On the Wash Front - January 2010

Fish, or Cut Bait —
Jumping on the Loyalty Program Bandwagon
By Anthony Analetto

According to Thomas Edison, “genius is 1 percent inspiration and 99 percent perspiration.” For everyone who has managed to sweat out the events of 2009, it’s time for the annual challenge to organize your best inspirational projects to grow your business over the coming year. One topic that seems to be blipping on radars all over the car wash industry is the need to implement a customer loyalty program. After you complete the 1 percent inspirational part of the task and decide that you do indeed want to increase the frequency and amount of money your best customers spend at your business, the question becomes “what does the other 99 percent of the job entail?”

The potential is huge. Just take your average monthly wash volume and multiply by 20 percent. According to the magic number from the 80/20 rule, that provides you with an approximate number of existing customers likely to be influenced by an effective loyalty program. Now take that number and predict that 20 percent may wash once more in a month due to your efforts, and the other 80 percent could spend 20 percent more if your incentives are strong. Chances are you’re looking at an annual number in the tens of thousands of dollars, which is why everyone is talking about building customer loyalty programs.

If it were as simple as putting out a punch card offering the tenth wash free, you wouldn’t have read this far. If it was as easy as buying a fancy POS system, then nearly every car wash in the country would already have one — we’ve already established that the numbers make sense. Unfortunately it’s not that easy, and having the right tools only gets you to the dock. Whether you ultimately fish with your loyalty tools or just cut bait demands a lot of sweat. So let’s take a look at some fundamentals before I race into a nuts-and-bolts discussion on loyalty points at the end of this article.

THANK YOUR CUSTOMERS

In a nutshell, a loyalty program is simply a formal process to say thank you to your best customers. Why wait? Why make them jump through hoops? Before developing a formal program, make sure you and your staff consistently walk up to customers, shake their hands, and say “thank you for visiting our car wash, we’ve seen you wash here before and want you to know how much we appreciate your business.” Giving a sincere thank you is powerful, and arguably the best loyalty program you could ever implement.

There’s a restaurant near our office where a group of us eat three to four times a week. Great food. Great service. And a loyalty program that makes me want to take my business elsewhere. For a while, during each meal, the waitress would throw down a new punch card without saying anything. I would throw them in the center console of my car and forget. One day I brought in the whole stack, asked that they combine them, and was told, “We can’t do that.” After some joking, the manager agreed to combine the cards and honor the free lunch but still never thanked us for our business.

One thank you, one time, would have more impact than even the most sophisticated loyalty program. Establishing processes and training to ensure staff consistently thank customers requires work. If you haven’t already, pick up a copy of Raving Fans by Ken Blanchard and Sheldon Bowles to spark some ideas on accomplishing this.

BE KNOWN FOR SOMETHING

Cultivating loyalty from your customers is impossible if they don’t first have a positive memory of their experience at your car wash. Grab onto a competitive advantage, feature, or activity at your wash and promote it on every advertisement and sign you create. You might be the fastest, cheapest, greenest, or offer a 48-hour rewash guarantee, but it means nothing if your customers don’t know about it. Over the years I’ve seen operators offer proprietary wax services complete with smoke machines, free snow-cones with every wash, and one of my all-time favorites — the pumpkin promotion — which I shamelessly copied. Each year this operator went out and bought $2,000 worth of pumpkins and created a pumpkin patch at his full-serve wash. Every customer who bought the top package was able to pick a free pumpkin. Kids in the cars driving by would point and ask their parents to stop for a car wash. His sales and average ticket skyrocketed, and people remembered it year after year. The point is that in order for a loyalty program to work, you have to be known. Whether it’s your logo, branding, stellar customer service, a red carpet on the ground, wash quality, or a patch of 1,000 pumpkins — you have to stand out.

BE CONSISTENT

Once started, loyalty programs demand absolute commitment. They should only be discontinued by rolling them into a better reward system. Although it’s obvious that once you give out a punch card, you must always give out punch cards or risk alienating the few precious customers who collect and redeem them. Consistency should apply to every promotional effort. If, for example, you heavily promote a “Whacky Wednesday” or “Early Bird” special and see huge volume spikes week after week, you are successfully rewarding your loyal repeat customers by default. Don’t stop. Don’t suddenly raise the price. Be careful. Taking away these perks that your customers expect can have a greater negative impact on your business than if you never offered a discount in the first place.

MAKE IT EASY

Now that you’ve made the commitment to implement and consistently deliver a loyalty program, look to one of the available technological solutions to make it easy for both you and your customer. To drive up your ticket average and increase your volume, you’ll want to reward customers more frequently with incentives that are compelling yet make financial sense for you. Computer-based point systems make this easy. Here’s an overview of the basic loyalty programs and how they work:

Points Program
Very simply, you’ll establish how many points your customers get for each dollar spent. Next, you’ll define rewards that can be redeemed with points that can be printed automatically on receipts. At its most basic level, it can simplify the common “buy nine car washes and get the 10th free” program for both you and your customers. They are infinitely customizable, and you can easily use points for offers to drive sales at other profit centers such as detailing, lobby sales, quick-lube, or premium online extra services.

Prepaid Cards
Most POS systems make it easy to sell and track prepaid card sales, but gift cards are not only for the holidays. Many operators will discount these cards as a form of loyalty program and some locations use discounted prepaid cards in lieu of a fleet program, eliminating difficult invoicing paperwork.

Prepaid Items
Instead of a prepaid dollar amount, consider selling a prepaid group of services. This can be done as a wash book or a prepaid card with a balance for items such as 10 washes for the price of eight.

Fleet Wash Programs
Waning in popularity due to extra paperwork and invoicing procedures, establishing discounted fleet wash agreements remains a great way to reward loyalty in this valuable market. Creative branding of prepaid cards for specific markets, such as a special discounted “Realtor” card, can be an effective way to show appreciation for these regular washers.

Gatekeeper Campaigns
Loyalty program software can also be used to reward loyal gatekeepers to otherwise inaccessible audiences. When you want to reach employees at a nearby company or members of local social clubs, carefully negotiated programs that track and reward the organization for each client they send over can be very effective. Rewards may be in the form of free services or gift cards for the gatekeeper, or possibly a group-discounted rate.

Reward Client Referrals
These programs give your current clients an incentive to become promoters for your business. Not only is it an incentive for new customers, but it also acts to reinforce your original customers’ attachment to your business. One possibility would be to reward members of your existing unlimited wash club with a free detailing service for them and a new friend who joins when they both prepay for an entire year.

Fundraising Programs
Filled with the potential to build bonds with the community you serve and even define what your car wash is known for, fundraising is a complex topic that warrants detailed consideration. Most POS systems have functions using gift cards or scan readable coupons to make executing these programs easier for both car wash owners and non-profit organizations.

SUMMARY

Before jumping on the loyalty program bandwagon, first make sure that you truly believe in it. Although a tremendous opportunity to drive volume and revenue, your program will only be as effective as the sweat you put into it.

Good luck and good washing.

Anthony Analetto has over 26 years experience in the car wash business and is the president of SONNY’S The Car Wash Factory’s Equipment Division. Before coming to SONNY’S Anthony was the director of operations for a 74-location national car wash chain. Anthony can be reached at (800) 327-8723 x 104 or at AAnaletto@SonnysDirect.com.

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