Deal, No Deal
Many still enjoy the sport of deal hunting.
Although a large number of customers prefer to simplify their shopping expereince with flat-rate pricing plans, many others enjoy the bargain hunting experience.
People love to save money; everyone knows that. But for many consumers, a low price by itself isn't nearly as important as shopping for that deal. Kit Yarrow, a consumer psychology professor at Golden State University, writes that the "treasure hunt" aspect of looking for the best bargain is "one of the primary joys of shopping" for many people.
Dr. Yarrow wouldn't get any argument from the management at J.C. Penney. In February, the 1,100-store chain launched its "Fair and Square" program, which eliminated coupons and the nearly 600 "special sales" it typically runs every year. In place of these discount offers, J.C. Penney cut its everyday prices by 40%, which resulted in items costing the same or less than they had in the past. The result was a resounding thud. Shoppers stayed away in droves; same-store sales plummeted by 19% the first quarter and continued their decline the second quarter. By August, J.C. Penney threw in the towel and abandoned its Fair and Square program.
Car wash operators can learn a valuable lesson from J.C. Penney's experience. Although a large number of customers are looking to simplify their shopping experience with flat-rate pricing plans, such as unlimited passes sold with the SiteWatch® Automatic Recharge Module® (ARM®) and the popular Amazon "Subscribe and Save" monthly renewal program, many other shoppers enjoy the bargain hunting experience.
Although each car wash is different, an effective marketing strategy should appeal to both groups with monthly passes sold through SiteWatch ARM and special limited-time offers made online with SiteWatch Website Connect™, on Facebook with the Social Circle® Module and at the self-pay station with SiteWatch Profiles.
The Fun Factor
J.C. Penney wasn't the only retailer to learn a hard lesson about the cost of giving up special offer marketing. Lowe's implemented a similar strategy and saw its net income dip by 10%. Especially damaging to the home improvement chain was its lost sales during the Memorial Day weekend, when rival Home Depot ran holiday specials.
Even the purveyors of luxury goods can find the going rough when they forgo the excitement created by limited-time offers. Coach, the maker of upscale handbags, eliminated coupons from its factory stores early in 2012, but the results were so disappointing that the company reinstated coupons in July.
Replacing special sales with everyday low pricing takes the fun out of shopping.
Well-known retail researcher, Paco Underhill, of Envirosell says that replacing special sales with everyday low pricing "takes the fun out of shopping." This is something that savvy marketers like McDonald's understand well. Deal-driven promotions were at the heart of McDonald's wildly successful launch of the McCafe line of beverages, which played an essential role in helping the chain increase per-store sales by 50% (from $1.6 to $2.4 million) from 2004 to 2011.
McDonald's has consistently used special offers to draw attention to new flavors as it has expanded its McCafé beverage line. The recent launch of its Frozen Strawberry Lemonade, Frappés, and Real Fruit Smoothies typified this strategy. During the introduction, McDonald's peppered the market with not one, but three coupon deals: tear-off pieces on cups good for $1 off any blended ice beverage, digital buy-one-get-one offers, and Sunday supplements granting a free blended ice beverage with the purchase of a regular sandwich or salad.
Going beyond simple price deals, McDonald's has added special twists to its promotions to generate extra excitement. For example, the company had a national scavenger hunt to promote the launch of its Carmel Mocha beverage, hiding three-foot-tall McCafé cups at different places around the country. Consumers who found the cups won exciting prizes, such as a $1,000 McDonald's Arch Card.
A car wash isn't likely to be able to do anything as elaborate as McDonald's scavenger hunt, but it can use the customizable screens on the SiteWatch XPT® to promote the launch of a new service or menu option with special limited-time offers.
On the subject of menu options, McDonald's offers us another valuable lesson. Recently, the chain has begun to include short-term seasonal items on its menu. The company made its Cherry Berry Chiller available nationwide only through August this year, and in May also added a seasonal breakfast addition, Blueberry Banana Oatmeal.
According to McDonald's, the objective of its newest marketing strategy is to add fun to the menu to keep regular customers excited about grabbing a meal at the chain's restaurants. The seasonal plan was implemented after research showed that variety was of top importance to McDonald's customers.
Research conducted by the highly-regarded NPD Group in March 2012 highlights the wisdom of McDonald's marketing plan. According to the NPD survey, 75% of consumers said that sales and special deals were "extremely important" to their buying decisions. This surpassed even convenience (60%) and customer service (56%) in importance.
The flexibility of the SiteWatch System makes it simple for car wash operators to add seasonal specials to their menus. For example, you can offer a special holiday shine package during weekdays in December and highlight it on your XPT screen. You can also promote this special on Facebook with the SiteWatch Social Circle Module, which offers a variety of seasonally themed posts that can have sales messages attached to them.
Coupons are a critical component of most deal-driven marketing campaigns. This is one reason why coupons (both digital and paper) have continued to grow in importance. According to the Kantar Media report, coupon promotions of all kinds grew by 11.2% in the first six months of 2012.
