How To Get The Price "Right"
Even When Everything Is Always On Sale


When not comparing notes through social media, many consumers are researching deals and specials on comparison shopping sites like Biz Rate and NexTag. More than 80 million Americans now use these sites, which show deals on millions of goods and services from tens of thousands of retailers.

Remember when your parents told you never to speak to strangers? That's still good advice for youngsters. But today, more and more consumers are following a decidedly different path. Millions of them are "talking" to strangers every day online through chat rooms and social media sites – and their conversations often revolve around the prices they're paying for goods and services at businesses like your carwash.

More than half of Americans who use Twitter now recommend purchases in their Tweets. This advice carries weight, too. According to a 2009 survey by Econsultancy, seven out of ten respondents said they trusted recommendations from people they didn't know.

When they aren't comparing notes through social media, many consumers are checking out deals and specials on comparison shopping sites like Biz Rate and NexTag. More than 80 million Americans now use these sites, which show deals on millions of goods and services from tens of thousands of retailers. According to the 2010 Online Shopper Intelligence Survey, 22% of consumers who shop online regard these sites as the most important factor in guiding their purchase decisions.

The ready availability of information on special deals coupled with the nagging financial concerns that most Americans now face, have made consumers more discount conscious. In a survey taken just before the 2010 holiday season by the National Retail Federation, more than half (54.1%) of all consumers said they planned to compensate for the soft economy by shopping for sales more often.

Being a carwash that serves a local market doesn't exempt your business from this Internet-driven price comparison trend. A survey of 1,000 online shoppers by the BIA/Kelsey organization found that 42% of respondents used Internet comparison sites when shopping for local goods and services. Almost six out of ten (58%) of respondents said they used online coupons for local shopping too. Click here to learn how SiteWatch® Website Connect™ can help you run effective online coupon campaigns.

Don't Look Now, But Your "Local Market" Just Grew

The Internet and social media, along with the rapidly expanding reach of m-commerce (mobile commerce) promotions done via smart phones, have made the pricing structure of every retail business an open book. Not only has technology given customers a clear view of your prices, it's kept them informed about what your competitors are charging too.

This change has expanded the competitive market of every retail business, including your carwash. For example, suppose you have a competitor two miles east of your carwash. Customers who live and work two miles west of you and shop in the center next to your carwash, might not be aware of this competitor since they don't drive by his business.

If your competitor promoted a half-off sale with signs outside his carwash, your customers probably wouldn't see them; and since few people read newspapers anymore, they wouldn't be likely to see any ads your competitor ran either. However, now that these customers can see your competitor's discounts on blogs, comparison shopping sites, Facebook pages, smart phone apps and the Tweets they receive, they might decide that it's worth driving the extra two miles to take advantage of his half-off offer.

Technology has in effect redrawn the boundaries of your "local" market. This creates greater competitive pressure on your carwash, since more competitors can now pull business away from you; but it also creates new opportunities for you to expand your market by reaching out to customers beyond your immediate trading area.

The Endless Price War

The challenge facing your carwash or any other retail business is how to reach today's more price savvy (and price sensitive) customer while avoiding excessive discounting and maintaining a healthy profit structure. This challenge has been made even more formidable by the rapid growth of comparison shopping apps on smart phones. Now, customers are not only exposed to a constant stream of discount offers on the Internet, they can access them on their phones too. Google reports that the number of shopping searches it receives from mobile phones has skyrocketed 30,000% in the past three years.


Last year, major retail chains drove the comparison shopping trend to new heights with promotions that sent discounts to consumers' phones while they were shopping.

Last year, major retail chains drove the comparison shopping trend to new heights with promotions that sent discounts to consumers' phones while they were shopping. These promotions often involved "check ins", which locate the consumer at a store, then send a discount that can be used at that site to her cell phone. For example, in August the Gap sent a 25% discount e-coupon to customers' phones when they checked in to the store through Foursquare, the location based social network.

Given the widespread availability of digital discounts and price comparison services, it's not surprising that 63% of the consumers responding to a Harris Interactive survey said that they would not make a purchase unless they received "a deal". In light of this, many retailers have come to realize that they must have some kind of special offer online at all times to remain competitive.

Keep Communicating

Since a growing number of customers now expect to have ongoing access to the latest deals and special offers, it's essential for a retail business to maintain a constant flow of communication with them. Much of this communication occurs online in the form of email blasts, Facebook pages, Tweets and other social media posts – but at the heart of any digital communications strategy is an attractive, user-friendly website. Social media messages typically refer consumers back to a website where they can print coupons and get more information. Plus, many consumers now begin their comparison shopping searches by visiting retailer websites.

According to the Capgemini Cars Online survey, 11% of auto shoppers researched a vehicle online before going to a dealership in 1999; by 2008, this figure had increased to 88%. This growth has been repeated in industry after industry.SiteWatch Website Design can help you create a positive impression on customers by giving you a professional-looking, easy-to-navigate website.

Emphasize Value Over Price

Keeping up with the competition in today's wide open market, will often require that a carwash feature special discount offers. However, it is critical for any retail business, including your carwash, to achieve a balance between special deals that attract customers and discounts that erode profits.

This point was vividly illustrated recently in the quick serve restaurant industry. In an effort to catch up to McDonald's, which was pulling away from it by offering consumers a more diverse mix of affordable dining options, Burger King added double cheeseburgers to its $1 value menu. The $1 price made it impossible for franchisees to sell the cheeseburger while still maintaining profits. So, the National Franchisee Association, which represents more than 80 percent of U.S. Burger King franchisees, filed a lawsuit against the chain.

