DataBytes 13 - March 2021

March 17, 2021

It's been a wild year for the car wash industry, and once again, Jason Baumgartner and Chris Moriarity from Suds Creative take a look at what's happening with car wash volumes across the country. Specifically, they discuss how the recent winter storm in the southwest impacted washes and how they rebounded.

Jason and Chris also discuss the importance of collecting customer contact information for building relationships and loyalty.


Jason Baumgartner, Suds Creative President: Hello, welcome to DataBytes, March, 2021. I am Jason Baumgartner, founder and president of Suds Creative, and with me as always, Chris Moriarity, our VP of consumer strategy. Chris, how are you today?

Chris Moriarity, Suds VP of Consumer Strategy: Top of the morning to you Jason, and a happy St. Patrick’s day. I’m going to do the whole podcast in an… No, I’m not going to do it in an accent but…

Jason: Yeah, Chris.

Chris: I do love St. Patrick’s Day. Everybody got real nervous there, I know it.

Jason: Well, welcome Chris. It’s good to be back with you here on DataBytes. Let’s jump into it. Well, first as always, we’re going to take a look at the national stats, and then we’ll drop in and talk about some of those trends. As usual, we’ll do a state discussion, kind of pull out some of the top performers, some of the ones that are struggling, and we’ll take it from there. And then we’ve got a really good section that talks about collecting contact information versus optimizing your site for throughput on busy days. And I think it’ll be very insightful. And then, as always, feel free to contact us, we’ll leave you our information at the end. So let’s jump into it. Well, we just came out of a crazy year. 2021 is looking a lot better. We’re actually up 2.3% year over year, and you’ll notice we’ve had some pretty crazy weather events that have happened and just in the first 10 weeks. You’ll notice that peak in week eight, and this is really interesting, that week eight peak is actually 16% higher than any volume day that we recorded in all of 2020. So that peak is very interesting, it’s not just a blip that you see, it’s something that will stay there as we go through the all 52 weeks. But 16% higher in week eight. And ironically, week eight also was a strong week in 2020, but 16% less than it was in 2021. Leading into that, obviously we have the events that took place with that weather storm, that snow storm and ice storm that hit down in the Southwest. But Chris, what jumps out at you when you look at the trends and the national looking at 2021 compared to 2020?

Chris: Well, and it’s interesting when you think about all the facets of the economy and how that manifests in our little corner of the world. And what we’re seeing right now are just extreme reactions, extreme weather, extreme reactions to weather. And as people, we’re looking at the numbers all last year, we saw everything move like a flock of birds and ebb together or drop together and moved. I think we’re going to see a little bit more chaos. And part of it is there are certain parts of the country that just decided that the pandemic is over. And they’re having live sporting events again, everyone’s opening up movie theaters, and it’s kind of the zero to 60. And if we know anything about human beings is that we don’t make big adjustments quickly very well. So even though we’re going to see some of the highest highs that we’ve probably seen in ever, we also want to make sure that we’re prepping, we’re doing our due diligence to say, “Hey, is this an artificial peak? Is it going to go even higher?” And we’re really going to have to look at how this whole thing moves to keep our businesses growing and growing safely.

Jason: That’s a good point. If you look at the COVID effect, coming off of the holidays, the end of January, the first part of February, COVID cases were skyrocketing coming off of the holidays. You think that has anything to do with some of the behavior here, or do you think it’s mostly weather driven?

Chris: I think coming in, if we look at it, it’s so consistent that I think that these weather systems they move in very, very predictably. So I think that looking backwards, it’s fairly explainable. I think that looking forward is where we’re going to hold on tight.

Jason: Great, let’s, this is another view of, just an isolated view of 2021. I do think it’s interesting when we had all the weather events in the Southwest, it really killed states like Texas, Oklahoma, saw these big dips, but nationally we were just spot on from where we were in 2020. So in aggregate, it really wasn’t much of an effect, but it definitely hurt those two states, but they also rebounded really well as we’ll see in a moment.

Chris: Absolutely, and as we get into that specific data, you got to think of who’s prepared for what? This is a whole conversation about preparedness in many ways to where I was in still in Washington State when our big snow storm hit, and they’ve got like one plow that we share with Seattle all the way down to Portland, and it’s just one guy. So it just takes a while, and then everyone comes back out. So when we get to the state level here, I mean, it’s very interesting stuff.

