Lather, Rinse, Repeat

Car-wash operators tap technology, service to keep customers loyal.

Article Preview: 

Tuesday used to be the slowest day of the week for the car-wash tunnels at each of Waterway Gas and Wash’s 18 locations. Since August 2009, however, when Waterway began offering the roughly 20,000 members of its Clean Car Club a 10-cents-pergallon fuel discount every Tuesday, it has become by far the busiest.

“This year our business is up a greater percentage than any other over the previous 20 years,” says Henry Dubinsky, chairman of Chesterfield, Mo.-based Waterway Gas and Wash, which does business in the Cleveland, Denver, St. Louis and Kansas City, Kan., markets. “It takes more than last August to figure out what’s been behind the increase. But so far this year our worst month has been better than our best month last year.”

Waterway’s best customers differ greatly from those who would spend $5 on a standard in-bay rollover wash. With some variation from one city to another, the retail price to join the 35- year-old Clean Car Club runs $325 per year, and most members pay their dues a year in advance. In addition to dime discount Tuesdays, membership also entitles users to a 5-cents-per-gallon discount the other six days of the week, a free exterior wash with a fill-up and other service discounts.

Dubinsky will be the first to admit the Clean Car Club is not a loyalty program per se, though his customers are intensely loyal; members generally have their vehicles washed at a Waterway location anywhere from two to 10 times per month. Even so, the company is currently “putting substantial effort” into creating a loyalty program for groups of customers who do not wash their cars often enough to make membership in the Clean Car Club worthwhile.

Formal car-wash loyalty programs remain something of an enigma, though advances from industry suppliers have fueled their steady rise. In their place, many operators instead choose to hook customers with low prices, a convenient location, special discounts or, in a best-case scenario, a brand with a distinct identity, according to Kyle Doyle, president of Blue Sky Image Inc., a King Park, N.Y.-based marketing firm that advises approximately 20 wash operators per year.

“The operators who do loyalty well usually do it by accident,” he says. “It’s the byproduct of trying to accomplish something specific, whether it’s wanting to be the fastest site in town or having the highest level of service. … Loyalty comes down to expressing who you are clearly, proving it and naturally finding a certain number of people who relate to your brand.”

For others, loyalty is the fruit of investments in technology that rewards customers for purchase frequency and, in the process, fosters heartfelt allegiance.

“We’ve seen very successful sites that do no loyalty promotions and simply put out a clean car and do a very good job with what they’ve got,” says Harold Guthrie, national accounts representative for Green, Ohio-based DRB Systems Inc., which produces an array of car-wash hardware and software. “We also have folks who are successful who have sophisticated loyalty programs. You also have cases where people have these sophisticated loyalty programs and they just don’t do much with it.”

Doyle underscores Guthrie’s last point: “The problem I’ve seen is that even guys who paid $50,000 for a nice system wind up stopping it because they’re not doing anything with the data. If you don’t have a plan to use the data, it’s just wasted time and money. You have to have the commitment upfront, where you say, ‘As soon as I get the data, this is what I’m going to do with it.’"

FINDING THE RIGHT LEG

The industry continues to add more washes to what some consider an oversaturated market—“not enough jam spread over too much toast,” as one marketer puts it. More than 100,000 car washes swab vehicles throughout North America, approximately 40,000 of which share lots with c-stores, according to the Chicago-based International Carwash Association. Add in the effects of a stubborn recession that refuses to die, and the only way for a car-wash operator to boost volume is to either steal someone else’s customers or wash existing customers’ vehicles more frequently. Either way, operators must adequately incent customers to change their behavior. “Geography and price are both ter- rible legs to stand on,” says Ryan Carlson, director of marketing for WashCard Systems, Lino Lakes, Minn., which manufactures car-wash systems designed to boost loyalty. “Someone else can always build a car wash closer than you are, and if price is the only leg, it’s awfully easy to say, ‘OK, if you’re a $3 wash, then I’m a $2.99 wash.’ If you’re correctly marketing your brand, it allows you to craft a message to be known for something besides price or location.”

Business or fleet accounts, he believes, represent an underdeveloped opportunity to “lock in” frequent— and profitable—wash users. That said, many operators either aren’t comfortable enough to market themselves well or simply don’t have the time to devote to seeking out fleet deals with the likes of law-enforcement units, limousine companies and taxi services. “Regardless of the state of the economy, companies still need to keep their vehicles clean,” Carlson says. “Realtors are still going to need to drive people around in a clean car. … Some of our customers are working with companies like Halliburton or the petroleum companies or local departments of transportation and are doing anywhere from $30,000 to $100,000 in billables per month.”

