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Will you lose money by converting your best customers to a monthly pass?
When car wash operators are considering an unlimited monthly pass program, their biggest concern is that they will lose money that they are getting from their best customers. Logically thinking about it, if someone is paying you $10 per wash and coming in once a week, you’d be crazy to put them on a plan that lets them wash an unlimited number of times for $19.95 a month. You’d be cutting your revenue in half from these customers.
If that is the case, then why are so many operators offering monthly pass programs? The answer is simple: These smart operators are making more money by creating more “best customers”.
To understand the numbers behind this this concept of making more money overall, we took a look at a full service car wash that tracks every customer by their license plate. To get an apples-to-apples-before-and-after comparison, we looked only at customers that met the following criteria:
They must be a member of a monthly pass program.
They had to be in the system at least 6 months before joining a pass plan. Meaning, they were already a customer and not a brand new customer.
To be included, at least six months had to transpire after joining. Meaning, since we are comparing before/after sales, we didn’t want to include customers who only joined a month ago.
What we found is that indeed there were 76 customers that spent less in the 6 months after joining a monthly pass. However, there were 212 other customers (nearly 3 times as many) who spent more.
Prior to joining a monthly pass program, these 288 existing customer averaged 2.71 visits to the car wash. After joining a monthly plan, they averaged 3.44 visits. That increased frequency makes sense because these customers can now wash for “free” once they’ve joined a plan. But, what is really important is that these existing customers used to spend an average of $26.07 per month. Now, they spend an average of $41.56 per month…a nearly 60% increase!
This particular car wash has 1,600 customers participating in their monthly pass plan, which are now considered “best customers”. 75% of them were customers that had already visited the car wash at least once in the past. However, about 25% were new; meaning, they joined a monthly pass plan on their very first visit.
To make sure this particular study is not an anomaly, we looked at two other full service car washes and saw similar results.
This concept of creating more “best customers” is not limited to the full service market. It also applies to exterior car washes.
At Wash Works, an exterior car wash (read about “The Comeback Car Wash”), they consider a “good customer” as one that washes at least once a month. You may have a different definition, but they had 163 of these customers that spent $19,551 in the year prior to adding pay stations, RFID readers, and monthly passes. Now, they have 886 “good customers” that spend $144,926 a year. And, those numbers are growing.
When considering whether or not to offer a monthly pass program, there are many decisions you’ll have to make such as “what price to charge?”, “do I have the capacity to wash more cars?”, etc. However, based on the data we’ve seen, “can I afford to convert my best customers?” should not be one of them.