carwash statistics will enable deeper appreciation, better understanding and a clear gauge to determine your marketing and business effectiveness.






 
 

 
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