“Simplify and amplify” – those are the words Derek Gaskins keeps in mind as he works to boost the profile and performance of the 33 car washes that Mid-Atlantic Convenience Stores operates. Gaskins is gung-ho about building up that business, so it seems likely that he’ll be saying those words for some time to come.
Mid-Atlantic, Richmond, Va., is a wholesale fuel distributor and an operator with a network of some 300 company-owned and dealer locations in Maryland and Virginia. It is on the lookout for locations where it can build new petroleum-convenience businesses, and plans to include car washes where there is space for them, said Gaskins, senior vice president of marketing. And acquisitions of going concerns will be considered more appealing if they have car washes, Gaskins added.
Some operators might wonder whether a full-tilt attitude is justified. Some car washes in the petroleum-convenience channel have struggled in recent years as the economy has suffered, Gaskins and equipment makers acknowledged. The divestiture of retail sites by Big Oil companies, ongoing for years now, has distracted attention from some car wash business, said Jim Belanger, marketing vice president for National Carwash Solutions, a supplier that works with Mid-Atlantic.
“Big Oil moved away from retail – sold real estate or put in place multi-site operators,” Belanger said. Among some that have taken over divested sites, focus and capital has been oriented toward acquisitions, “re-doing the trade dress and changing operational structure to run bigger chains,” Belanger said. Capital and focus on the car wash business has been lost as some operators acquired more stores, Belanger said, “and then they get into managing the expenses of the carwash rather than running the business. That gets them into a kind of downward spiral because the quality suffers. Signs get old and the car wash becomes weathered-looking. It gets tired.”
Steve Robinson, marketing director for equipment maker Mark VII, said, “In general the biggest thing that has impacted car wash in petroleum-convenience is that the recession has limited access to financing.” As a result, he said, “Operators haven’t been able to upgrade when their equipment is fully depreciated. It’s getting old and not doing as good a job of washing cars.” Also, Robinson said, “Mid- to large-size chain operators have focused on things like PCI compliance which has cost them a lot of money and diverted a lot of their capital investment funds away from replacing capital equipment.”
But the potential revenues and profits from the car wash business remain attractive, industry experts said, and the recently released NACS State of the Industry report supported that point. The car wash category in the petroleum-convenience channel showed strong profit growth – increasing 75.4 percent in 2011 – according to the report.
The big margin that car wash offers “surpasses other categories” in the petroleum-convenience channel, said Russell Bell of Ryko Solutions. Automated washes especially bring an added benefit of no labor, he said, unlike another high-margin category, foodservice, where labor is a significant cost.
While a car wash must be well-maintained and operating efficiently, that alone is not enough to make it a success, industry experts said. That is a baseline. Marketing and promotion must follow.
“A car wash is not an impulse purchase any more,” said Mike Perry, a former car wash equipment salesman, now operating a consulting business, Total Marketing Concepts, in Marietta, Ga. “It hasn’t been for five years.”
The three most important marketing steps are very simple, said Dave Dougherty, senior product manager for PDQ Manufacturing, a car wash equipment maker. “First, it is always preferred to have the car wash visible from the fueling island. The visual of a clean car exiting a wash bay will be a very positive impression for a consumer while they fill up. Second, the site must be bright and clean. Consumers will not feel very confident that they will receive a clean car if they pull into a dirty wash bay. Third, and definitely not last, would be to offer the necessary tools to educate consumers so they clearly understand the various wash packages available. This can be done via pump toppers or any other site signage.”
Much of the marketing and promotion is described by the experts as “simple,” yet taxing because it demands effort and constant attention to detail.
For example, a simple step that makes a big difference is putting a sign on the car wash building that identifies it as a car wash. “You’d be amazed at how many operators don’t do that,” said Robinson of Mark VII. Also essential is clear directional signing to help people find that car wash that is tucked behind the store or off to the side, Robinson said. “Have a sign somewhere pointing to the entrance,” he said.
