P&G, the world's largest advertiser (with a $5 billion annual ad budget), reached this decision after its own market research showed that only 2 percent of the 3 billion coupons the company issued each year for Tide detergent, Pampers disposable diapers, Crest toothpaste, and its other well-known products were actually redeemed by consumers.

"There's nothing effective about a system that fails 98 percent of the time," a P&G spokesperson said, when announcing the company's decision.

Aside from being ineffective for P&G, coupons had another serious shortcoming: By constantly emphasizing special deals and discounts, the company's coupon promotions "created disloyalty and confusion among consumers," according to the P&G spokesperson.

P&G's decision prompted other national advertisers to reduce or cancel their own couponing promotions.

Coupon Issues Drop

After rising dramatically earlier in the decade, the number of coupons issued during the past 12 months has declined from the previous year, according to Dun & Bradstreet's Nielsen Clearing House division.

As The Wall Street Journal noted in October, "Marketers and retailers are looking for alternatives to coupons and other inefficient promotions."

Closer to home, I believe the trend away from couponing will have a significant effect on the way full-service and exterior-only carwashes are marketed.

In fact, many operators have told me that they've already begun to phase out coupons and replace them with marketing programs based on the frequency of customer visits.

This is not to suggest that carwash coupons will go the way of the dinosaur. In all probability, coupons will continue to be used effectively at many carwashes.

But the major marketing trends inside and outside the carwashing industry all indicate that fewer operators will be couponing in the future. And there's a good reason why.

Like Procter & Gamble, they've found that coupon promotions don't produce the desired effect in terms of building customer loyalty and increasing repeat business.

As the P&G spokesperson noted, coupons tend to create "disloyalty" among customers. The coupon clipper is typically more committed to the idea of saving money with a coupon, than to patronizing any particular carwash.

This customer's decision about whether to visit your wash or your competitor's is often based only on where they can use a coupon.

Coupon-Clippers Wait

Using database marketing customer tracking systems, many carwash operators have discovered this principle for themselves.

They've learned that a high percentage of coupon customers will only return to a wash when they can use a discount coupon.

Having gotten into the habit of "waiting for coupons," these customers will put off returning to your wash until they receive an attractive coupon offer.

Coupons will not generate repeat business from these customers, unless you're willing to give them coupon deals on a constant basis. When you do this, you've in effect permanently lowered the price of your wash.

Carwash operators who use database marketing systems have also discovered that coupon-users are unlikely to buy any extra services or other options that are not included in the coupon offer.

It doesn't matter whether your coupon is for a basic wash or a deluxe package, the coupon customer comes to your wash with the "special discount price" planted firmly in his or her mind.

Because of this intense focus on price, coupon customers tend to be very resistant to the idea of deviating from the coupon deal by purchasing an extra service.

Think about the goals that successful carwash operators have traditionally emphasized in their marketing programs:

* Increasing customer loyalty

*Building repeat business

* Generating extra service sales.

In light of this, you owe it to yourself to take a careful look at the potential marketing advantages that replacing coupons with customer frequency programs can create for your carwash.

Consider what happened at one southern wash (where coupons had accounted for more than 22 percent of total transactions), when the owner suddenly stopped all of his couponing promotions.

In place of coupons, this operator used his computerized database marketing system to create a "frequency discount" program.

Customers who came to his wash less than once a month were charged a higher price than they had been paying, but those who visited more often received substantial discounts.

The size of these discounts increased as a customer returned to the wash with greater frequency.

The impact of this frequency discount promotion was impressive. In the first quarter after he stopped offering coupons, this operator's vehicle count increased by 15.5 percent, and his dollar volume rose by 21.7 percent over year-ago levels, even though weather conditions in this operator's market were very similar both years.

Other operators are achieving equally impressive results with different types of frequent customer promotions.

Play Your Cards Right

Using their database marketing systems to track complete purchase histories, many of these operators are awarding customers "frequent washer points" for every dollar spent at a wash.

These points can then be redeemed by customers for free washes, extra services, deluxe package upgrades, and in some cases non-carwash rewards, such as dinner at a popular restaurant or tickets to a movie.

Operators who offer these rewards typically issue bar-coded "frequent customer cards" to people who sign up for the program.

Simply by running one of these cards through the computer system's scanner, the operator is able to keep track of the frequency points that have been accumulated by a customer and the rewards that he or she has received.

The effectiveness of frequent customer cards in building customer loyalty and stimulating repeat business has already won them a wide following among carwash operators.

According to a survey conducted for Dow Jones' American Demographics magazine, 31.5 percent of consumers over the age of 18 have used a frequent customer card at a carwash.

In fact, carwashes were the third most popular purchase for frequent card holders in the survey, trailing only food (48.3 percent) and stockings/hosiery (32.7 percent).

The American Demographics study also found that frequent customer cards play a big role in building customer loyalty.

Well over half the adults who currently have -- or formerly had -- a frequent customer card, reported that the cards influence their buying decisions as consumers. One in five respondents (20 percent) said that frequency cards influence almost all of their buying decisions.

The Gathering Instinct

Frequency programs also offer an important intangible benefit -- they appeal to what some might call "the gathering instinct" in all of us.

Everyone likes to feel that their actions are building up to something. By giving customers the opportunity to accumulate "points" every time they visit your wash, you'll be satisfying this drive. This should encourage a sense of accomplishment in customers and give them positive feelings about your carwash.

The same database marketing technology that has made frequency programs more popular and more practical is also creating other opportunities to build repeat business in our industry.

In the future, I believe we will see more operators use pre-paid (or "stored value") cards at their washes. The technology needed for these cards, which allow the customer to buy a predetermined amount of services in advance, is available to the carwash industry today.

Carwash operators should be able to use pre-paid cards as powerful marketing tools. Operators can encourage long-term repeat business by offering customers better deals when they buy cards of greater value.

For example, you can give customers credit for $60 worth of services when they buy a $50 pre-paid card, $130 worth of services when they buy a $100 pre-paid card, and $200 worth of services when they buy a $150 pre-paid card.

This creates a win-win situation for you and your customer. You're basically ensuring that the customer returns to your wash for an extended period of time, and the customer is getting a discount on your services.

Unlike coupons, this discount is tied to the degree of loyalty that the customer shows your wash. For this reason, pre-paid cards and other frequency programs give people a real incentive to return. It would be all but impossible to match this incentive with any coupon promotion.

That's one reason why a growing number of carwash operators are following Procter & Gamble's lead and "clipping" coupons from their marketing plans.

Ken Brott is vice president of sales at DRB Systems, Inc., Uniontown, OH.