Recently, I watched a short promotional video on YouTube for a car wash company offering unlimited fast, convenient, quality washes starting at just $14.95 per month.
To paraphrase a woman customer in the video: Love the value because I can wash my car all I want for less than $15.00. Of course, given my nature, I wondered how she would love the value for $9.95 or $119 annually (instead of $179). I imagine she would.
To make a point: Hard Rock in Tampa, FL conducted a promotion last February whereby the company gave away $50 gift cards good to use at convenience retailer WAWA. The card could be used at any WAWA for gasoline, food services, beverages, or convenience goods and products.
Reportedly, hundreds of people lined up before the promotion even started, and the waiting line stretched more than half way across the entire casino floor and lasted all day long.
There were so many thousands of people who took up the offer that Hard Rock ran out of gift cards and had to give vouchers or free play to avoid a customer-service catastrophe.
So, why the big rush for just $50? The principal reason — besides “free, free, free” — is the WAWA brand image in which consumers in Florida have found great value.
Of course, WAWA has to promote this way because it cannot tap into the subscription economy by offering monthly unlimited gasoline, unlimited food services, or unlimited lotto tickets.
However, car wash operators can, and they have done so in a big way.
Over the last four years, equipment spending has more than doubled, most of which has been in the conveyor segment including express exterior and loyalty-club-powered car wash models.
According to a recent industry report, almost 80 percent of conveyor operators surveyed offer loyalty programs whereas self-service and in-bay automatic operators trailed at around 50 percent.
The monthly unlimited wash option is the most popular. Reportedly, the median number of memberships among survey respondents is 2,500. Median is the value separating higher half from lower half of a data sample and not the mean or average number.
Subscription pricing has shown to provide car wash operators with a more predictable revenue stream, which is greater than the revenue from one-off purchases.
Subscription members also have higher average lifetime value than nonrecurring business models. Moreover, people find unlimited washing convenient, and it saves time and money.
So what might rock the boat?
After all, experience has shown that when products get old or can be replaced by something cheaper or easier the novelty can wear off. Likewise, if customers decide the value isn’t worth it, what is going to keep them from canceling their membership?
Here, manufacturers have attempted to enhance the car wash experience by tailoring products and process to create a better show for the customer.
Other operators have switched to belt conveyors in an attempt to differentiate the business. Yet others have joined digital car wash networks to improve their position in the value chain.
The latter of which may raise issues of privacy because subscription models and digital networks require a business to gather substantial amounts of information from the customer.
Experience has shown a security breach can have a significant and long-lasting effect on revenues.