Loyal customers aren't fair-weather friends. Few people appreciate this as much as Richard Smith, general manager of Golden Nozzle Carwash, a chain consisting of one full-service and 11 exterior-only locations in the Springfield, MA, area.

Smith saw his traffic count tumble by 8 percent in 1996 as a result of New England's record-breaking rainfalls. Still, he wasn't frowning. Dollar volume at Golden Nozzle actually rose by 3 percent during that rain-soaked year, even though the chain drew fewer customers.

"Just about everybody in our area saw their business hurt by the weather, but it wasn't all bad news for us," says Smith. "We were able to make more money while cleaning fewer vehicles."

The secret? Smith credits the 22,000 members of Golden Nozzle's "Clean Car Club" with helping his chain buck the bad-weather trend. These loyal customers, who prepaid $6.95 to join and receive a package of benefits, continued to return to Golden Nozzle regardless of weather conditions.

"It seemed that the worse the weather got, the more we depended on our club members," says Smith. "On sunny days, we found that club members made up just a little under 12 percent of our tunnel traffic, but when the weather turned bad this figure jumped up to over 18 percent and sometimes more than 20 percent."

Golden Nozzle's success in weathering one of New England's worst winters illustrates the effectiveness of prepaid loyalty programs in creating repeat customers.

"Our loyalty club plan has kept customers coming back and encouraged them to spend more when they visit," says Smith. "Plus, the money we make from selling prepaid memberships has boosted our dollar volume.

Smith says that's true during bad weather years like 1996 and good weather years like 1997." In the winter of 1997, Golden Nozzle's traffic count rose by 18 percent, and dollar volume jumped 31 percent.

Marketing experts in a wide range of industries share Smith's enthusiasm for prepaid loyalty programs. Beginning with the successful debut of "phone cards" earlier in this decade, prepaid programs have changed the way a variety of products and services are marketed.

Kmart and Blockbuster Video are just two of the high-profile retailers that have started prepaid programs in the past year. The Blockbuster "Rewards Program," for example, offers customers free rental videos and other perks in exchange for a $9.95 annual fee.

Whether it's run by a national video store chain or a local carwash operator, the primary goals are the same:

 To lock in loyalty - Customers who prepay to participate in your "loyalty club" program are, in effect, committing themselves to using your carwash since they've already given you some of their hard-earned money. You can encourage even more loyalty among them by including "frequency incentives" in your club plan.

For example, customers who prepay for seven washes could receive a free polish wax every time they return to your wash within two weeks of their previous visit.

 To generate cash flow - The money from the sale of prepaid club memberships goes directly into your bank account. However, your customers will take weeks - perhaps even months - to use the washes. Others will use only some of their prepaid washes before moving out of town or dropping out of the program and providing you with a "windfall" profit.

Smart operators will use this windfall to fund even more generous club member offers. As one operator explained, "The system really feeds on itself - it lets me do more for the customers who care about our service the most."

At Golden Nozzle's Clean Car Club, customers who pay $6.95 to join are entitled to a free 10th wash, a free birthday wash, a rain check guarantee (free rewash if it rains within 48 hours) and a 15 percent discount if they pre-purchase six washes.

"You're asking people to pay you in advance, so you have to give them something very good in return," says Smith.

With a club plan you don't have the mailing and advertising costs associated with coupons. Plus, when you issue coupons, the only people you draw are either regular customers who would have bought a wash anyway (at full price, no less) or "clipper fanatics" who get their cars washed only when they receive a coupon.

However, with a prepaid loyalty program, you establish a logical connection between the customer's actions and the discounts they get. Customers who prepay and support your wash regularly are the ones who will get the best deals.

There are basically three kinds of prepaid loyalty programs in the carwash industry.

 Pre-loaded programs. A specific number of washes are bought in advance, usually at a discount. For example, six washes for the price of five.

 Open programs. These entitle the member to unlimited washes for a specified period, such as a month or a year.

 Perk programs. Entitle the member to discounts and other benefits ( a free rain wash guarantee, the eighth wash free), but are not loaded with pre-purchased carwashes.

Typically, each will have an expiration date. Different kinds of prepaid programs will work better in different markets and with different customers.

For example, perk programs can be sold for a much lower price than pre-loaded programs and open programs. However, because pre-loaded programs and open programs require a greater financial commitment, they can be more effective at locking in loyalty.

You can also combine elements of different prepaid programs in your club. For example, you could offer a rain wash guarantee to customers who pre-purchase 10 carwashes. Or, as Golden Nozzle has done, you could offer customers in a perk-oriented club the chance to pre-purchase blocks of washes at a discount.

Regardless of the program you offer, customers who participate will regard your benefits as having more value.

"If club membership is free, there's always the tendency that customers are going to regard it as being worth what they paid for it," says Smith. "But when you pay for something, you appreciate it more."

Prepaid club loyalty programs can be run either by tracking license plate numbers or by giving members bar-coded cards. When a plate number is entered on your register keyboard, or a card is run through the card reader, your database marketing computer system automatically adjusts the member's account to deduct a wash from the prepaid total or award a discount.

This gives you complete control over the loyalty program and protects against cashier errors or dishonesty.

Running the program on bar-coded cards can save time over entering license plate numbers into your computer system.

"We used to enter plate numbers, but now we just swipe club cards through the bar-code reader," said Bob Cavalieri, owner of South City Carwash in South San Francisco. "This saves about four or five seconds a transaction. That might not seem like a lot , but when you're running a high volume of cars it adds up fast."