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Business Operations

More than token value

October 11, 2010
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While many carwash owners might argue there is nothing better than real money, operators of token-driven venues would likely disagree.

Tokens provide:

  • The flexibility to reward customers for volume purchases;
  • Heightened security from cheats and thieves (including employees of the carwash);
  • Virtually free advertising; and
  • Increased profitability.

Reward flexibility
A token-based system allows operators flexibility in terms of vending their carwash services. Rewarding customers for high-dollar volume purchases with additional tokens is pretty standard.

Fast Lane Auto Wash in Poplar Bluffs, Missouri sells tokens at $1 each. For $5, customers can get six tokens and they can purchase 27 tokens for $20. That’s the equivalent of a free $7 carwash for purchasing $20 worth of tokens.

“We’re rewarding repeat customers and hopefully building brand loyalty at the same time,” says Fast Lane owner Scott Vaughn.

Because each carwash mechanism will accept any of his tokens, customers have complete flexibility over how they spend their tokens — and their time. Those who want to devote more effort to an interior vacuum may do so — while others may spend additional time on their car’s exterior.

Tokens are a great way to provide refunds to customers, to reward them for their opinions and to support civic groups in their fundraising efforts.

Kerry Hicks, who operates several Splash and Dash carwashes in southwestern Ohio, sells his tokens to civic groups for half-price. The groups then re-sell the tokens at full price and pocket the difference. They make money and Hicks makes friends and reaches new customers.

When issuing refunds to a customer, Hicks also throws in some extra tokens for their trouble. The minimal cost of the tokens is overshadowed by customer retention and goodwill.

The Rainbow Car Wash in Winnipeg, Manitoba, issues tokens to its customers for participating in their market research efforts — whether they are formal surveys or off-the-cuff questions.

“We were constantly doing surveys to see what our customers are thinking,” comments former owner Korey Brandt. Rewarding customers with “a token of appreciation” for their opinion has resulted in many changes around the carwash – including a change in soap shortly after Brandt, who has since sold the business, took over five years ago.

Increased security
Thieves and cheats target carwashes because of the cash they can get away with — not because they desire a lifetime supply of tokens. Operators that have switched to tokens and invested in signage to call out this fact see reduced or eliminated break-ins.

Aside from the loss of cash from a successful break-in, there are significant costs to replace facings and repair coin boxes even if vandals try, but fail, to steal your cash. These replacement and repair costs can be lessened, if not avoided entirely, with tokens and proper signage.

Since employees are handling tokens rather than cash, there is less employee theft as well.

Varying levels of security
At some point, operators will need to determine at what price they’ll vend their services. While quarters have been the staple for many years, an argument can be made that they are too cumbersome.

Larger tokens have a higher perceived value and lend themselves to higher-vend pricing.

For security-minded operators there are options from standard brass/standard sized tokens (which offer no security) to high-tech tokens with a prismatic code minted into the token.

Profitability
Perhaps the most common argument against tokens has to do with their cost. Why would a carwash operator buy tokens to dispense services when he can dispense those services directly in a cash transaction?

In addition to the security issues, here’s where reuse and “walkways” enter the business picture.

Let’s assume carwash tokens which vend for a quarter cost the operator a dime to buy. This price is based on a 10,000 token order, in .800 brass with two custom – front and back – die charges. Smaller volumes will increase cost, while the use of standard dies will decrease cost.

If you sell a token for a quarter, and it costs a dime, you have fifteen cents per sale to cover the cost of water, utilities, water treatment, soap, etc. But since tokens are re-usable, if it is used twice, the cost per use is now a nickel instead of a dime.

If you use a token 100 times, the cost has dropped to just 1/10 of a penny, and so on. Since tokens can be used for decades, their per-use-cost approaches zero, making them nearly as economical as a cash-based system.

Just walk away, Renee
So where does the added profitability come into play? Ironically, from customers who do not even use your services.

The fact is that many tokens sold will not be redeemed because they are lost, misplaced or otherwise unavailable when the customer needs a carwash. These are called “walkaways” because the tokens are sold, but walk away before used to purchase a carwash.

Going back to our example, if all 10,000 tokens are sold in a year, and all walk away, the carwash makes an extra $1,500 per year (.15/token times 10,000 tokens/year).

What about operations which vend services at higher values — like $1?

Larger tokens, typically used for higher value services, are more expensive — but they still cost less than a quarter when purchased in lots of 5,000. At those numbers, the gross margins are even higher.

Assuming the token cost is a quarter, and the selling price is $1, then the difference is 75 cents per sale. If the carwash sells the entire 5,000 token order in a year, and they also take a walk, the wash will make an additional $3,750 (75 cents per token times 5,000 tokens).

So what do customers with these “walkaways” do when they need a carwash?

They buy more tokens. After all, they’re just tokens, right?

Which is part of the psychological power of tokens — people are more likely to use more tokens because they are not viewed as “real” money.

Marketing rewards
Aside from the increased security and flexibility to reward customers which tokens provide, there are also intangibles such as the marketing opportunities they offer.

Vaughn from Fast Lane Auto Wash refers to tokens as “the cheapest form of advertising” because tokens are routinely kept with pocket change or in an ashtray or drink holder.

Every time a customer sees your token, you create an impression for your carwash. This subtle reminder may be all that is required to trigger the response: “Oh, yeah, I’ve got to clean the car before I take that client to lunch next week.”

It means more activity for your carwash.

As operators become enamored with the benefits of token, they begin to develop new uses for them.

CARisma, an express carwash in Houston, TX, gives away tokens with each wash purchased. CARisma owner Ron Pickett uses these tokens to offer customers free vacuum services.

The “Free Vacuum” tokens Pickett uses include the CARisma duck logo.

“We reward customers with a free vacuum for each wash purchased. Instead of making it free for everyone, we use it to reward customers — with a single cycle,” Pickett explained.

Pickett has noticed that not everyone cleans their interior when they wash their car’s exterior. He’s seen customers who save their tokens and then do a more thorough clean-up of their car’s interior once a month or so.

Others vacuum until the cycle ends and then move on, which is important for a high volume operation.

Pickett figures his facility can wash 160+ cars per hour on a busy day. Offering free vacuum service without limitation might induce longer vacuum times, and thus constrain the number of cars completed per hour.

Albert Einstein is credited with saying compound interest is the greatest invention of mankind. While that may be true, a guaranteed return on your investment has got to be a close second.

Tokens, which can be vended for a quarter, 50 cents, a dollar or more, are providing a guaranteed return for self-service carwash operations across North America.


David Blumenfeld is marketing manager for TokensDirect, a division of Osborne Coinage Co. For more information, e-mail David at Davidb@osbornecoin.com.

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