Jason: Awesome, let’s jump into the states. So when you looked at it from a macro view, almost every state has performed really well compared to 2020. These are some that really jumped out. You look at states like Illinois, right here in Ohio. And again, 2020 is in blue, 2021 is in orange. You’ll notice those peaks. So they also had some pretty massive weather events that rolled through the Midwest. But also some states like in the Southeast, we actually, I ran out of time, but put together a cohort of states just to group together the Southeast, and the Southeast as a whole, from North Carolina on down and over through, Mississippi, Alabama, Louisiana have performed really well in the first quarter of 2020. But what jumps out at you here when you look at these state by state?

Chris: Well, and it’s interesting, cause you’re always, I always tell people that, experience manifests as a gut feeling. Like in your gut, something’s telling you as to why something’s happening. And if you’re right, then that feeling will then manifest in the numbers. And what I mean by this is, as we’ve been having so many conversations with businesses big and small all around the country, we’re seeing a lot of sleeping giants come off the bench. We’re seeing a lot of people who were playing it a little bit cautious, they wanted to be safe, they wanted to make sure that they were growing. Now they’re willing to take on a little bit more risk. We’re seeing a lot of people dig into their wallets, and they’re looking to make a lot of noise. So as that collective spending has this ripple effect where all of a sudden, so people are noticing, and I’m getting the calls, and I’m sure you are too, where, “Hey, the guy across the way is now marketing” or “They’re, he’s changing his prices. He, he’s doing something,” which gives them the impetus “Well, shoot, maybe we need to be ready.” And then that person, it all just starts to rise. So that rising tide does indeed float all boats, which is why you see these entire states having flow together. And it’s interesting, but it is also predictable. So as we see that happening, we get some view and we get some perspective onto what those trends are. We can stay ahead of it a little bit, which is the whole idea.

Jason: Sure, I also think it’s interesting, when we went through COVID, the amount of new investor activity that we saw had, it kind of dried up. So the people that didn’t already have shovels in the ground or have funding for their projects, we started to see that dry up, and now we’re seeing it just explode. So some of that may be pent up demand, people were kind of wait and see approach to spending that type of a capital investment, but they’re sure coming out of the woodwork now. There’s a lot of new starts and first time new builds that we’re seeing and which is pretty exciting.

Chris: Oh, and you just felt terrible for folks where this is a long project. I mean, these sites just, they don’t fall out of the sky. So when you know that you’ve got your money tied up and you know that you’re not even going to open, best case scenario, for how many months, and now that’s a question mark. You’re going to be naturally nervous. And now again, people are waking up, and it’s going to be a very exciting year.

Jason: You know, staying on this slide, Chris, you talked about, earlier when we were prepping, like a rubber band approach. This slide literally is the rubber band. Will you explain that for the audience?

Chris: Yeah, so when you think about just economics in general, and there’s lots of different schools of thought, but there’s something called “The Efficiency Within the Markets,” but basically the market has a homeostasis. It has a natural level where wants to be, right. So when something artificially pulls it down, like not just weather, but extreme weather, it wants to return to where it belongs, to it’s homeostasis. So when that storm goes by and it’s released, you get an overcorrection to the top, and then it comes back down where it’s supposed to be. So this is very interesting because we saw it in so many states where it got pulled down, that rubber band got pulled down so far that when it released, it went way, way up. But because of the predictable nature of this, there are stances and there are things that could have been done if the sites were looking for it. We’re going to talk a lot about that because it really stands with your ability to communicate to your members, patrons, customers and so on. And that’s where you can really take advantage of some of these extreme swings.

Jason: It is pretty crazy though, to just look at the drop-off and then the demand that just shoots right back up. In Oklahoma, I think is just a prime example of that rubber band effect as you call it to where for two weeks, I mean, it fell off the map and the one week just, I mean below 250 cars in a week across an entire state and to see it shoot up definitely these, those Southwest states and really into the Southeast as well. And even states like Missouri, where you see these big peaks definitely contributed to that week eight peak of 16% over 2020.

Chris: Absolutely.

