Forewarned Is Forearmed: Market Research to Stay Competitive

Enter the Market

“Competition is real, and competition is good for the market, but we want to make sure that we’ve picked the best site possible, no matter where somebody else comes in,” says Davis. “We always want it to be our goal that we don’t get ‘out-real-estated’ by anybody.”

The Tommy’s Express chain stretches across 260 locations nationwide. Wild Pines Ventures signed up in 2017 as the sixth franchisee, adding a new location every year since, on average. Corporate headquarters has a committee to review franchisees’ real estate decisions, according to Davis, using a robust evaluation process.

“Tommy’s has a formula (that I can’t really talk about) for population density and specific demographics, how many tunnel car washes a community can support, based on a variety of factors,” Davis says. She adds that Wild Pines Ventures, more than the usual franchisee, adds its own hands-on research.

Davis says her company investigated barriers to entry, such as permitting hurdles and the cost of construction in Alaska, about 75 percent higher than in the Lower 48. All totaled, each site represents about $10 million of initial outlay. The bottom line is whether the anticipated revenues will cover the costs.

The bottom line is strong enough that Tommy’s Express sold Wild Pines Ventures the franchise rights to eight locations in Alaska. Davis says, “Our family is committed to an $80 million investment over the next five to seven years, probably, so we believe in Anchorage big time. Because of that, we did a lot of market research.”

One research tool comes from Placer.ai, a location analytics platform created in Israel in 2018. Using cellphone data, it correlates the movements of people between residential areas and selected businesses.

“For example, I could tell you how many visits the larger car washes here in town were getting over the last six months, the last twelve months. And I could tell you generally where their traffic is coming from,” Davis explains. “So when we were analyzing the Anchorage market traffic patterns, things like how traffic flows down the Hillside were really important.”

Her son and daughter-in-law are co-owners in Tommy’s Express and live in Anchorage, so their personal knowledge of the market and traffic patterns has been extremely valuable. Data plus homegrown interpretation led Wild Pines Ventures to build its flagship location on the Abbott Road curve, where high-income Hillside residents pass by for commutes and errands.

Research Methods

The other seven Tommy’s Express locations have been scouted and selected based on high-tech heat maps and more mundane reconnaissance. “We did the old-school kind of research,” Davis says, analyzing population density and traffic patterns from city and state transportation agencies and from open-source economic projections.

“There’s nothing really sexy about that data,” Davis adds. “That’s readily accessible data.”

Entrepreneurs without franchise support can get help from the Alaska Small Business Development Center (SBDC). Advisors can order a packet supplying basic data such as business maps, demographics, and patent and trademark searches.

For a do-it-yourself approach, SBDC points to other research tools. For example, global analytics firm IBISWorld sells industry- and state-specific reports containing information such as number of establishments per municipality. A five-page report costs $495, while $1,495 buys a membership license to access the entire IBISWorld analytics platform. However, as part of its advising services, SBDC can show clients IBISWorld reports at no cost.

SBDC also suggests that DIY market researchers can start with the State of Alaska Open Data Geoportal. The web page links to the National Address Database, land parcel data, and dossiers for each city, town, and village from the Alaska Department of Commerce, Community, and Economic Development. The Alaska Department of Transportation and Public Facilities has a data portal detailing roads, infrastructure assets, and boundaries. The Alaska Department of Natural Resources portal hosts more geospatial data. In Anchorage, the municipal Office of Information Technology has up-to-date data on restaurant health inspections, childcare inspections, and commercial and residential property ownership.

Shoveling through that blizzard, though, can be daunting for a startup business. Experts can help. Katie Berry, president of McKinley Research Group (MRG), recommends contacting local economic development agencies or nonprofits, such as Spruce Root in Southeast. MRG itself is geared more for public policy and industry-level research.

Berry says, “We provide service across a really broad spectrum of industries, communities, and people. Typically, we are answering social and economic questions for them, and that can really vary from how effective a program is to the financial feasibility of a new development.”

MRG can help with business decisions, of course. Berry explains, “We’ve had clients come and say, ‘We have a partner who would like to sell us a business unit or thinks that we need to expand into this region. What can you tell us about that region? Is that an opportunity for us?’ It also may be questions such as, ‘We want to build a new recreation opportunity. Is that financially feasible in this market?’”

For entrepreneurs, the most readily available research advice might come from financial institutions. Even if a startup doesn’t need a loan, lenders know what kind of market research they want to see from a strong applicant. Berry says, “They have a wealth of experience in these kinds of things that can help you steer to the right questions and who you should be asking those questions of.”

Rich Results

MRG has been researching Alaska for fifty years, known as the McDowell Group until McKinley Management acquired the firm in 2020.

Getting good answers starts with the right questions. Berry says, “What we always do with clients is we think through their particular question, who they’re trying to connect with, what they need to know, and we pull out those tools and mix and match them.”

Tools range from housing data to intercept surveys, where researchers approach the target audience either in person or electronically. Berry adds, “We’ve recently branched out even into WiFi popup surveys, which are a different methodology for us but something that’s emerging and helping move away from the cost of intercept surveying.”

Research isn’t always number crunching. MRG also conducts executive interviews. “A company may say, ‘We really want to understand our churn customers. If you signed on in the last two years, why did you sign on with us? Why did you leave our service?’ Those kinds of in-depth conversations can be really helpful,” Berry says.