Late-model fuel dispensers with video screens offer the opportunity to advertise the car wash, Robinson noted. And he recommended cross-promotions between the car wash and the convenience store. “I’d say that’s where we see the biggest untapped opportunity,” he said. Mark VII sells an optional LCD panel that can play animated graphics that can be used for such promotions, he said, telling customers to “Stop in the store for a half-off on a cup of coffee,” for example.
Ryko encourages its customers to follow a “five-zone” merchandising program that begins with luring the customer from the first zone – the street – to the second zone – the fuel island, where pump-top signs, for example, pitch the car wash. Inside the store is the third zone, where more signs can be posted and offers made. Just before the vehicle is washed, the operator has a chance to upsell a customer – the fourth zone. And at the exit there is an opportunity to invite them back, with a coupon, for example.
National Carwash Solutions helps car wash operators who are struggling with a detailed survey and report on how it is covering the basics, and a discussion of the improvements needed to reach a “baseline” performance. Then, Belanger, said, a five-step marketing program devised by National Carwash can be used to maximize revenues.
“The differentiating element is commitment on part of the marketer,” Belanger said, and that also happens to be the first of the five steps. Allocating personnel to manage various categories is a best practice, and demonstrates that commitment, Belanger noted.
Next is “refreshing” the car wash or car washes with an inexpensive facelift that includes installing bright, white, easy-to-clean vinyl paneling inside bays – an area that tends to get dirty, Belanger said. Another way to brighten up the interior is with LED lighting, for which government incentives may be available, Belanger added. Ensuring that the machines are operating well is part of this second step. “If they’re not operating well and continuously, and customers come wanting a wash – you’ve lost that wash at least, and very possibly that customer,” Belanger said. A review of the chemicals is vital, Belanger said, because the image and fragrance of the soap can make a pleasing sensory impression. “Some operators lose that pleasant experience by cutting costs on the chemicals,” Belanger said.
The third step is to create a program give the carwash a strong identity. “If the site just says ‘car wash’ on it, you need to brand it” and make its presence known through abundant use of point-of-purchase (POP) materials and signs, Belanger said, “so it’s clear that you offer a car wash, and people know you do.” The signs need to be cycled, Belanger stressed. “Operators change signage in convenience stores regularly,” he pointed out. If they forget to do the same with outdoor signs for the car wash, those signs become weathered and tattered and so does the image of the car wash.
Once the site has been made to look like new again, the fourth step, Belanger said, is promotional: run a “re-grand opening” giving away the top car wash to entice customers and possibly “hook them on that top package.” Operators should do this for a couple of weeks, Belanger advised, and some have done it as long as a month. “It gets people to try the refreshed car wash again, it builds up traffic again,” he said. Offering a discount on gasoline with the purchase of a wash is another powerful incentive, Belanger said. “In the old days operators would discount a car wash with a purchase of fuel,” he noted. Reverse the approach, so that customers get 10 cents or 20 cents off per gallon of fuel with the purchase of the top car wash, he said.
Fifth, analyze what it is now costing to keep your rejuvenated car wash system running properly – parts, labor, service – and compare it to the cost of buying or leasing a new one. “Often the cost of keeping the old one running is more than what it would cost to lease a new machine,” Belanger said.
Belanger said the company helps its customers who are struggling because the benefit is mutual: “The more car washes they sell, the more chemicals we sell them, the more service work we do for them, the more parts we sell them.”
So what did Mid-Atlantic do to “simplify and amplify?” Gaskins said the operator deleted two levels of car washes, so that instead of five, it now offers three.
With three choices, the differences are more immediately discernible, and customers can choose more easily. “People are very busy, they’re hassled and harried – they don’t need complications,” said Gaskins.
To promote, the company offers cents-off gasoline for customers who buy a car wash. In a broad sense, Gaskins said, the key is to treat the car wash as a business, instead of a service, a value-added offering or, worst of all, a burden. “It should be a true line of business,” he said. “It’s a great opportunity to cross-sell.”
And he made no bones about imitating others with outstanding car wash operations. “Find the best-in-class and copy them shamelessly,” he said. He didn’t offer to name names.