Jason: So let’s take a look at some of the sites that are, some of these states, excuse me, they’re struggling a little bit. And this actually goes back to 2020, where Colorado is one of those states that just never made it, quite made it back and was always about eight to 10% behind what it was doing in 2019. And still, some of this is weather related but how much of this, you look at Colorado, you look at Washington, California, how much of it’s weather related, how much of it may be is still a lingering effect from some of these centers not, having more remote work, not having as much commuter, potentially some political type of effect. California and Washington were two of the states that were hit the earliest and sometimes the hardest. How much of it’s COVID, how much of its weather?

Chris: Well, and I think Colorado is really going to be the test of that, given the fact that they’re getting hammered again. So is it like the other states where, indeed, we’re getting this tension pulling down that we might be able to take advantage of on the upswing, or has there been a seismic shift in the way that their way that their population is dealing with the outcomes of the pandemic? You know, one of the things that we look at all the time is, where can we go and find people who need what we do? Meaning for our clients, for our sites. And for years, all the data kind of stacked up in two different columns, where you had folks who would wash to and from work, your commuter traffic, and then you had the other group that would, usually tend to wash when they’re running other errands. And of course, one of the things that we do is we geo-fence, and we look and we’re hunting and we’re pecking for where different people are coming from. And just earlier this week, if you looked at the top 10 performing geo-fence campaigns, eight out of the top 10 came from geo-fencing retail as opposed to competitors or traditional commuter routes. So we’re seeing now that these large population centers where that was going to be a huge avenue, well, these people didn’t sell their cars. They’re just washing their cars at a different time. So now we need to recognize that pattern shift, and we need to adjust accordingly. They’re all still out there.

Jason: Speaking of that report that we just went over, that, the other thing that jumped out to me was C-stores, the 7-, the 7-Eleven, the ampm’s, we started to see those creep up in same-day visits as well. Pretty interesting. All right, go into the next segment Chris, we’re going to talk a little bit about contact information and the difference between operators, that we see this all the time at Suds, operators will a lot of times tell us that, “We don’t capture contact information because we’re worried about what that will do to our throughput.” You know, too many lines, we got busy days, especially successful operators. And what that does is, it limits your ability to reach out to these people, to get them back on your site. It limits your ability to reach out to them if they were to churn out, but to your point earlier, it also limits the ability to communicate right before you know that there’s going to be some peaks in demand. And I want you to tell, jump into this slide real quick and tell us about this study that we did.

Chris: Yeah, so again, we’ve always advocated for contact information collection because a lot of it was self-serving. You know, we market, we need to meet people, we need to reach out to them, keep them engaged. I don’t think he was really until COVID forced our hand in a lot of different ways to where that contact information was no longer a luxury or an extension out of growth, it was an extension of survival. Meaning we had to reach out to these members to tell them what was happening. And we were going to pause it, it was going to be okay, you didn’t have to cancel. And the people that had that contact information to be able to do that were well-served by it. But now that we’ve gone kind of past the crisis stage of this, we wanted to take a step back and say, we understand the push and pull on the realities of getting cars through that tunnel. We don’t want to take away from that. But how important is this issue? So we took 30,000 members, and of the 30,000 members it wasn’t quite 50/50, it was 17,000 of that sample size did not have email and 13,000 did. And we said, okay, that’s pretty close. So what were the differences? Well, the first thing that jumped out was members that had an email address had an average tenure, meaning how long they had their memberships, how many months? Their tenure was an average of 2.81 months longer than those without.

Jason: It’s incredible.

So when we talk about just members in general, I don’t really care how many members somebody has. I care about lifetime value, which is a by-product of how long these members are staying with these groups. And so 2.81, or just 2.2 months, one additional month, whatever it is across that many members is an absolutely monster statistic to pay attention to. Beyond that–

Jason: Let me ask–

Chris: Okay.

Jason: I want to stop you there and ask a question because how much of this is, Because that’s a huge number, right? I mean, on average, we see tenure rates somewhere between eight and 10 months on, I should say. And our goal is we’d like to try to increase tenure by an additional two months. How much of this is, the customer has anything to do with the email address, how much of it has to do with operator that values being able to communicate with their customer also treats their customer in this way, or the operator that is putting an emphasis on collecting customer information also maybe puts an emphasis on the customer experience overall?

