Time Is Money… Even In A Soft Economy

Time Is Money… At least at McDonald's where a 7-second improvement in transaction speed can bump up sales 15%. Read what this means for carwashes.

80% of consumers reported that excessive wait times have caused them either to stop patronizing a business or become less eager to visit it again.

Think consumers are too concerned about saving money today to worry much about saving time? Gad Allon of Northwestern University’s prestigious Kellogg School of Management would suggest that you think again.

Allon led a research team that studied waiting time at quick serve restaurant drive-thru lanes in Cook County (Chicago), Illinois. Their findings, which have direct implications for carwash operators, provide stark proof that even though Americans are interested in stretching their budgets during this tough economy, they aren’t willing to sacrifice their time with long waits in line.

According to Allon’s research, which was published in 2010, consumers will balance the cost (in time) of waiting in line against the prices charged by a business to determine the true value of their purchase. Based on their study, Allon and his associates concluded Consumers are willing to pay more for their purchases at a business where lines move faster.

Another indication that consumers are as focused on saving time as money can be found in a 2010 white paper from Maritz Research. In this study, only 2 out of ten consumers said that long lines had no impact on their relationship with a business. The other 80% of consumers reported that excessive wait times have caused them either to stop patronizing a business or become less eager to visit it again.

Shorter Lines Mean Larger Profits

Since consumers place a greater value on their time, they are more likely to reward a business that minimizes waits. This connection was very evident in the Northwestern study.

Looking at the quick serve industry, Allon found that “a 7-second reduction in waiting time results in an average 1.5% market share increase for a restaurant if all restaurants in that area simultaneously reduce their waiting time”. However, for a large, well-known chain like McDonald’s, the same time-savings “increases market share by more than 3%”. And, sales increase by 15% for that McDonald’s if the time savings is unmatched by other restaurants in that area!

Writing in the Harvard Business Review about the growing importance consumers are placing on saving time, Christopher Meyer of Ernst & Young, observed “customers aren’t in a position to levy direct charges for their time spent waiting, (but) the performance of companies like Amazon, which immediately confirms orders and informs customers of shipping and delays, have raised customers’ expectations that their time will be valued. Consequently, reducing customer “NVA time”—that is, non-value-added time—is a new source of competitive advantage, ripe for innovation.

Applying the same standards to the carwash industry, it’s safe to assume that you’re likely to see bottom line benefits from installing time-saving SiteWatch® features like the Xpress Pay Terminal®, FastPass®, Prepaid Cards and the Automatic Recharge Module®.

All Waits Aren’t Created Equal

Unlike the cost of goods and services, which are determined by tangible factors like the price of raw materials or the rent paid on a site, the “cost” of waiting in line is very influenced by emotional factors. Studies have shown that people become less patient when they wait in line for something they don’t particularly want. For example, you’re probably going to be more impatient and upset waiting for an hour to see your dentist than you are standing in line 60 minutes to see a concert or sporting event.

Upscale hair salons have made waiting less stressful for their clientele by serving snacks and playing popular DVDs on their monitors. But customers of an upscale salon generally like going there more than most us enjoy picking up food at a drive-thru window - or taking a vehicle through a carwash tunnel.

Consumers assign a value to the time they spend waiting in line for routine transactions like a carwash purchase. The more impatient they become waiting, the greater the value they assign to their waiting time. In the quick serve restaurant study conducted by the Northwestern team, consumers assigned an average value of $40 an hour to the time they spent waiting at drive-thru windows. The fact that this value is well above the actual hourly earnings of most consumers illustrates how deeply emotions can influence your customers’ feelings about waiting in line.

Special Lanes For Time Travelers

A study by the Pennsylvania Turnpike Commission found that E-ZPass lanes processed 1,400 transactions per hour compared to 250-350 for cash lanes.

Not all consumers place the same emphasis on saving time, which is why organizations as diverse as your state highway department and Disney theme parks have created designated express lanes. Whether they’re at a Disney theme park or a state turnpike, these lanes offer customers the chance to save time by circumventing the normal transaction process.

A study of trucks traveling on the New York State Thruway by the US Department of Transportation found that wireless E-ZPass transactions reduced transaction time by 60% at toll booths.

In the process of saving time for customers, E-ZPass also increases productivity for the turnpike operators. A study by the Pennsylvania Turnpike Commission found that E-ZPass lanes processed 1,400 transactions per hour compared to 250-350 for cash lanes.

A carwash that installs an express lane for prepaid customers or monthly pass holders with SiteWatch FastPass can expect to see similar reductions in transaction time – as well as the accompanying increases in productivity. Plus, as more customers at a carwash migrate to the wireless express lane, the site’s traditional payment lane will become less and less crowded. This starts a “virtuous cycle” effect that not only saves time and results in shorter lines for FastPass users but also for other customers as well.

“The (Waiting) Times Are A Changing”

In addition to creating express lanes, some businesses have lowered waiting times by tweaking their operation procedures during peak periods to process customers more efficiently. Leo’s, a popular chain of restaurants in the Detroit area known for an extensive menu that features everything from pancakes to shrimp dinners, limits its offerings to fewer than 10 items during baseball games at its Comerica Park location so it can handle more customers in less time during Detroit Tiger baseball games.