Car-wash clubs in which customers pay a set price per month—say, $29.99, for “all you can eat,” according to Carlson—are another avenue for making an operator’s site the only wash certain customers will ever use. “It’s a $29.99 seasonal pass, regardless of how much or how little they come in, so it’s recurring revenue and a way to build up slow periods of the month,” he says. “We’ve seen some operators who made their entire debt service at the first of the month without washing a single car because of all these accounts. … You’re selling a clean car; you’re not selling a car wash.

 “With any loyalty program,” he continues, “you have to create goals that are more than, ‘I want to make more money.’ … You’re finding reasons for people to come to your business beyond reasons of soap and water.”

WashCard’s various service modules, which can help operators create car-wash clubs, develop fleet accounts or position themselves as “charity washes,” generally cost $1,800 to $2,000 in equipment, not including back-end expenses. Beyond these kinds of systems, the growing use of technology such as radio-frequency identification tags and self-service terminals has helped stoke customer loyalty.

“As a customer, you don’t even have to roll down your window anymore,” says Guthrie. “At a manned station [a cashier] can punch in the license-plate number or scan a bar code on the windshield. You’re taking it out of the hands of the cashier. At the same time it allows them to spend more time talking to the customer, pushing other services.”

Self-pay stations run $35,000 to $40,000 per lane, so it’s easy to see how an operator could spend up to six digits for several self-pay stations and “all the bells and whistles,” according to Guthrie. For a loyalty-equipped point-of-sale system, operators will likely spend a minimum of $25,000.

“As for payback, again, it depends, but some folks do it in less than a year,” he says. “Either way it takes work; you can’t just buy the system, install it and expect it to do the work for you. If a customer shows up and never hears about the 10th wash free, it does you no good. … The technology is just a tool.”

In a sense, technology-driven loyalty systems can also help operators eliminate wash drive-offs. If a dishonest customer finds a way to leave the site without paying, some systems can “flag” the plate number upon the customer’s next visit. Chuck Delaney, owner of Allston Car Wash in Allston, Mass., has used this technology to all but abolish the number of drive-offs at his high-volume location on Boston’s outer rim.

“I have probably two or three that get by me every month, but the next time they don’t,” says Delaney, whose site employs DRB Systems’ equipment, including the loyalty-promotion module that doubles as a loss-prevention tool. “Before I started using the customer-tracking piece, I got a lot of incompletes who didn’t pay—maybe 50 to 75 drive-offs a month. And before that you were lucky to get within 20 a day.”

Allston Car Wash offers packages for exterior washes and full-service washes alike. Considering his full-service packages account for 48% of volume and cost as much as $29.95 each, the recovery of those losses represents a significant bottomline lift.

Whether used for recovering losses or gauging customer visits, tracking frequency is essential, according to Doyle. “Maybe someone used to be coming in once every three weeks and now they’re in every two and a half,” he says. “If you track them and have their information, you can find out why.”

Convincing customers to part with their personal information, as in getting them to sign up for a formal loyalty program, has become an increasingly tricky proposition. Many customers now view their privacy as more valuable than currency.

What you’re looking for from a customer has to be equal to what you’re giving back—a free wash when you sign up or on your birthday, 10% off detailing services, etc.,” he says. “An address is incredibly helpful, because then you can make a map of where your customers are coming from and use it for future marketing purposes.”

PLAYING FAIR

Operators such as Stu Mandel, owner of Gas House Express Car Wash in St. Louis, forgo electronic loyalty programs in favor of business models that engender loyalty by offering good service at a fair price, or what he calls “the old-fashioned way.”

“I used to have a good friend out of Indianapolis, and whenever I would drive up there we’d go to his favorite place, a deli called Shapiro’s,” he says. “There was a sign there that read, ‘Every day is opening day at Shapiro’s.’ I got what that meant. Every day everything has to be straight and clean, and everyone has to be on their toes, just like it was on opening day.”

He doesn’t believe in unnecessary discounting, though he does subscribe to off-color promotions and the power of “free” as a way to lure new customers. (See sidebar, p. 100.) For a time the site tried punch cards for gasoline sales, but a significant amount of customer abuses convinced him of the program’s folly.

“There’s an old expression that what’s right isn’t always popular and what’s popular isn’t always right,” he says. “My approach has always been that whatever you do, you do it well and charge for it. … Loyalty is doing everything right and treating the customer like a friend, and building the relationship from there.”

Gas House Express offers a satisfaction guarantee and, as part of it, a rain guarantee. If it rains the day a customer gets his car washed, he has two days to return for a free rewash. Mandel calls it part of the company’s philosophy to “play fair with the customer.” It seems to be working, considering the site has washed as many as 1,700 vehicles per day.

