The Soapbox
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Tony Jones |
Sign of the Times
The national average price for unleaded gasoline has hovered above $4 per gallon for more than a month and some carwash operators have reported huge drops in volume compared to last year, some as high as 40 percent. As of this morning, the national average for unleaded stood at $4.096, according to AAA and the Oil Price Information Service, and 35 states and the District of Columbia had gas price averages above the $4-per-gallon plateau. The national price average for diesel fuel is a whopping $4.81 per gallon.
Meanwhile, 3M Car Care not long ago released the results of an online survey of 2,500 Americans in which 62 percent indicated they are choosing to wash their own cars at home in order to save money. In addition, 33 percent are doing their own detailing, 17 percent are using fuel additives and 11 percent are making their own repairs to the exterior of their vehicles, according to the survey, which was conducted by Harris Interactive. The results were released before the national gas average hit $4.
While the Elbow Grease Economics survey results are not scientific, they also are not all that surprising considering the economic circumstances. Do-it-yourself (DIY) consumers in the car care aftermarket were an enormous target audience before hints of recession and surges in gas prices, and manufacturers are likely to increase their marketing and simplify their product mix aimed at new DIYers going forward, including women.
Of all the car care activities consumers could choose to do on their own, washing the car is viewed as the easiest by far and probably the most desirable. Consider, too, that a spike in home washing is also coinciding with the release of numerous consumer at-home eco-carwash kits. If you don’t think there is a correlation, consider the sales spike of fuel-economy and hybrid vehicles and the economic and environmental reasoning behind many of those purchases.
Also at play are rising costs for suppliers. The price of raw materials, particularly petroleum-based products, continues to climb, as well as freight and transportation costs. Deflecting or absorbing continually rising costs without passing the hardships onto retailers and consumers is problematic. Conducting business for any company is becoming enormously expensive.
Different industries are handling the situation with different methods. On the heels of several airlines beginning to charge $25 for passengers to check a second piece of luggage, others, led by American Airlines, have announced they will charge $15 to check the first bag — each way. That slap is in stark contrast to the Let’s Refuel America promotion from Chrysler which offers to lock in the price of unleaded or diesel fuel at $2.99 per gallon for three years for qualifying customers who lease or purchase an eligible Chrysler, Dodge or Jeep vehicle between May 7 and July 31.
Who would you rather spend your money with? The psychology and perception of your promotions and business practices during difficult times is critical. It is more expensive to gain a new customer than it is to maintain repeat business, and if existing customers have a hankering to wash their cars at home, then the tall order is to convince them and compel them to do otherwise.
Full-service carwash operations certainly have the most difficult task. Do you discount prices, reduce your labor force and promote more express washes, or can you implement a long-term loyalty program that bundles a package of all of your services to provide enough rewards and incentives to keep customers coming in, even if the frequency of their visits declines slightly?
Loyalty, fleet and charity programs perhaps have never been more valuable to your carwash operations. “Contractual” customers are investors in your business and are obligated to your operations as long as you continue to meet their needs. Communicating the right messages to these customers and remaining part of their budgets and purchase decisions is paramount.
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