Some folks define brand as a promise of trust. Consider a company slogan that promises satisfaction guaranteed or your money back. Such things become part of a company’s reputation and a recognizable element of its brand.
For example, over the years, I’ve had the opportunity of working with exceptional car wash operators. Some of them have adopted the family name for the business.
Doing so has provided them with the opportunity to establish a brand that has become synonymous with their family’s name. In fact, these operators believe their reputation is their single most valuable asset.
Consider Wawa, a company that went from small town dairy to convenience store phenomenon. Wawa is open 24 hours a day, 365 days a year. It offers everything convenience you could expect such as snacks, lottery tickets, drinks, tobacco, and gas. However, made-to-order, fresh food is their specialty.
Wawa is also famous for customer service, scrupulously clean bathrooms, decent gas prices, free air, no-charge ATMs, and EV charging stations.
Wawa has a cult-like following of customers and new stores are welcomed just about everywhere. Forbes ranked them number 12 in their Halo 100 list of brands that consumers love.
Wawa invaded Florida some years ago. They chased also-rans out of the market and forced others to step up their game. In fact, hopefuls often contact the company to ask how soon a Wawa is coming to their area.
Is something like this possible with car wash? For example, car wash is an occupation for the family businesses I mentioned and the focus is on wealth protection. Many have branched out to four or five sites or are in process of doing so.
As for the top 50 largest car wash chains, it would be hard to show that any of them has achieved name recognition nationwide. Clearly, there is still plenty of opportunity to create new car wash brands at all levels that are strong and enduring.
Brand image is the driving force in consumers paying more for a national brand.
One attribute of brand is the notion of commanding a higher price than a store brand or private label. For example, the findings of a working paper published by the Marketing Science Institute suggest brand image is the driving force in consumers paying more for a national brand whereas perceived quality is the driving factor when it comes to purchasing a store brand.
To underscore this, researchers at McKinsey & Company found that 40 percent of consumers surveyed tried a new brand during the pandemic but only 20 percent bought a store brand/private label product because of affordability.
So, brand matters, and this means it has value. One way to judge brand value is to compare prices for comparable products and services. For example, if the average sales revenue for a large chain is $17 and for a local wash is only $14, brand value would be $3 per car wash.
Another method to judge brand value is to add the lifetime value of existing customers and the rate of new customers and their expected lifetime value.
With the appraisal approach, brand value is calculated as the replacement cost at the same level as the current business. Here, brand value could be calculated as the difference between financial projections at the time of appraisal and actual future financial performance.
For example, if projected net operating income was $250,000 in year three and actual is $500,000, brand value can be calculated by applying an earnings multiple against $250,000. If the multiple is 10, brand value is $2.5 million or one half of total market value.
Bob Roman is a car wash consultant. You can reach Bob via e-mail at bob@carwashplan.com or by visiting www.carwashplan.com.