In Boston, Delaney has a similar approach, catering to affluent suburban customers through a full-service facility staffed by 12 to 15 employees per shift to make sure customers leave 100% satisfied.

“Employees are there to towel-dry the cars and take care of anything a customer isn’t happy with,” he says. “[Customers] are not just talking to a box. It goes back to old-time service. … I give them a full-service car wash on their birthday, with a week or two on either side, every 10th wash is free, and they get $2 off a wash if they get an eight-gallon fillup.”

 Monica Musich, president of VALDAK Corp., a chain of nine Valley Dairy stores based in Grand Forks, N.D., has eyed electronic loyalty programs for use inside her stores and in her company’s four car washes (three full-service and one exterior). So far she’s found nothing to deepen customer loyalty more than best-in-class service, for which her sites are already well known.

“Around here,” she says, “we’re the standard by which most people who want their car washed go for, so I really don’t know what [loyalty programs] are going to give us. To me, it’s almost a case of being locked in because it’s so hard to back out of it. Once you have it, people don’t want you to give it up. It’s a marriage.” 


Tips to Grow On

  • Build customer loyalty on firmer ground than geography or price. Someone else can always get closer or offer a cheaper wash. Look for loyalty systems that can facilitate wash clubs, fleet accounts and socalled “charity washes.” Some also include loss-prevention tools.
  • Commit to customer tracking and use the data for future marketing purposes. If the information goes unused, the investment is a waste of time and money.
  • Get creative with promotions. Customers will remember an entertaining wash experience.  

Selling More Than a Clean Car

Best-in-class car-wash operators do more than clean a vehicle by continually inventing new ways to “sell” loyalty. Some examples:

Coupon books: In Allston, Mass., Allston Car Wash owner Chuck Delaney sells coupon books, which offer a 15% to 18% discount per wash. The books sell incredibly well on holidays such as Mother’s Day, Father’s Day and Christmas, for which he adds an extra coupon. “A lot of people will buy two or three of them,” he says.

Charity washes: Monica Musich, president of Grand Forks, N.D.-based VALDAK Corp., wants to be known as “the charity wash,” whereby local philanthropic groups would host car-wash fundraisers at her company’s sole exterior location rather than in a random parking lot. “We give them a percentage of the washes (30% on a basic wash, 40% on a mid-tier wash and 50% on a high-end wash), and their people come and help sell them,” she says. As of mid-June VALDAK had done one charity wash and was beginning to field calls from other interested groups.

Gift cards:Gift cards are “an awesome way” to lock in customer loyalty, according to Harold Guthrie, national accounts representative for DRB Systems Inc. “The money is spent only at your location,” he says. “If you sell somebody a ticket book or a gift card, they tend to burn through it faster and get more washes than they would if they were paying cash.”

 Intangibles: Stu Mandel strives to accomplish five goals at his St. Louis-based Gas House Express Car Wash: Treat the customer like a friend; maintain a unique facility, “because no one wants another McDonald’s”; display quality every step of the way; provide good, fast service; and exhibit the three P’s, which are persona, personality and penguins, referring to the site’s official mascot, complete with the motto, “This wash is penguin approved.”


Want Loyalty? Make Some Noise

Gas House Express Car Wash in downtown St. Louis has carved out a fertile niche thanks to its high-volume location, unique site design featuring countless depictions of a penguin (the site’s official mascot) and, more than anything else, entertaining if not eccentric promotions that even its owner would admit defy common sense.

“One of the most awesome promotions we’ve done this year is we picked a type of car and for that week we washed it free,” says Lynn Coleman, director of operations for Gas House Express. “If you really wanted to cause a lot of hoopla, you could do a free wash for all Chevy cars, which we did, and the clever part is that you can take it from a broad range and whittle it down to something like all two-door Chevy Aveos with license plates beginning with the letter P.”

The promotion, which ran last fall until the onset of another blustery Midwest winter, was announced every week on the site’s reader board. Coleman remembers an influx of people coming into the store to ask questions along the lines of, “When are you going to do gold Nissans?” Although she couldn’t share precise numbers as to how the promotion affected volume, she says the promotion will likely be resurrected.

“Besides getting more people on the lot, another thing it did was introduce [customers] to our other services,” she says. “For the customers who met the criteria, we gave them a bounce-back coupon of a discount on upcoming washes, a discount on gas, a discount on the c-store. … Then they’ll find out we have good coffee or good something else inside the store that gives them a reason to come back.”

Click here to download full article