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Two-Touch System - Expand Unlimited Wash Club Memberships

By Brian Mattingly

11/01/19

The evolution and transformation in the car wash industry has been massive over the past several years.

The days of neighborhood tunnel washes with high-schoolers toweling off newly washed vehicles is being transformed by automation, technology, and even artificial intelligence.

With these rapid industry advancements, we are beginning to see a formation of the car wash industry as the new frontier for roll-up strategies and private equity transactions:

INDUSTRY TRANSFORMATION

Today’s car wash is a fully automated express wash requiring very few employees to operate. Consumers can drive up to a pay station, choose their wash from a touch screen, enter the tech-enabled tunnel, and drive up on the conveyor for a wash. As the car moves through the wash, the computer-controlled system ensures consumers get every service they paid for. Safety sensors monitor proper spacing of vehicles on the conveyor — should a customer inadvertently step on the brakes the system prevents the cars from piling up. Once complete, consumers can pull up to a vacuum bay and quickly vacuum their own vehicle.

Furthermore, if a consumer were to subscribe to an unlimited wash plan — which is becoming a fixture of express, flex, and full-service washes — they can simply drive up to the pay station where their car is identified as a member of the plan. Radio frequency identification (RFID) technology or license plate recognition (LPR) technology at the pay station is used to identify which plan the vehicle is tied to. The arm lifts, and in goes the car through the tunnel for a wash — an effortless experience for the consumer.

TECHNOLOGY AND GROWTH

The major POS software companies in the car wash industry are leading the advances in technology. They are consistently examining processes and looking for ways to provide new automation. For example, LPR technology is beginning to take over the older RFID technology for unlimited plans.

Automation is also creating avenues for sophisticated and personalized marketing messaging to car wash consumers. Marketing companies have developed sophisticated technologies that allow for new potential consumers to be identified and invited into the wash. Through marketing/POS integration, barcodes placed on direct mail pieces are scanned when the new customer drives up to the pay station. The codes are then tied back to the new customer and tracked so remarketing and messaging around joining the unlimited wash club can be leveraged.

Two-touch marketing systems like this are helping car washes add new members to their plan at a very strong clip. The idea of inviting a consumer to experience the wash before being asked to join the club can have a powerful impact.

With the LPR, the ability to understand visit frequency can allow for customer segmentation and specific messages can be crafted to various cohorts of consumers. If someone hasn’t visited in a month, they can be remarketed to differently than you would to someone who comes every week.

Research tells us that from an unlimited wash perspective, if the new member visits several times in the first month, their stickiness and longevity in the program increases. Targeting messages to encourage multiple visits in the first month can be done through sophisticated marketing and technology.

RECURRING REVENUE AND SCALE

Many car washes have three or more levels of unlimited wash plans. The higher-end plans allow for more services and can be more lucrative for the car wash operator. However, all levels of wash plans have the magic financial formula for long-term growth — recurring revenue for the wash owner.

Despite poor weather or other uncontrollable reasons, car wash owners can plan budgets based on consistent and recurring revenue derived from unlimited wash programs. Owners and people modeling the finances for car washes are developing models based on the number of members in the plan. The number of plan members and churn in membership are now significant metrics looked at when studying car wash finance.

With recurring revenue and automation, car wash owners and groups are able to scale operations with limited cost. Because of this, private equity and buyer groups are circling the car wash industry.

COMPETITION AND PRIVATE EQUITY

Roll-up strategy is a term generally used in private equity and is now being thrown around frequently in the car wash industry. At the Car Wash Show in Nashville this year, several private equity bankers were walking the exhibit halls discussing this strategy.

In a roll-up scenario, a buyer group will start buying up car washes —typically in a close geography. They will outfit them with automation and take advantage of the limited employee operating expense and recurring revenue that is captured through the unlimited plans.

Many new sites are being built as well to take advantage of the economics. Older sites are being re-outfitted and converted to express washes with automation. With the expansion in the economy and the entrance of private equity, competition is heating up in the United States.

The car wash brands that continue to embrace some level of a personal touch will create differentiation in a space that has the potential to be commoditized. Other considerations include strong offensive marketing strategies that leverage marketing technology to communicate one-to-one with consumers. The car wash winners will also be the brands that are consistently targeting new consumers before their competitors reach them.

  

Brian Mattingly is the founder and CEO of Welcomemat Services, a digital and disruptive marketing company specializing in targeting people who have recently moved. Through Brian’s leadership, the brand has grown to over 60 locations and operates nationally. Brian is an experienced communicator and expert on local marketing. He is a regular panelist and conference speaker on marketing and was a keynote speaker at the International Franchise Association Annual Conference in 2019. Welcomemat Services has developed patent-pending technology to help car wash owners grow unlimited wash club memberships. Welcomemat is a member of the ICA and a regular exhibitor at both regional and national events.

For more information you can visit his company’s website https://welcomematservices.com



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