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Locking in Long-Term Commitments

Locking in Long-Term Commitments

May 19, 2023

6 minute Read

By Lindsey Quick

For the last several years, the car wash industry has been on fire with talk of subscription models. With the tremendous growth that’s happened during that time frame, car wash owners and operators are now exploring ways to evolve their subscription services, to cement loyalty from their customers and to protect against competition. Some car wash professionals are looking into longer-term membership plans as a potential strategy to lock in a solid customer base. Gyms, cable companies, and some phone service providers do this — but is it a viable option for car washes?

There’s no question that consumers are willing to subscribe to a car wash plan. According to the 2022 ICA Car Wash Consumer Study, wash club subscription programs are the fastest-growing service offering in the car wash industry, with reported membership increasing by 43% since 2019. And with 88% of customers planning to continue their membership, the trend isn’t going away any time soon. With tools that integrate with your point-of-sale hardware and website, or smartphone apps allowing customers to carry access to their memberships in their pockets, there’s no shortage of capabilities. So, should you be adding more options to your membership program, as far as the structure and length?

LONG-TERM OR MONTH-TO-MONTH?

ICA member Dennis Dreeszen, owner of Colorado-based Autowash Car Wash and CEO of AMP, strongly believes in the value of a membership, but sees pros and cons to long-term versus month-to-month. “Through memberships, operators can create predictable, consistent, steady revenue streams while their customers enjoy the benefits of having access to car washes,” he said. “The challenge for operators is reducing churn, either because the customer doesn’t see the value after a few months, or they decide to go to another car wash chain based on a lower cost offer or other factors.”

One approach to mitigating that churn is through semi-annual or annual memberships, but Dreeszen acknowledges that some customers are reluctant to enter into a contract. “Incentivizing semi-annual or annual commitments with an additional discount is one way to convince customers to opt-in,” he said.

From his perspective, though, the most profitable way is to maintain loyalty and flexibility at the higher margin month-to-month program or offer multiple subscription options to satisfy the needs of most customers. “Annual, semi-annual, month-to-month and even pay-as-you-go should be offered in order to attract customers with different needs, financial situations or preferences,” he said.

Long term commitments with subscription models at the car wash.

LOOK FOR FLEXIBILITY

Being able to easily manipulate and manage the management software program is a key point to consider when contemplating your membership options, too.

Dreeszen knew the value of a membership program, but wanted flexibility in managing it and couldn’t find a program that supplied exactly what he had in mind. So he partnered with Adam Trien, an experienced smartphone app developer, to create the AMP Membership Platform.

“I had ideas about how to improve the process and the customer experience, but there was nothing out there that could accomplish what I wanted,” he said.

The platform, which is a smartphone app, allows car washes to leverage the power of the smartphone to drive membership, loyalty, marketing and retention activities anywhere the customer is, not just when they visit a location, Dreeszen said.

Flexible membership platforms, such as AMP, could also help with attracting new customers, retention, conversion, reporting and future program adaptations. Dreeszen said you should look for a program that easily adapts to new pricing models and allows you to convert or change customer plans without hassle to your customers or your teams, while integrating seamlessly with all systems to make membership programs of all levels easier to manage.

KNOW YOUR RENEWAL LAWS

ICA member Austin Esecson is co-founder and CEO of Rinsed, which specializes in customer relationship management (CRM) software solution built specifically for the car wash industry. “Our tools integrate with the operator’s existing car wash point-of-sale hardware, automating messaging via email and text to customers and helping operators manage and grow their subscription revenue,” Esecson said. Operators also have access to detailed reporting and analytics.

Esecson believes annual plans are a fantastic way to improve retention with the added benefit of better cash conversion for the operator, but notes there are two important things to consider before implementing an annual plan.

“First, I would only suggest going this route if you are able to renew the plan automatically,” he said. If the customer has to make the buying decision all over again in 12 months versus having the default be that they are automatically renewed, operators lose a lot of the power of it being a subscription. 

“Secondly, you'll need to keep up with the ever-changing Automatic Renewal Laws (ARLs) in your state or find a partner to help navigate this for you,” Esecson said. In a growing number of states, there are requirements around consumer notifications and providing the opportunity to opt-out ahead of any renewal of 12 months or longer. Using a tool like Rinsed can help operators compliantly benefit from annual plans without changing their existing point-of-sale hardware.

Long term commitments with subscription models at the car wash.

EXPLORE CUSTOMERS’ NEEDS

ZIPS Car Wash, based in Plano, Texas, has been offering a no-contract, unlimited wash club since 2012. Although the structure of their month-to-month plan has evolved over the years, ICA member Mark Youngworth, ZIPS Car Wash chief marketing officer, said the brand wants to meet customers where they are.

“Our approach is to offer a low-risk opportunity to see if ZIPS unlimited services are a potential solution for a customer’s needs,” Youngworth said. “While subscription models have been around for a while in this industry, there are still so many customers who have yet to try them. We feel it’s important to meet customers where they are, so we’ve made it easy to try it out and experience the ZIPS difference with options that are obtainable and affordable.”

MAKE IT EASY FOR THE CUSTOMER

No matter the tool one uses, it is imperative that customers have access to their membership profiles online, with the ability to edit or change their plans at any time.

“Car wash owners are losing tens of thousands of dollars in subscription revenue each month because it isn’t easy enough for customers to do things like update their credit cards or manage their plans online,” Esecson said. “We have a program to attack both credit card churn and voluntary churn, and can often reduce both by more than 20%.”

Esecson also recommends making it easy for customers to purchase their memberships online. “Online sales have a huge untapped potential in this industry,” he said. “We have some clients selling more than 10% of their new memberships online. If you can successfully open up this channel, it can have the same effect as opening a new store without the time, labor and capital expense involved.”

ZIPS Car Wash prioritized this concept with their program, ZIPS Unlimited. Members have access to an online customer portal, ZIPSme, where they can manage their membership and access additional benefits.

The ZIPSme portal includes a feature called Partner Perks, where members can access discounts and giveaways while also having the capability to manage their unlimited account, including updating their personal information and adjusting their plan.

“If you listen to customers, one of the biggest complaints about memberships is the inability to make changes to their plan,” said Dylan von Kleist, vice president of sales and marketing for AMP. “If you’re locking them into a semi-annual or annual program, the fastest way to ensure they’ll want to cancel is to make that program difficult or cumbersome to manage.”

USE DATA TO DRIVE CONVERSION

Both Rinsed and AMP offer detailed reporting and analytics capabilities that will help operators make better informed decisions about their membership programs.

For example, the AMP Platform can automatically recommend different membership levels as customers use the wash. “When your pay-as-you-go customers use the wash, the app is collecting data about what level of wash they purchase, how often they purchase it, and where they purchase it,” Dreeszen said. “Through automation, the AMP app can tell that customer their potential savings if they joined one of the other membership programs.”

As customers grow more accustomed to subscription programs in their everyday lives, there’s an opportunity for car wash owners and operators to reassess their membership plans and consider whether a long-term or short-term option works best for them and their customers. With the dramatic growth of subscription wash programs being one of the top three factors fueling record industry growth, now is the time to consider what’s right for you. While most industries are moving toward the month-to-month model, it is possible to find success in long-term contracts.

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