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It’s a new world in the car wash space. And I’m not talking about the introduction of subscription membership revenue, and its boon to industry growth.
The new, new world is no longer surprised by that trend, and is instead laser focused on developing best in class sales motions.
Operators are investing in their sales teams – and it shows in the conversion rates, which have doubled over the past three years.
The entire distribution of the industry has shifted. Back in 2022, most locations were in the sub 5% range (see how left-skewed the light blue bars are?). Now, it’s an even spread, and the average performer is between 7 and 10%.
Still though, nearly a third of operators are below 5%, stuck in the ways and outcomes of 2022. Operators in the 5-10% range are performing well, but are still behind their best in class peers who sit comfortably in the double digits.
So, how do we improve?
Pricing is the lowest hanging lever to pull. The chart below shows, by conversion rate, the ratio of new member price to renewal member price (100% = no locations are running promotions, 50% would mean on average they are running half off prices).
The chart shows that successful sales organizations with 8%+ conversion rates are granting new members promotional pricing of least at 25%, while operators below 5% conversion rate offer starting prices similar to returning members. This proves that pricing is a great lever - it’s also a sugar rush! The best operators are committed to a sustainable sales culture, built off of clear value propositions and top notch experiences, not a perpetual promotion.
What about the mature operators? How high can you go?
This is where things start to get interesting, and is the Car Wash industry’s bread and butter! Getting from 5% to 10% and beyond is about developing your people.
We gather sales pitch audio data from our Salespath product and grade the transcripts off a rubric. After amassing a data set of well over 1 million pitches, we made a heat map of the results across each category of the rubric. We were curious: does scoring higher on the rubric actually imply a better conversion rate?
The answer is yes! Higher scores on the rubric (further to the right) = better conversion rates (darker shades of blue)! While nearly every category demonstrated correlation between scores and conversion rate improvement, the most powerful categories were:
- How reps handled objections
- Whether they mentioned the recurring nature of the membership
- How well/if they communicated the promotional offer
- Articulated the cancellation policy and absence of any contract
- Establishing clear next steps and concluding the sale
You’ll notice one exception to the rule. We grade conversations based on whether the rep encouraged prospects to simply accept the promotion and then immediately cancel – if they did this, they received a zero. Those resulted in higher conversion too.
This presents another lens into an effective sales organization – you don’t just want higher sales, you want healthy sales. A high conversion rate attached to high churn is not going to bring your operation sustainable value down the road.
More on that…in a following blog post :)
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