Chris: Well, and you hit the nail on the head and we do a lot of what we call sales trainings to help folks kind of get enrollment moving, but we kick off the whole thing with a pretty basic statement that this is a relationship game. And at no point in time do we ever want to be having a conversation or otherwise that anyone would ever want to avoid. It’s not about pestering people or pressuring people into situations. It’s about fundamentally what does it even mean to have a membership? Because what it can’t mean is that this is just a perpetual coupon that gives them this discount for as long as they would like it. A membership has to have meaning, and for it to have meaning, it needs to be reciprocal, right? There needs to be consideration, there needs to be a true level of relationship that’s going on. And half the time, once these members are members , they’re still strangers in so many ways. They’re not part of anything. And those who have really taken on this concept of a membership and made it a little bit more tribal. What’s it mean to be a member here versus a member there? Is it because we’re a dollar cheaper? Because if that’s all you got, then all I got to do is be 50 cents cheaper than you and I’m going to win, but that’s not what drives loyalty. So there’s so many things that we pull out of this information that are, that are truly meaningful that just get lost. If we think about just contact information in general, email is going to be the easiest way just to stay front of mind. I mean, for a lot of the email content that goes out, I, this is going to sound, hopefully the writers aren’t listening, they’ll get mad. I don’t even care if people read it. All I want them to do is see me in their inbox and know that I’m part of their day. Get used to them, getting them used to being communicated with, from us. But beyond that, think of something as simple as an address, granted, now somebody has to fill out their address but what can we learn from an address. Where often one of the things we’d like to do is just take all the addresses of all the members and just plot them on a map. And in 10 seconds, looking at that map, you’ll learn more than 10 hours of staring at a spreadsheet. You’ll see exactly where people come, you’ll see what the trends are. You’ll see what those natural barriers are. And one of the things that I love is that there’s always somebody who’s some ridiculous distance away. And I say ridiculous meaning, far and away above the normal, 35 minutes, 45 minutes away. And usually people try to explain it away. They’ll go, “Oh, well, they probably commute over here,” and whatever it’s like, well, okay. So you’re telling me in that 45-minute commute they had no other choices? Of course they did, and they chose you. There’s a story there, there’s a story about loyalty. So back that up, where do we tell stories? We tell stories on social media. What are the stories that everyone seems to want to talk about? Themselves. “Hey, look what we’re doing, we’re making things cheaper, here’s a discount.” Why not take that story of Joe Smith, who’s been a member for 12 months, lives 45 minutes away and is still a member here. Put that person front and center because people can I tell ya, businesses can steal your pricing, it can approximate and kind of pull in your colors, they can buy the same equipment but they can’t steal your stories. So put them out there forward, that’s what drives value. And if you want people to be interested, you’ve got to be interesting. You’ve got to pull those, everybody has them. They just don’t know how to ask for these things. But if you look at this, even beyond just the tenure, the second bullet point here, that members with emails are 43% more likely to be on the top package. We know that through a sequence of communication events, we know it takes an X amount of interactions before somebody will enroll, but we can guide and nudge them to a higher level when we have this contact information. And this was validated again earlier today with a tactic that a new owner had just taken on his own, but where people start is where people stay, meaning that the first time they come to your site where whichever package they pick that’s more than likely what they’re going to continue to pick into perpetuity. So if we can use these tools to guide that to a higher point out of the gates where we’re sitting pretty for the long game, which is just something that you’ve been preaching for ages.

Jason: Well, it’s nice now to have some data behind it to reinforce that. But yeah, the idea is that most operators look at the transaction as just that, it’s a transaction. And what you’re talking about, what we talk about at Suds is about building a relationship. So instead of looking at it as spatial, like this is the transaction I’m going to communicate with them while they’re onsite. We’re looking at it more linear and have a longer-term approach and things that you’re mentioning, the development of brand stories and authenticity. When we talk about in the next episode of DataBytes, we’ll talk a little bit about some of the changes that have happened to consumer behavior as a result of a pandemic. And, you know, it’s really interesting that a lot of the opportunities that we get initially have to do with short-term growth around, you know, a promotion or membership or revenue, but the really successful operators are the ones that understand that building a business is building a relationship with your customers, building in those brand stories and being authentic, and that’s something that does take a little more time. But anyway, really great stuff, Chris. Anything else you want to?

