Contributing Members:
Team A:
– Ossy Guillen
– Toriana Hyman
– Antonio Andrelexa
– Brenden Kimono
– Heba El-washah
– Nicole Motykano
This business Innovation Report shall discuss how the Service Business: Car Wash, can be innovated and improved. The report will first explain what the Car Wash business is, what are its main functions and how it operates. The report will discuss current issues and problems with the business model that should be addressed, innovating on these issues can lead to a better and more efficient business model. The report will detail what the innovations will be, how it will affect the business model, the positives and negatives of the innovations, and how the business will profit from the innovations.
Executive Summary (Description of Business):
A Car Wash is a Full-Service Operation, offering clients a wide range of services that the customer is able to choose from depending on their budget. There are typically three types of Car Wash Models. The first is an employee wash, this means that Car Wash Employees Soap Scrub, Wash and Dry a client’s car by hand with a wax. The second type is machine wash, the client’s car is fastened by the wheels on a moving platform where it moves by itself across the different machines that wash, scrub, and dry the car. The final model is a self hand car wash, in this model the client is responsible for the car wash, with the company only providing the essential tools that are required for the car wash.
Current issues & problems in the Car Wash Service Industry:
– Labor shortage
– High usage of water
– Inconsistent quality
– Outdated payment systems
List of improvements to enhance the Car Wash Service Industry:
– Self service kiosks
– Automated payments system and processors
– High tech equipment (License plate reader, Automated conveyor system, Water recycling system, and Advanced (senors, brushes, dryers)
How the improvements would benefit the Car Wash Service Industry:
The improvements listed above would benefit the Car Wash service industry because it would enhance the current system, increase overall efficiency, provide consistent quality, convenience for customers, reduce costs for customers while being environmentally friendly and conscious.
Financial Analysis of improvements to make the Car Wash Service Industry more efficient:
Based upon research self-serve car washes can profit around $40,000 yearly. However, more extensive and efficient tunnel car washes can potentially profit from $500,000 to $700,000 yearly. With our improvements we are trying to make towards our car wash service industry, it is planned to gain more profits for our company and to make it more efficient towards consumers. In a financial analysis out the four p’s in the marketing mix, price is the most important factor. For our product the car wash, since we are offering three different styles of washes. They will all be offered at different rates.
– The first wash – a car wash employees soap scrub
– Cost- $75
– This wash is the most expensive since it is a car wash that is the highest quality to get rid of all the dirt and grime. This also is wash were the employees wax your vehicle.
– The second wash – a machine wash
– Cost- $20
– This wash is the second most expensive wash since it is your car going through a tunnel wash and it is one of the quickest washes out of all three.
– The third wash – a self hand car wash
– Cost- $10
– This wash is when the customer washes their car on their own only using our equipment and products.
In our to please our consumers we will offer a loyalty program to receive more customers and to show our current customers we valve you them. The loyalty program will have a monthly subscription that will be a total of $60 a month. The monthly subscription will offer getting a tunnel wash (second wash) every week and having the option to get a third wash daily. Their will also be other offers such as if you purchase three of the first wash you will receive a second wash for free. This process will keep customers loyal to our car wash and always coming back.
Since our company will have self service kiosks it will cut down the number of employees that will need to be hire which also cuts down the costs. In addition with having a third wash where customers can wash their cars on their own will help limit the amount of employees needed.
Lifetime Value Exercise:
Contributing Members:
Team A:
– Ossy Guillen
– Toriana Hyman
– Antonio Andrelexa
– Brenden Kimono
– Heba El-washah
– Nicole Motykano
1. Who is the “customer” you are focusing on? Describe the average customer using relevant characteristics.
The customer we are focusing on is the average car owner who utilizes car wash services and values a convenient and efficient quality car wash experience. Characteristics relevant to our average customer who will utilize our car wash service is someone who is tech savvy, has disposable income, has a busy schedule, and is environmentally friendly.
2. What is the average “lifetime” of a customer in this industry? Explain your response.
The average lifetime of a customer in the car wash service industry can vary depending on a few critical factors such as the lifespan of their car and the amount of frequent visits to the car wash. Typically, a customer may wash their car 1 – 2 times a month making 12 – 24 total visits a year and the life span of a car can fluctuate anywhere from 5 – 10 years. Assuming 5 – 10 years lifespan of a car we can guess the average lifetime span of a potential customer in the car wash service industry would be estimated at around 60 – 240 visits.
3. Do the customer’s spending patterns change over a lifetime? Why or why not?
In the car wash industry, customer spending patterns do not change much over a lifetime. Car wash businesses are always in demand because of the convenience and ease when it comes to washing a car. Getting a car wash, rather than washing the car yourself, is much more efficient. Most customers will visit a car wash about 1-2 times a month, but factors like poor weather may lead to another one or more visits per month.
4. What would be a relevant time period to use in calculating customer revenue? What is the typical revenue (per loyal customer) over this time period?
The most relevant time period to use in calculating customer revenue would probably be during the summer months. The summer is the busiest season for a car wash business. The reason is because of the nice weather. The chance of getting a car wash during the summer and then having the cleanliness ruined by poor weather is much slimmer than the other seasons. When calculating the typical revenue of a loyal customer over this time period, all the different service options and pricing must be looked at. On the low end, an exterior car wash could be only $10. On the high end, there are businesses that offer monthly subscriptions that could be upwards of $60 for unlimited premium car washes. There are other services offered that are priced between these two, but these are the average low and high end. The summer only lasts 3 months, and loyal customers would probably visit a car wash at least two times a month. With all of this information taken into consideration, the average typical revenue per loyal customer during the summer is around $110.
5. Are there costs involved in serving the loyal customers? If so, what are these? Should these costs be considered in the lifetime value calculations? Why or why not?
6. What is the likely number of referrals that come directly as a result of the lifetime customer’s recommendations? (Be realistic.) Explain your response.
7. What assumptions are you making in order to do your calculations? List all assumptions that are applicable. (It is very likely you will be making multiple assumptions for each number you use in your calculations.)
8. Use all of the relevant numbers (based on your assumptions) together to calculate the Lifetime Value of a customer in this industry.
9. Based on your calculations and assumptions, what is the lifetime value of a customer to an organization in this industry?
