What if Alexander the Great owned a car wash? Or how about Napoleon or maybe even Genghis Khan? Aside from some unorthodox signage (“Foot Off Brake, Car In Neutral And Hands Off Flaming Arrows”), I bet they would be pretty good operators due to the fact that these men were brilliant strategists.
The word strategy is a Greek military term that means the, “art of the general”. Since the business world has always been fond of military analogies, it’s no wonder strategy has become the word we use for this core business principle. In fact, there is no greater element to sustainable success than good strategy. (We are primarily talking about marketing strategy here, but since marketing is the layer of the business that interacts with the world, it is impossible to separate your business strategy from your marketing strategy.)
WHY IS IT SO IMPORTANT?
Your strategy is so monumentally important because it answers the question, Why should our customers buy from our car wash and not from our competitors? Or even broader than that, Why should they spend their money on a professional car wash and not do it themselves in the driveway or even skip it all together and spend their money on something else? Businesses without clear strategies are rudderless and have no foundation to base tactical decisions on.
Simply put, strategy is how you differentiate yourself from the alternatives. It’s finding differences that consumers value and making those differences crystal clear to everyone. Stop reading this article for a moment and write down your answer to this question (or at least write it down mentally), Why should a consumer in your community go to your car wash instead of the competition? (Go ahead; write it down. We’ll wait.) How easy was that? Did you instantly know what to write? If not, this MUST move to the top of your priority list. However, even if you knew what to write, how concise was your answer? And even if your answer was quick and concise, how well is that message being communicated at every customer touch point?
Think of any retail company that has succeeded and you will see a company that has made their differences clear. Starbucks experienced tremendous growth for over twenty years, in part because their café-style stores and dark roasted coffee were so obviously different from the competition. And when Starbucks seemingly occupied every corner in America, Dunkin Donuts capitalized and experienced their own growth, not because it copied Starbucks, but because it established itself as the anti-Starbucks offering lighter roasted coffee for the “Average Joe”.
Another lesson we learn from big retailers, is that business owners that ignore strategy, and instead focus on tools like coupons or social media, do so at their peril. When Circuit City went bankrupt do you think it was because they didn’t have a good website or because they weren’t using Twitter and Facebook? Of course not- They were using those tools to the same extent Best Buy was. The reason they failed was because they lacked a strategy that made their differences clear. Was it price? Or selection? Or service? It was none of those things. Of course, they would tell you that they were focusing on all of those things, but they weren’t able to do any of them in a way that made them different.
I believe that one of the reasons the express exterior model has worked so well is that it is so obviously different from the sea of full service washes. Instead of $20 for a wash and spending a half-hour, it’s $5 for five minutes. This is a difference that is blatantly obvious. However, guess what will happen when a market becomes saturated with exterior express washes? People will again look for differences and that will open the door to consumers that are looking for more service and are willing to pay for it. I’m not saying we will see a complete reversal, but history has taught us that success comes, not from features alone, but from being different in ways that customers value.
HOW TO BUILD A STRATEGY
Like all elements of a successful business, strategy is not something that happens overnight. It may be simple, but it is not easy. Were going to break strategy creation into four steps: (1) research, (2) segmentation and targeting, (3) positioning, and (4) branding.
1) Research
Before a general can create a strategy, he must be able to answer key questions about his enemy, his own troops, the environment and his recent battle history. Similarly, a car wash owner must assemble some research before he can devise his strategy.
- Demographics- Since most of your business will come from a 3-mile radius, it is important that you understand the background and lifestyles of your neighbors. And while there are certainly similarities throughout the U.S., your community is unique and understanding that uniqueness is key. Demographic reports are widely available on the web.
- Your Strengths and Weaknesses- You cannot create a sustainable strategy unless you know what your capabilities are.
- Competition- Since our goal here is to establish differences, it is essential that you know your competition very well. In fact, you should regularly have your car washed there. In The Art of War, Sun Tzu famously says that, “if you know both yourself and your enemy, you can win a hundred battles without a single loss.”
- Sales Trends- In order to create the best strategy, you have to know what your up against. That means having an intimate understanding of your sales trends in revenue per car, gross sales, cars washed, sales mix (quantity sold for each wash package) and net profit. You should have a line chart for each (except sales mix) for the past three years.
2) Segmentation and Targeting
The next step is to look at the demographics and figure out who the different groups are in your community. Keep in mind that segments are groups that you communicate with in different ways. In other words, you wouldn’t have a segment for retired 60-year old men and another for retired 65-year old men because you would communicate with them in the same way. However, you would have different segments for retired men and men in their 20’s, since you can and should communicate with them in different ways.
Once you’ve figured out what groups are present, the next step is to decide whom you want to target. These will be the few segments you choose to go after. You need to consider the size of the segment, your ability to reach them, their potential profitability, the level of competition for that group and the growth potential.
3) Positioning
Once you know who you want to target, you need to think about how you will position your car wash in a way that attracts those target groups. Again the focus is on communicating the differences that these particular groups value. Positioning starts with a clear statement. This should explain, in 2-3 sentences how your car wash is positioned and why customers should come to your car wash and not the competition’s. It also includes a tag line, which should be the ultimate distillation of your value.
Keep in mind too, that the enemy of positioning is generality. Many car washes claim that they focus on the cleanest car possible or service or something similar. But their competitors make the same claim. If you want to build your business on service or cleanliness you have to be specific and make a claim that your competitor can’t or won’t. If you want to use cleanliness, don’t just say, “The cleanest car in town”. Instead say, “The only car wash to offer every customer a clean car guarantee.”
4) Branding
Now that you know how you want to position yourself, you need to figure out how to communicate that position to the community. Branding is about communicating your position so that when people think of you, they think of that position. This includes your logo, style, signage, website, uniforms, wash package structure and pricing, level of service and anything else that communicates on your behalf. You know you have succeeded at branding when you ask 10 different people what they think of when they think of your company and they all say the same thing- and their answer is directly related to your positioning.
For example, if we think of Apple (the computer company, not the fruit) we all think similar things and it all has to do with the way they want to be positioned. We think of simplicity and ease of use, innovation and elegant design. Apple brands itself as those things through heavy use of white space in their design and simple, clean layouts. They don’t just design new gadgets, they design new gadgets that are pretty to look at with a focus on the user interface. The point is that they decided how they wanted to be positioned and then made sure they created a brand that fit that position and they executed that brand at every possible customer touch point.
Now, you might think to yourself that you already have the answers to these questions and know them instinctively. You already know all the research, you know the segmentation and targeting, you know the positioning and you know your brand. However, it cannot be stressed enough that taking a formal look at these areas regularly and then analyzing them with others (managers, fellow operators, friends with business experience, etc.) is vital. Just the process alone often leads to insights that can have a huge impact. I suggest putting all this information together in a binder and then doing the analysis off-site in a formal meeting. You’ll be surprised at the inspiration a clear strategy give you.
You are the General, and you are at war. The most important aspect of winning any war is to create a winning strategy. That means finding a way to differentiate yourself from the competition in a valuable way and communicating that difference clearly. Without a clear strategy, no amount of coupons or even the newest equipment is going to make you successful. So set aside some time to review your strategy. It’s the most important thing you can do.
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