Chris: Yeah, and I think the last one because folks are going to read it here, where it says emails are nine times more likely to lead to enrollment than traffic alone. It’s kind of a confusing statement at first glance cause there’s some layers to this. I mentioned one of the layers earlier that when you collect an email address from wherever you get it from, a free wash campaign or social media, whatever it is now, they’re more likely to be in a sequence that’s going to encourage them to come back, versus somebody who might’ve just driven by, driven in and driven away. Naturally, the person that we can reach back out to is going to have a higher likelihood to enroll than the person that we can no longer contact ever again. That makes sense. But I want to kind of remind people of an additional layer that often gets overlooked. Those who have collected these emails, that is a currency unto itself that is so wildly under leveraged. When you think of a, there was a term I was introduced to a few years ago, it’s called a node. And it’s kind of a social media term where Jason has a lot of people who were interested in his opinion. So he, as a node is somebody I would want to basically cling onto cause he’s going to be able to extend a message out in a lot of different directions, right? So think about if you’ve got a thousand emails and that’s a thousand people, what’s the likelihood that each one of them might introduce three of their friends to your business?

Jason: Mm-hmm.

Chris: That as a reward for their loyalty, say, “Hey, we would be nowhere without our loyal members. We consider you our friends, we want to meet your friends. Make three people’s day, send three people a free wash on us, we can’t wait to meet them.” Well, now I’ve taken that list that you’ve paid for through whatever means it was of a thousand people and I can now extend that exponentially for a little more than the variable cost associated with each one of those free washes. When you follow the math all the way along, there should be something that’s systematically done. And it’s something where you can now use this flock, use this tribe to extend way beyond what you could do normally just with your checkbook alone. And that’s where again, I realize that just giving them a pad of paper and scribbling down their information in line, it’s probably not going to happen, but as we’re getting more and more adept using technology, everything from their phones to QR codes, to apps, to all this kind of stuff, to collect their information it doesn’t matter where you start, it matters that you start today . I can get this info somehow.

Jason: And I think it’s good to point out too, that we’re saying emails in this study but really we collect emails and phone numbers and first name, last name typically. So it’s really contact information. And so, create some method of communicating with these people is super important. Again, we use emails in this study but really it’s contact information. So phone numbers, to give you some clarity on the way we look at the world, emails are great for frequent communication. And like Chris said, it’s not that we even care that people read the email or open the email. But if you see Epic Shine and in your inbox it’s a reminder that you have a membership and then you’re staying top of mind. And or if you see Epic Shine, it’s a reminder that, Oh, you know what, actually, I need to wash my car today. It’s a way to get top of mind and stay top of mind with these people whereas, phone numbers, text messages are something that we communicate to people when we want them to take action right away. And so it’s very valuable to collect both and have a system like Sudsy, our marketing automation platform that allows you to communicate both from a text perspective and also an email perspective. Great stuff, Chris, any parting thoughts?

Chris: Oh, yeah. I would say that–

Jason: It’s St Patrick’s Day.

Chris: Oh, for sure. And that was a terrible accent. But what I think the last thing that I would leave people with is think forward, right? Meaning that right now, I was in Colorado and I got this seismic weather event that’s happening right now, you know what I’m doing? I’m staging a list of everybody who’s discontinued a membership within the last three months because the minute that storm lifts I’m going to pound that list saying, “Hey, we miss you, I know you’re thinking about getting all that salt and grime off your car today. We’d love to welcome you back for XYZ price, click here and we’ll get you taken care of.” You can use this knowledge proactively but you don’t have those lists, you’re on the bench. and the motion–

Jason: It’s a fantastic idea. It’s a fantastic idea. And especially during the spring where there’s so much weather volatility.

Chris: Mm-hmm.

Jason: Speaking to emails, feel free to send us your questions, Jason@sudscreative, Be sure to include DataBytes in the subject line so we can pick that up. We look forward to talking to you next time. Thanks for hanging out with us. Happy St. Patrick’s Day.


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