There's a good reason for this increase; many consumers who have been hurt by the recent recession are very deal-driven. According to a report by eMarketer, 12% of Internet users say they never make a purchase without checking for an online coupon first, and 35% said they check for these deals at least occasionally. Another survey, this one by the research firm ForeSee found that 60% of online shoppers subscribe to at least one daily deal site.
Coupons are a critical component of most deal-driven marketing campaigns and have continued to grow in importance.
A car wash can reach customers who are looking for deals online by posting special offers on its website using SiteWatch Website Connect. Using this SiteWatch product, car washes can sell limited-time discounted car washes on their websites and have customers print barcodes that can be used to redeem the washes on-site. By limiting the offer to their websites, car washes can attract deal-driven customers while still preserving the perceived value of their wash services at their stores.
SiteWatch Social Circle Module, which sends newsfeeds to the friends of customers belonging to a wash's Social Circle club, offers another effective means of reaching online customers. Every Social Circle Module newsfeed has room for a selling message, providing an ideal opportunity to attract the friends of good customers with limited-time offers.
Email blasts are another way of reaching deal-driven customers without detracting from the perceived value of your car wash at the point of sale. A recent Borrell Associates survey of nearly 40,000 consumers found that 44% of them have signed up for four or more email lists. Coupons included in your email blast can be accepted at the built-in barcode reader on your XPT.
Aside from driving sales directly, coupons (online and print) serve as a form of advertising. According to research conducted by Rajkumar Venkatesan and Paul Farris of the University of Virginia, coupons help increase awareness and sales for a business even when they aren't redeemed. Studying 500,000 coupons issued by eight retailers over a 16 month period, the researchers found that 60% of the "sales lift" that resulted from coupon campaigns came from purchases made by people who received, but did not redeem the coupon itself.
Another important point about coupons is that not all of the consumers who redeem them are serial bargain hunters. A study by NetNewsCheck found that 45% of the coupon redeemers it looked at were new customers and 22% of them returned to the issuing store without a coupon.
In some cases, these bargain hunters will even eventually trade up. A study by American Express found that Internet "flash sales" of luxury apparel actually wound up increasing full-price sales of the same items. "The new focus on full-priced online fashion shows that giving consumers a taste of luxury will undoubtedly help build brand loyalty over time," said Ed Jay, senior vice president of American Express Business Insights. With this in mind, you might want to focus your online discounts on your best packages, anticipating that a share of these customers will later trade up to your better wash option.
Regardless of how you configure your limited-time offers, making them part of your marketing strategy along with unlimited monthly passes is likely to give you a broader appeal. A recent study done for the quick serve restaurant industry by NPD Group identified a dramatic split in the US market between consumers who are concerned about the price of each purchase and those who have more disposable income. In response to this study, many quick serve chains implemented a "barbell" approach to marketing, having value meals for one group and more elaborate fare for the other. Based on current market conditions, car wash operators might find this to be a good recipe for success too.
- How Cash Lost Its Cool
- Psychology of Consumption
- Know Me, Sell Me
- The New Productivity Paradox: Growing Without Getting Bigger
- Act Now!
- Youth Movement
- Viral Marketing 2.0
- Deal, No Deal
- Simplicity Sells
- Good Impulses
- Experience Required
- No Laughing Matter
- Word of Mouth Shouts Out
- The New Rules Of Retailing
- Off The Clock
- The Heart of the Matter
- In Search of Stability
- Time Is Money… Even In A Soft Economy
- Back To The Future
- Making Your Car wash "Part Of The Conversation" In A Facebook Driven Market
- Reach More Customers By Giving Them More Control
- Finding Your Voice on Facebook
- Small Wonders: Bigger Isn't Always Better
- Flat Pricing Paradox
- The Power Of Partnering
- When Word-Of-Mouth Becomes World-Of-Mouth
- You've Got To Give To Get
- How to Get the Price Right
- When Click Meets Brick: Reaching Carwash Customers in the Multi-Channel Age
- Casting A Wider Net: Diversifying Your Marketing Strategy Keys Growth
- Putting The "Custom" In Customer Service
- Double Duty - High Tech Tools Send An Important Message About Your Commitment To Your Business
- Peak Performance: Managing Your Carwash During Its Busiest Periods
- Time To Rethink Your Ideas About Customer Service
- Profitable Performance Creating An Entertaining Experience Makes Customers Happier – And More Loyal
- Listening To Self-Pay Customers "Pays Off"
- Marketing From Within
- Your Customers Have Changed. Is Your Carwash Keeping Up?
- Reaching the "Car-Cooning" Customer
- Bridging The Digital Divide
- The New Pricing Paradigm
- The Future Isn't What It Used To Be
- Growth Strategy For Challenging Times: What Price Loyalty?
- Growth Strategy For Challenging Times: Invest