New investors in the professional carwashing industry usually understand rather quickly that there are certain variables that affect the busy days and produce the bad days. Unlike owning a gas station or a food service establishment, where demand is consistent for a good location and more predictable, a professional carwash’s business can be negatively impacted by such outside factors as poor weather conditions — even more so than by a close carwash competitor, according to some experts we have contacted in the past.
Unlimited wash and loyalty programs have emerged as a customer saving and convenience strategy. However, in order to overcome unpredictable weather conditions and provide a more consistent picture of profits each month, many carwashes have also employed these membership-based programs to their own businesses’ benefit.
A shifting consumer
Monthly club carwash membership, as mentioned, can have benefits for the carwash and the customer. One dual benefit, reflecting a trend in customer purchasing throughout the country for many products and services, is the recurring monthly charge. From replacement razors to movies, many consumers are enjoying these electronic, virtual transactions without disruption to service.
According to Bonnie Kimberlin, vice president of sales and marketing for DRB Systems LLC, while loyalty programs in the carwash market are nothing new, several emerging trends are pushing their success today.
“We think unlimited programs that are billed in a recurring monthly manner revolutionized the industry. Society is much more used to the idea of getting billed each month. It is acceptable to go cashless for consumers,” states Kimberlin, adding that an owner’s success with these programs is contingent on pricing them right for the particular business and its customer base.
New carwash owners and operators must also expand their monthly strategies to include membership packages other than unlimited. Commercial fleet accounts also enjoy the benefits of a recurring charge or discounted group rate for such services as carwashing. However, while the systems and technologies are similar, successful carwashes take a different approach with these accounts.
“Don’t just think of unlimited with the monthly programs,” says Tim Gustafson, product testing and development for WashCard Systems. “With the right program, you will have the structure in place to handle fleet accounts and other package deals, such as ‘Buy 10 washes, get one free.’”
Loyalty to your bottom line
When setting the prices for your unlimited, semi-limited and fleet programs, experts note that new investors should take into consideration their current rates and sales, upselling opportunities, the customer base, competition and the desired goal. For carwashes looking to even out bad weather days and provide steady monthly revenue, the strategy might be different compared to a busy wash with no competition.
“An unlimited program might not be the ‘magic pill’ for your carwash. If your competition is not offering an unlimited program, then you might not want to go full unlimited because there are abusers out there,” explains Gustafson. “Whatever a new investor decides on, just make sure there is flexibility with the technologies so he or she can seamlessly change the programs as the market shifts.”
Kimberlin offers some pitfalls to avoid when offering and pricing a monthly program. Overpricing the plan and under-delivering on results is one major setback, but there are others. If you compensate managers and staff on cars washed, she adds, that strategy should also include selling wash packages. Additionally, owners should focus on dollars per customer versus dollars per car.
“Also, don’t limit your loyalty programs to only monthly plans without including other types, such as house accounts, club plans, unit plans, dealer plans, etc.,” asserts Kimberlin. “You should also have a clear strategy for dealing with commercial vehicles and drivers of services such as Uber and Lyft. And, always provide a phone number to call for questions about the programs, adjustments and cancellations.”
According to Kimberlin, when considering a monthly club rate, the below factors should also be considered:
- Competitive pricing
- Single wash pricing
- The carwash’s goals
- Cost per wash
- Visit frequency
“In addition, new investors need to make sure they are making money from any program. If needed, trial test any program with a group of loyal customers,” advises Gustafson. “In general, for unlimited programs, make sure you are covering the cost of six to eight washes today.”
According to Gustafson, for a true unlimited plan to really pay off for most carwash owners in the long run, the location has to maintain a large customer base. The larger the unlimited program customer base is, the less impact the abusers of the program will have on it.
Technology to match your business
Each carwash is unique and each new investor’s program potential will be different based on several factors, including new wash versus existing wash, population, demographics, competition, existing system technology, current rates (if applicable), site setup for inclusion of a “members only” lane, etc.
“Each new investor coming into this industry really needs to evaluate their current situation and research different systems and vendors before making any decisions,” says Gustafson. “If you are looking to eventually expand, for instance, then you need to take into consideration the different software and hardware companies’ abilities to bring it all together for you. You don’t want to establish a working process at one location, only to retool it for another down the road.”
Radio-frequency identification, commonly known as RFID, continues to play a big part in the success of loyalty programs. RFID is commonly used in various parts of society, including for road and bridge tolls and facility security.
RFID chips and cards come in different shapes and sizes, but the benefit to carwashes is all the same. RFID allows for wireless non-contact tracking of information. While this feature is invaluable to express carwash formats, all wash types can benefit from RFID, which can reduce fraud, abuse and vandalism.
When it comes to loyalty programs, there is a definite right and wrong way to implementation. As Gustafson concludes, “Understand your customer base and your business model, and make sure that you are not setting your business up to fail.”