Disney World established a “command center” at its theme park to monitor the waiting times and line lengths of various attractions, so it can take steps to handle volume more efficiently during peak periods. For example, Disney will adjust rides during busy periods by doing things like sending extra boats to the Pirates of the Caribbean when lines get too long. The theme park giant will also send extra greeters to a restaurant that sees a spike in diners.

Taking an even more proactive step, Disney will start mini-parades in less crowded areas to draw visitors away from busier attractions so it can level out traffic flow. This led the New York Times to write, “Walt Disney, already praised for its crowd control expertise at its theme parks, is taking the managing of wait times to another level.”

As a carwash operator you can take similar steps to make your site more responsive to peak period traffic demands. For example, you can install an extra Xpress Pay Station for busy periods, just as the majority of new McDonalds are now being built with multiple drive-thru stations. You can also use the hand-held SiteWatch Portable Touchscreen Terminal to process customers on your lot when long lines form at your self-pay stations.

The Profiles feature in the SiteWatch Xpress Pay Terminal also makes it easier to process customers quickly during peak periods by automatically shortening the duration of sales messages at your Xpress Pay Terminal. Profiles will display a shorter, more basic, sales message during high-traffic periods so customers can complete their transactions in less time, keeping your lines moving faster. Later, when traffic volume declines, the longer and more extensive sales messages automatically reappear on your Xpress Pay Terminal.

Incorporating Time Savings Into Your Business Model

As the experience of Yund and many other operators illustrates, converting from full service to flex serve can help you expand your market by appealing to customers who value the professionalism of your service, but aren’t eager to invest the time or money in the complete package that you offer.

Some businesses have gone beyond modifying operating procedures and have made more substantial changes in their business model to process customers more quickly. The most famous (and arguably most successful) example of this kind of change is McDonald’s introduction of the drive-thru window at its restaurants in the mid-1970s.

At the time, McDonald’s was looking for new ways to help it keep up with a surge in customer traffic that had seen the chain’s volume triple between 1972 and 1976. The chain’s goal in installing drive-thru service was to complete transactions in 50 seconds or less.

McDonald’s success in achieving its time-savings goals with drive-thru windows was instrumental in helping the company enjoy a remarkable run as the quick serve industry leader. At the time McDonald’s installed its first drive-thru in 1975, it was the largest chain in the quick serve restaurant industry.

At the same time, Sears was America’s leading retailer, General Motors the world’s largest car maker and IBM the dominant computer company. Other than McDonald’s these former market leaders have fallen far from their lofty positions in a little over a generation.

Today, drive-thru windows account for over 60% of McDonald’s sales. The chain is so committed to the drive-thru concept that it pulled out of one California town when the city fathers refused to allow it to include a drive-thru window in its remodeling plans for its local site.

Full service carwashes might do well to consider taking a page from McDonald’s drive-thru book by converting their sites to flex serves using the SiteWatch Xpress Pay Terminal. Click here to see a video interview with Bob Yund, a full service operator who made a conversion to flex serve.

As the experience of Yund and many other operators illustrates, converting from full service to flex serve can help you expand your market by appealing to customers who value the professionalism of your service, but aren’t eager to invest the time or money in the complete package that you offer.

Full service carwashes that offer a quicker exterior option by becoming flex serves, are doing more than giving customers a chance to save time, they’re also providing something else that today’s consumers demand – the freedom to choose. Empowered by the Internet, today’s consumers are accustomed to exercising a large measure of control over their purchases, even when they are shopping off-line.

This is one reason why Internet savvy customers tend to favor retailers that offer them self-pay options. In a recent survey published in Retail Wire, 72% of consumers said they were more likely to patronize stores that give customers the flexibility to interact easily via self-serve kiosks and online over those that just offer traditional in-store channels. Click here to learn how SiteWatch Website Connect™ can help you market your services online.

Like full service carwash operators who have extended their reach by converting to flex serve, many restaurant chains have followed a strategy of reaching new customers by offering scaled down versions of their standard menu items. Dairy Queen has enjoyed success promoting its seven ounce mini Blizzards and “Petite” bite size deserts. Starbucks has also done well with its “Bistro Boxes” small meals with salads, wraps or noodles that are less than 500 calories. Even Coca-Cola has jumped on this trend promoting its 7.5 ounce (90 calorie) mini-cans of soft drinks.

Looked at strictly from a “numbers” standpoint, these under-sized offerings are not as good a deal for consumers as full-sized packages. Yet consumers are willing to pay the premium to save calories – just as they are willing to reward businesses that save time with faster-moving lines.

So, whether it’s reducing waistlines or “waiting lines,” retailers that innovate to help customers get what they want are typically rewarded with extra business and healthier profits. This is why the Northwestern University researchers ended their report on quick serve drive-thru lanes by stating “In conclusion, reducing waiting time standards pays off handsomely in the fast food industry.”

We think that’s good advice for operators in the carwash industry, too.