Meanwhile, the Subway chain took a different approach to competing with McDonald's. Rather than trying to match the industry leader's $1 value meal, Subway introduced its $5 foot long sub meal, and used its marketing muscle to emphasize that customers received more choices, greater nutritional value, and extras like potato chips or cookies for the higher price. The campaign was such a success that soon other quick serve restaurant giants like Arby's, Domino's and Quiznos began offering their own versions of the $5 value meal, making the price point a new benchmark for the industry. The SiteWatch® Xpress Pay Terminal's® user-friendly menu screen makes it easy to bundle different services together to create value packs for your customers.

Rafi Mohammed, a pricing expert and author of the book The Art of Pricing, cautions that any business should look at value, not price, when offering customers special deals. "I think that the word (value) is misused, and when people talk about value, they think about it in terms of giving people the lowest price," Mohammed says. "From a consumer's standpoint, it's about an evaluation between what they get and what the price is."

Conveying a value message about your wash is especially important when you discount, since lower prices can lower the customer's perception of quality. Dr. Antonio Rangel, of the California Institute of Technology, demonstrated this principle in a study that had volunteers evaluate "different" beverages that were in reality the same product distinguished only by its supposed price.

Dr. Rangel gave the volunteers product samples that were, unbeknownst to them, the same beverage. He told the volunteers that the sample beverages sold at different price points, and shared the prices with them. In addition to asking the volunteers their opinions, Dr. Rangel scanned their brains and found that the medial orbit frontal cortex, the area that registers pleasant experiences, was stimulated more by the beverages thought to be higher priced, indicating that they were more valued by the person, even though they were in fact the same product as the lower priced samples.

All Discounts Are Not Created Equal

While Dr. Rangel's research illustrates the perils of excessive discounting, another study, this one published in the Harvard Business School Press, offers a somewhat different perspective. Researchers Eric Anderson and Duncan Simester point out that consumers don't focus on the price of most of the goods or services that a retail business offers, but instead are tuned into a few "sign post" items, such as milk at a supermarket, soda pop at a convenience store.

Based on a retailer's prices for these sign post categories, a consumer will make assumptions about the overall price competitiveness of a business. So, most shoppers would assume that a supermarket that offered low prices on milk and eggs would also be very competitive when it came to canned ravioli and nutmeg.

Many full service carwashes that have converted to flex serve operations by adding the SiteWatch Xpress Pay Terminal® have followed this "sign post strategy" by adding a value-driven express exterior wash to attract price-conscious customers, while still maintaining the price position of their original full service options. Click here to read a case history of one such operator, Fuller's Car Wash in Chicago.

Anderson and Simester also maintain that offering deals on too many of the things you're selling reduces the impact of your marketing efforts. The two cite research they did for a national women's clothing catalog, which found that demand for a dress with a "sale" sign by it was 62% lower when other items in the catalog had "sale" signs by them, too.

In another study, Anderson and Simester found that when "sale" signs were placed by 20% of the items in a Chicago supermarket, demand for those items jumped almost 40%. However, when the number of "sale" signs was increased, so 35% of the items in the store were on sale, demand for the featured products rose only about 30%. The researchers concluded that there is a law of diminishing returns at play with sales, so the more items you discount, the less impact your price promotions will have on consumers.

A Variety Of Options

The most effective strategy for carving out a healthy market share for your carwash in today's deal-driven economy is to focus your customers' attention away from the price of individual washes by encouraging them to enroll in an unlimited monthly pass plan. The SiteWatch Automatic Recharge Module® (ARM™) can help you run and control a variety of monthly plans. Research studies and the experience of carwash operators who use ARM® have demonstrated that, even in economically depressed markets, monthly pass holders are far less price sensitive than other customers.

Realistically, however, not all customers are going to be interested in monthly passes. In these cases, it would seem that focusing a carwash's discount policy on its basic wash can be an effective strategy for reaching price comparison shoppers without creating the confusion that might result from offering too many discounts. Following this strategy, you can attract new customers with a single basic wash discount on your website and in the social media, then encourage them to trade up by printing personalized offers for your better washes on their receipts using SiteWatch Intelligent Receipt Messaging.

The sheer volume of discount specials being offered today has led many retailers to use offbeat specials--and even free give-aways—to stand out from the pack and build their brands. This was the logic behind Denny's successful free grand slam breakfast promotion after last year's Super Bowl, which drew 2 million people to the chain's restaurants and generated 24 million website hits.

It's also why so many retailers offered extravagant incentives, such as free cell phones and iPads to shoppers on Black Friday. Aside from wanting to drive traffic on that particular day, these retailers also used the over-the-top offers to build brand recognition.

The Profiles Feature in the SiteWatch Xpress Pay Terminal allows you to run the kind of attention-grabbing offers that attract customers, but at the same time restrict these offers to limited periods to protect profits. For example, suppose you decide to generate viral buzz for your business by offering a $1 exterior wash for three hours on the first Monday of every month. For fun, you can change the hours of the sale every month and have customers visit your website to see when the sale takes place. The XPT's profile feature will automatically start and stop the sale offer based on the times you designate.

Target followed a similar strategy on Black Friday 2010, when it gave $10 Target gift cards to customers who spent more than $100 between 4 am and 10 am. By offering gift cards instead of a $10 cash discount, Target accomplished two very important objectives: it encouraged repeat business (since the gift cards were only good on future purchases) and it preserved the integrity of its pricing structure, since the gift cards are perceived as being different from the actual products purchased. Learn more about SiteWatch Prepaid and Washbook Control.

Regardless of which kind of promotion fits your needs, it makes sense to take a new look at your pricing and discounting strategy. In a world where special deals are never more than a computer click or smart phone touch away, the carwash that isn't engaging its customers with price incentives runs the risk of being left behind.