If there is one thing the current economic environment has made clear, it is the importance of taking nothing for granted. For decades, carwash owner/operators could count on the fact that customer transactions would happen with regular frequency. Getting the car washed was a habit. But, as budget conscious consumers juggle a myriad of economic priorities and uncertainties, that habit might be happening less frequently.
One commonsense investment in the future is the adoption of a customer subscription model. Cash transactions are dependent on everything, from household budgets to the unpredictability of the weather. Subscription models, when done properly, offer continuity for carwash operators.
Subscriptions can strengthen relationships with customers and reduce a dependence on cash transactions. With a critical mass of subscriptions, owner/operators have a more dependable income. They have the confidence to reinvest in the business, which can improve facilities and wash quality, lead to more services and special offers, and ultimately enhance the customer experience and the customer and owner relationship. Subscription models offer a win-win for all parties.
Applying a subscription model
Subscription models — where consumers register with a credit card to receive a monthly shipment of a product or on-demand access to a service — are increasingly used by marketers and are applied to everything from pet food and vitamins to waxing salons.
In return for committing to a regular payment, consumers are guaranteed a reduced price. By leveraging a preferred membership model, the consumer gets the reassurance that they will always have access to the product or service they desire and feel loyalty to the business that has offered the discount. The business gets a predictable source of revenue.
Approximately 70% of all business done by Mammoth Holdings’ owner/operators is subscription-based, yet the model has yet to catch on broadly with carwash owner/operators nationwide. The subscription model has been leveraged effectively in the Southeast and West where dust presents a challenge for customers, as well as environments where winter conditions and road salts can damage automobiles. These are all good factors for offering subscription models, as they encourage repeat business, but the broader customer relationship opportunity has yet to be fully explored. At our company, we have seen numerous benefits for both owner/operators and customers.
Creating a subscription model for customers
A membership subscription model can be packaged in a variety of ways, but offers certain fundamentals for customers — financial benefits, convenience, and the promise of long-term vehicle maintenance and protection. Memberships typically range from $10 to $50 a month depending on the services offered as well as local market pricing. Instead of pay-as-you-go, a membership — where the provider charges monthly — allows customers to opt for unlimited care for their vehicles for roughly the same cost.
Membership has its privileges. By installing an RFID tag in the customer’s car, or using license plate recognition, there is no need for the customer to leave the car. Visiting the carwash becomes hands free and trouble free. Membership helps eliminate friction, which has a positive effect on the overall customer and owner relationship.
The on-site experience is key to delivering on the promise of a subscription service. Owner/operators looking to build a subscription model should have a conversation with their point-of-sale provider. Be sure to take advantage of pre-programmed tools and screens that will create the right experience for the customer when they arrive on-site. This includes leveraging all services offered by OEM providers. Get a feel for what’s available by talking to other owners and learn from their approach.
Customer email is a critical tool in keeping that customer relationship vital. Use email to educate on all services provided (clear-coats, ceramics, etc.) and on the benefits of maintaining the customer’s second largest investment — their car. Also, educate customers with a tri-fold brochure that explains the environmental and economic benefits of more frequent washes and visiting a professional carwash versus washing at home.
Long-term benefits for owners and customers
Once the infrastructure is established and customers are recruited, owner/operators will see immediate benefits. Subscription revenue will provide a regular, predictable source of income, which leads to better long-term planning and greater stability for the business. With that predictability, owners can consider long-term investments, such as new builds. Membership and subscription programs generate additional data, which opens the door to understanding the customer on a new level.
Owners learn more about their customers’ specific needs, which allows for more creative and valuable marketing opportunities. The owner can create specialized and targeted packages of offerings that match customer buying habits. For example, a low frequency user might require a different approach and a unique set of messages focused on long-term automobile maintenance.
Owners have a better opportunity to upsell to subscription customers because those customers are made aware of additional premium washes. The result is a customer dialogue focused on personalized service and a more predictive business model.
Customer loyalty improves because the customer is locked in and is receiving a range of benefits from the relationship. And, the lifetime value of a customer is substantially higher, allowing for customers to be reached more frequently.
Customers will see upside with their first visit, experiencing faster service with dedicated subscriber lanes and the convenience of hands-free transactions. Membership offers better price points, a better quality of wash, and the availability of more services and special offers, such as additional vacuuming.
The future of subscription-based models
The future of subscription-based models is promising and offers a growth opportunity for the industry. App-based purchases will increase with the proliferation of technology and smartphones and the inherent customer convenience provided.
There will be more vertical integration with other businesses by leveraging of customer information. Retail organizations and restaurants will offer discounts to subscription customers based on their buying habits. For example, a coffee company could partner with a carwash to offer coupons.
We will also see an increase in the use of license plate recognition and RFID tag technology across industries. Look for an increase in the use of data analytics to better understand where customers are spending money and which businesses they are visiting. All this will provide invaluable information for owner/operators as they look to transition customers from cash transactions dependent on weather and economy to loyalty-based, service-oriented relationships.
Corey Joslin is chief operating officer for Mammoth Holdings, the first carwash platform formed by industry insiders with 112 operating locations. He works alongside Dave Hoffmann, Mammoth Holdings’ chief executive officer and former CEO for Dunkin’ Brands. Before joining Mammoth, Corey was director of operations for Pure Magic Carwash in Knoxville, Tennessee. He holds a Bachelor of Science Degree in Industrial Technology from Ohio University and a Six Sigma Black Belt Certification from The Ohio State University.