A business could have those conversations by itself, so why involve a market research firm? “There’s a social component to this where, if I know you, maybe I live in the same small town, it’s really hard to tell you, hey, your service was awful,” Berry says. “But when it’s a different person coming in, a third party, you might be a little more likely to give that candid feedback when you know that there’s some anonymity there.”

Acquiring and analyzing rich data requires more than statistical skills. Berry says the team at MRG have diverse backgrounds and perspectives. “What you have to have is curiosity and a little bit of tenacity. You have to be able to pick up the phone and call people,” she says. “Statistics is really helpful, but the ability to communicate with others is right up there with the ability to use Excel.”

For example, she notes that some researchers fished in Bristol Bay, so they understand that industry and region. Other team members have experience in public health. “They are so adept at systems thinking. They can look at the high level and see how these different things are connected. And that is applicable not just to health but to so many things,” Berry says.

Diversity helps her team tackle whatever research clients need. “It’s actually hard to think of a question that we couldn’t answer,” she says.

Ongoing Discussion

Once established in a market, businesses continually gather intelligence to make informed decisions.

Customer satisfaction surveys are the most direct measurement of whether a business is hitting its target. For example, Edible Alaska magazine gets detailed reader responses as part of a licensing agreement with Edible Communities, the national network that supports the local publication.

“Edible Communities nationally does a periodic reader survey,” explains Amy O’Neill Houck, co-owner with Jeremy Pataky of Edible Alaska. “We’re really lucky because when we do the survey, Alaskans step up. Of all the titles in the community, we get more respondents per capita than almost any other title. So we know our data is strong and representative of our readers.”

Those data include basic demographics as well as how long readers spend with the magazine (longer than with digital pages, Houck points out), what content they care about, and whether they make purchase decisions based on what they see.

“It’s useful for us when we’re speaking to potential advertising partners because we can give them real and recent data about how people are feeling about the magazine,” Houck says. One tip, not obvious without research to back it up, is that ads should be “evergreen” rather than time sensitive, knowing that readers pass Edible Alaska around for months or years after publication. Houck adds that research does not generally wag the editorial dog; storytelling is still more art than science.

Berry observes, “Anytime people are talking to their prospective customers, they’re engaging in market research.”

The stakes of a business decision dictate the level of investment into research supporting it. Short of hiring a firm like MRG, Berry says online tools like SurveyMonkey can get the job done. “Just because you’re not prepared to engage in thousands and thousands of dollars of market research doesn’t mean that there can’t be small ways that you engage,” she says.

However, Berry cautions that a bad survey can be worse than no survey at all, and a consumer ecosystem flooded with surveys has induced fatigue. Self-service kiosks constantly soliciting a star rating can erode the value of feedback, Berry says.

“You have to ask yourself, am I going to use this information? Because every time you connect with your customers in a survey or a phone call, you’re asking them to work for you for free, to give you something for free,” says Berry. “So you have to be really careful with how you use that line of credit.”

Tommy’s Express engages in marketing campaigns on a quarterly or monthly basis, Davis says, and the data multiplies the value of outreach efforts. For example, when sending 33,000 coupons for free washes, Placer.ai cellphone tracking suggested where to mail them. Davis says, “I could look at that heat map and say, ‘We’ve got really good saturation here… but there’s this area over here that we’re not penetrating like we need to. Let’s focus there.’ We constantly are doing market research where our business is coming from.”

Hidden Figures

Market research has already informed Davis where to locate the next Tommy’s Express in Anchorage. It’ll be on Debarr Road, where her company bought an existing bay wash and demolished it to make room for a tunnel, which will take the rest of this year to finish. She can’t disclose the other sites that will be developed by 2030 or so.

Research is driving further changes for Tommy’s Express. Davis says the data shows that odors contribute to a positive wash experience, so scents may be added to the light show that already accompanies the ride through the tunnel.

Experimentation also helps optimize operations. For example, Davis says the Abbott Road location gave away 2,500 washes for free one week, a test period while operators refined the angles of the brushes and blowers. Months later, the shop is still making adjustments to achieve the goal of 100 percent clean, with minimal water usage.

The tunnel wash uses 33 gallons per vehicle, Davis says, or one-third to one-quarter of a bay washer’s water consumption. The water is recycled in the building, and runoff is directed to the underbody sprayers. One thing Davis has learned is that the dirt in Anchorage is different from the red clay at the Oklahoma shop, which requires more frequent clean-out of the drains. Each market gets its own tweaks, based on data collected.

Not all results are as concrete as dirt in drains. Berry says, “We’re not in a very data-rich environment in Alaska, and there may be a perception that everyone has gobs and gobs of data at this point, everything is really well known, and that’s just not true.” As an example, Berry points to the Alaska Travel Industry Association’s annual report on the economic impact of tourism. The method is long established, and the sources are clearly understood, but estimating visitor spending remains a very technical question to answer.

Other obstacles to clear results are assumptions and misconceptions that might obscure what clients really need to know. Berry says, “We’re helping clients understand the landscape in which they’re operating and risks and opportunities in a broad economic sense, or challenging their perceptions or their biases of what they’re entering into.”

Where quantitative data is unavailable, Berry says researchers seek qualitative data. That is, “Sometimes you have to pick up the phone and call.”