For the casual fan, baseball conjures images of lazy summer afternoons, hot dogs and warm beer. However, for any genuine fan, the game of baseball- the activity where athletes throw, hit and field the baseball is inseparable from the statistics that are almost their own hobby. Any real baseball fan has at least a rough idea of the players on their favorite team's batting averages, Runs Batted In, On Base Percentage, pitcher's Earned Run Average, etc. The more intense fan knows even more and even the lesser fan appreciates the bevy of statistics that the broadcaster dispenses throughout the game. In fact, anyone who believes that baseball is "boring" or "too slow", feels that way because they don't appreciate statistics, because what makes all those pauses in the game interesting is the analysis of the statistics and the anticipation they create: "runner on second and third, 3-2 count, 2 outs and the batter is batting only .275 with runners in scoring position". These 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 you are doing and to 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 illustration, watch any manager press conference after a baseball game and you can see the value of statistics. Reporters will ask all kinds of questions about the game that just ended and the answers are almost always based on the statistics. If the team lost, and the manager is asked about why, he could simply say that the other team scored more points then they did. Of course, this is true, but it's a dumb answer. It's dumb because everyone already knows the other team scored more points. What they want to know is why the game ended the way it did and what led to that result. Therefore, the manager might talk about, "getting behind hitters" (throwing too many balls) or "leaving too many runners on base" or "not getting hits with two outs". In other words he will talk about the statistics of the game. When the coaching staff sees trends in these statistics they can do more of what's working and less of what's not. The point is that statistics enable improvement because they give clear proof of the results.
Compare that to car washing. When asked about a decrease in sales, the vast majority of owners will talk about the weather or the economy. That's a dumb answer. It's dumb because everyone already knows the economy is bad or the weather stinks. What is important, is figuring out specifically why sales are down. Is it because you're losing customers? Is it because the average days in-between visits is going up? Is it because you're not attracting as many new customers as you used to? And for each of these questions to what extent have they effected you?
Understanding the statistics of car washing 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. Therefore, we will now look at 15 statistics, or metrics that a car wash should measure in order to create better insight and enable improvement. I cannot emphasize enough how valuable the insights these metrics enable are to a car wash.
Before we start:
- You might have a great POS system, but in my opinion nothing beats a spreadsheet like Microsoft Excel for this stuff.
- Assemble this data once a month.
- The data in and of itself is useless. What we care about are the trends over time.
Also keep in mind that there are only three ways to increase sales at a car wash: (1) get more new customers, (2) get current customers to come back more often and (3) get customers to spend more per visit. All of these metrics will lead to one of these areas.
The Basics:
These first four are what most operators are tracking. They're a great start but certainly don't tell the whole story.
- Cars- How many vehicles went through your tunnel.
- Gross Sales
- Dollar per car- It's important to make notes of when you changed prices.
- Sales Mix- What % bought basic wash, middle package, top, etc.
Customer Insight:
I really think these next three metrics are where you will see the most value. Unfortunately, there are very few operators that are measuring these metrics. The first three here require customer tracking. Many operators have a POS system capable of customer tracking but have stopped entering license plates because they're not using the information, so why go through the hassle of entering it. However, if you put this data into a spreadsheet it will give you great insight. In the future, I think every car wash will have license plate recognition for customer tracking.
5. New customers- How many new customers do you attract each month? Is that 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 will have no idea what is working and what is not or whether this is trending up or down. You may have a promotion out there, but of the customers redeeming it, how many are new and how many are existing customers? At an educational seminar I did at the ICA Care Care World Expo in May I asked the crowd of at least 200, how many knew how many new customers they were adding each month. Only one person knew and I know from experience that that person is one of the best operators in the country with over twenty car washes. My point is that if you want to compete and survive, then you must know these numbers.
6. Frequency- What is the average days in-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 car wash is washing 60,000 cars a year, that the average transaction is $15 and that the average days in-between visits is 112 (16 weeks). If you can get that to 98 (14 weeks) then you just added another $130,000 in sales without any customer acquisition costs. Even if you just reduce it by 7 days, you make an additional $60,000 in sales. However, unless you know what your current frequency is, it is near impossible to improve without spending a lot of money and simply hoping something works.
7. Churn- What percentage of your customers are you losing in 12-months? Again, improving this metric can have profound effects on your sales and if it is declining you can at least address the reasons for the decline and get in front of the problem. Without knowing this statistic though, by the time you notice the decline, much damage will have been done.
More Insight:
8. Customer Satisfaction- Running you business only on gross sales is like driving a car using only the rear view mirror. It tells you what happened in the past, but that is already behind you. A key indicator for future sales is customer satisfaction. If that number is trending up, sales will eventually follow, if it is trending down, sales will eventually go down. Customer satisfaction (which is also related to loyalty) is typically gauged through a survey. The question marketers have found to have the best correlation is, "On a scale of 1-10, how likely are you to recommend this car wash to a friend?" If they answer 9 or 10, they are considered satisfied or loyal. If the answer 0-6 they are considered dissatisfied or disloyal.
This may seem daunting to many operators, but it can be pretty simple. Print business cards with the question we just mentioned. Then have a friendly employee approach 100 customers every other month. Have a box with a slit for the customer to submit the card. Make sure they realize it's anonymous and don't give away anything for filling it out- both of those things will skew results. Then enter the results into a spreadsheet. We want to keep track of two numbers: how many people circled 9 or 10 and how many circled 0-6. Now you will have a powerful metric to see if your marketing or operational efforts are succeeding.
9. Club Signup- If you aren't able to track every customer, then an opt-in club can give you a great sample to gauge activity. How many are signing up for the club each month? Typically, your club is a group of loyal customers, so monitoring their behavior is indicative of your overall customer base.
10. Unique Web Visitors- Unfortunately, our industry is not known for a prevalence of websites. However, if you do have one and use it as a sales tool, you should know how many unique visitors you have each month. This is another good indicator of future sales.
The Next Level:
In reality, these 10 metrics are fairly basic. Once we get good at measuring these things and gauging our efforts, there is another level of sophistication. Almost all major retailers invest big bucks in the following metrics because they understand how valuable they are.
11. Customer Profitability- The statistic that is most common in our industry is cars washed. While this is obviously an important metric it doesn't tell the whole story. After all, what we care about is profit, not quantity of transactions. For example, let's compare two customers: Bob comes in 10 times per year, buys the basic wash for $8 and redeems his loyalty card for his 10th wash free. Fred comes in half as many times (5) but buys the $15 wash. In this scenario, even though Fred comes in half as many times, he is worth twice as much profit as Bob. However, if you're not measuring profitability you would be happier with Bob because that means your washing more cars. This has huge implications.
12. Weather- Ok, we know the weather stinks, but how bad is it. Is it 10% worse than last year or 40%. Understanding that number will give you a better idea of how much of your decline or increase is attributable to weather. Therefore you should be keeping track of weather. If you don't want to do it manually there are resources on the web.
13. Customer Map- A geographic understanding of exactly where your customers are coming from. This vastly improves direct mail campaigns.
14. Campaign Take Rate- What percentage of the people that see your promotion are acting on it?
15. Long Term Campaign ROI- How much new business did that promotion create over 12-24 months?
You will never hear a baseball manager tell a group of reporters that they lost the game, "because the other team scored more points then we did". They will always point to the statistics of that particular game. Just like in baseball, measuring car wash statistics enable deeper appreciation, better understanding and a clear gauge to determine your marketing and business effectiveness.
