I'm a washaholicthat is, I love being in the carwash business. Every year, I and my fellow washaholics get together at the annual meeting of the International Car Wash Association (ICA) to discuss our trade. Those unfamiliar with the industry are sometimes astounded to learn its actually big enough to support an annual conference, but lets look at the facts: There are more than 90,000 car washes in the United States, with annual receipts of more than $32 billion. Car-washing is big business and getting bigger all the time.
This years convention in San Antonio was spectacular, with more than 120,000 square feet of exhibits and 9,000 participants. I even spoiled myself. Rather than stand in my booth to extol the latest money-making ideas to attendees, I roamed the floor and went to as many educational events as possible. I wasnt disappointed. What an eye-opener it was to listen to the best professionals in the business as they addressed ideas, challenges and solutions for our industry. From all the fantastic presentations, I came away with one idea so incredible I couldnt wait to get home, pass the news to my partner, and implement a strategy I know will separate us from competitors.
The Experience Economy
James H. Gilmore, co-author of The Experience Economy with B. Joseph Pine II, was the conventions keynote speaker. He was a powerhouse of ideas! His book is based on the idea that Work is theatre, and every business is a stage, claiming that in todays economy, simply offering great service is not enough. Companies must design memorable events for which they charge admission, the authors say. In their estimation, successful businesses use goods as props and services as the stage, engaging customers in experiences that are unique and personal.
From Gilmore and Pines standpoint, every product follows a particular cycle: It starts as a commodity, then becomes a good, then a service and finally an experience. Gilmore used the coffee industry as an example. As a commodity, a cup of coffee is only worth about 6 to 10 cents. As it becomes a good, its value increases to 15 to 20 cents. When you add the service aspect, its value jumps to 80 cents, which isnt bad. But when you toss in a lasting impression with a great experience, the price skyrockets to $4.50! If you think Gilmore is whacky, just take a look at Starbucks.
Now put on your car-washing or self-storage hat and think what you can do to increase the value of your product and set yourself apart from competition. Beefing up service helps, but everyone knows how to do that. So whats the next level? Creating a complete, memorable customer experience.
A Car-Wash Experience
From a car-wash perspective, I see a large number of in-bay automatics and express exterior tunnels being built. The prices they charge are similar, regardless of the amount of investment behind them. A wash at a $350,000 in-bay costs roughly the same as one at a $1 million tunnel wash. Why? Theyre both just exterior washes as far as motorists are concerned. Overall, theres very little to differentiate them.
Now consider the pricing of hair cuts. If you go to a barber shop, you might pay $8. But if you go to a boutique style salon, the price goes up to $35. Whats the difference? Its the experience!
As a business owner, I would rather gross $20 for a car wash by creating a memorable experience for customers than competing with all the other guys who operate in the $8 range. How would I do this? First, I would establish a theme for my business and carry it throughout the entire site: exterior design, uniforms, signage, interior displays, advertising, etc. Take a look at Disney, the masters of theme development and experience. This is what customers want.
During his presentation, Gilmore quoted J.D. Power and Associates, a global marketing information firm that conducts independent and unbiased surveys of customer satisfaction, product quality and buyer behavior: When we measure satisfaction, what we are really measuring is the difference between what the customer expects and what he perceives he gets. Gilmore takes the idea a step further, saying, Designing for the average is the root cause of customer sacrifice.
The bottom line is if we are to be successful, stave off competition and leave a measurable, long-lasting, favorable impression that brings us economic rewards, it is the experience that counts. We are part of the experience economy. Thanks to the ICA for introducing me into the most exciting way to look at the car-wash business. I cant wait to dream up fun ways to outwit my competitors!
Fred Grauer is the vice president, distributor network, for MarkVII Equipment LLC, a car-wash equipment manufacturer in Arvada, Colo. He has made a lifelong career of designing, selling, building and operating car washes. He can be reached at [email protected].