It’s another New Year! Lift your glass! “Here’s to washing more cars that return more frequently, refer more friends, spend more during each visit at a higher profit margin than last year!” And now that this is out of the way, the party is over.
Those are just a few poorly defined hopes for 2024. Hope won’t move the needle on the growth of your business. Inflationary pressures may lead you to focus on efficiency to hold price increases to a minimum. Competitive pressures might compel you to include goals to reduce membership churn, grow social media engagement, or improve customer ratings. Labor challenges might inspire goals related to controlling turnover within your team.
Understanding the difference between defining strategic goals, monitoring progress by identifying key performance indicators (KPIs), and establishing targets to measure success is fundamental to every business. Ask any car wash operator how they’re doing — and provided you don’t compete in the same market — they will likely share a series of performance indicators (PIs) nearest and dearest to their heart.
Is there a magical set of numbers that lead to success? I have always been partial to net revenue per car. But with so many operators prioritizing different PIs, which ones are the most critical to know if your business is going in the right direction?
The chicken or the egg?
I know successful operators who set targets first and work everything around hitting those targets. I also know plenty that set their KPIs first and fill in targets they want to reach. Neither approach is wrong. But as a self-taught member of this clan, I prefer a third approach — establishing strategic goals first.
These are the overarching objectives for your business. These goals are specific to the strengths, weaknesses, opportunities, and threats facing your organization. Strategic goals often relate to financial performance tracking, but that’s just the beginning.
Goals to shift your organization’s culture may produce more significant returns in a particular year. Goals to promote accountability within your team can impact everything from customer satisfaction to wash quality.
One size doesn’t fit all. Set strategic goals. Identify KPIs that can measure success. Set targets for those KPIs. You can search online all day long for the perfect set of KPIs, and you’ll come up empty-handed. It makes sense. No two washes will have the same goals at the same time, meaning they won’t ever be focusing on precisely the same things.
You Can’t Focus on Everything
The average person can remember 5 to 9 numbers, which just so happens to be why phone numbers are 7 digits, not counting area code. It may be a coincidence, but I’ve found it best to have myself and each team member focus on no more than 9 KPIs, ideally only 7. If you want to track more, add more people to split out responsibilities; just make sure one of them is measuring the value of the additional data to make sure it exceeds the additional labor cost to track it.
Monitor 5 to 9 KPIs for each person that supports your strategic goals, and you’ll end 2024 knowing what you’ve accomplished. Attempt to monitor everything, and you’ll be toasting 2025 wondering how time flew by so quickly with so little done.
PI Monitoring is a Must
We all know this drill. You go to a routine physical, and the doctor scans down the sheet. Each value in the left column is “in the normal range.” Each value in the right-hand column is “out of range.” This process not only taught me the importance of LDL, HDL, and triglycerides — but also gave me insight into monitoring large amounts of information available from modern car wash POS systems and smart tunnel controllers.
Carefully designed reports can call out spikes that are “out of range” and warrant attention. These PIs are monitored continuously; several may be included on the short list of 5 to 9 KPIs for a team member. Only if they measure progress toward achieving the goals you’ve set do they become KPIs.
Everyone hopes to win the lottery. Every business hopes to make more money. You will have KPIs with financial performance targets, but making more money results from pursuing your goals, it’s not the goal itself. Here is where the fun starts. Set goals that will create a sustainable competitive advantage. Superior service. Superior customer experience. Improved sales process. Increased customer retention. More efficient operation. A more effective team.
Analyze and prioritize the various actions you can take to move toward each of your goals. Improving your sales process may involve everything from signage to training to your POS system. Greater efficiency may involve equipment but also team organization, restructuring job responsibilities, and more. A superior customer experience can be in the tunnel, on-site, online, or even how customers can manage their unlimited plan. Compare investments of time and money to prioritize action items.
If you can’t measure it, it’s not a KPI. If, for example, you aim to increase customer satisfaction, you may first develop an action plan that includes anything from landscaping and staff training to implementing a free towel program.
Next, you need to have a KPI metric for measuring how satisfied your customers are. You could survey thembefore and after and compare the results. Another possibility is to measure wash frequency provided you use a reliable tool such as license plate tracking. Whatever you do, make sure you have a measurable KPI in place to track progress on your goals.
Targets must be attainable
KPIs are about holding your team accountable for hitting targets that support goals to give your wash a strategic competitive advantage. Targets that are attainable with sustained performance and commitment from your team will foster a culture of trust and shared purpose.
Providing stretch targets, with bonuses that are achievable only with coordinated effort above and beyond expectations, can foster a culture of excellence. Setting targets above what is attainable and achievable will result in frustration and resentment and sabotage your success. Beware of unintended consequences and set targets carefully and with purpose.
Plan, Plan, Plan
Failing to plan is planning to fail. I recall having this conversation once with the owner of a local restaurant. He commented that they didn’t have time for all this “5 to 9 KPI stuff.” If they were making more money, things were good. The restaurant closed years ago. I believe I’m safe to assume he has a mundane position working somewhere in someone else’s company now from 9 to 5.
Good luck and good washing.
Joining the company in 2000, Anthony Analetto serves as the president of Sonny’s CarWash Equipment Division. In this role, Anthony leads the innovation of new products to drive client success and oversees all operations, engineering, and supply chain management. Washing cars for more than 30 years, Anthony was the director of operations for a 74-location national car wash chain prior to joining the company.