Canceling Membership Model

[ShinePro1]

I launched Everwash at my wash in Columbus Ohio 6 months ago and I have 60 members/3.9avg uses, but it seems like 90% of these members were already coming multiple times a month, so this membership just reduced my overall revenue as they no longer have to buy it multiple times. Plus there are so many private equity-backed membership locations nearby I almost want to drop the membership model and go back to pay only.

Has anyone ever done this?

 

[chaz]

I’m in Cinn with 1 touchless, 4 ss, 8 vac. I have never even considered the membership option for my wash for exactly the reasons you are mentioning. the Model obviously works well with flex washes….i just don’t see it increasing my revenue. There’s a 4 bay ss only…about a mile from me that offers ever wash on bays only (not vac) ….my wash is priced higher and I’m always busy…the other wash is older and not well kept…..so maybe that format helps them….not for me

 

[JLanman]

I shared this to a similar question on one of the car wash Facebook groups.

Some things to think about. Would you rather have a customer that is worth $130/year or a customer that is worth $300/year? Many articles have reported that the average consumer will wash 13 times per year. If you look at Revenue/Customer, this customer is worth $130 per year at an average wash price of $10 (just an example with easy math). Assuming they use your wash for all 13 washes. Keep in mind there is no guarantees they will use your wash for each of their 13 washes if they are not tied to some type of loyalty plan.

The same customer could be worth $300/year ($25 per month membership plan x 12 months, again easy math). The magic of memberships is the reoccurring revenue. Once the customer signs up, the collection is automated until they take action to cancel the plan. With the full price wash approach, the customer has to take action with every single wash to choose your wash. In this example, you would need just over 2 - 100% loyal customers to match the revenue of 1 member.

You will need to plug in your own numbers to see this effect on your business.

Memberships is a numbers game. If you have low membership counts you are likely serving the heavy user population. The most inefficient part of embarking on the membership journey is the ramp time. The first consumers the will see the value of your plan will be the folks that are already washing their cars frequently. You are basically sacrificing the revenue from these customers to increase the revenue of your customer base as whole.

The trick to a strong membership plan is to attract the 3rd level of membership customer. The low users! This is the group, that will see the value in your offering, but only use it once or twice a month. It is this group the will dictate your pricing plan and it is this group that will offset the sacrificed revenue from your heavy user group.

You can curb the risk by switching from an Unlimited plan to a Limited plan. This strategy will likely slow your ramp, as the limited plans can be harder to sell. But it does offer some cover from heavy users.

Per your numbers, you are at the industry average of <4 wash/member per month. You currently have 60 members. Running 60 members at the industry avg is an indicator that you are likely starting to get some of the targeted market (low users) into your plans. Otherwise your avg use would be higher. Add to this, the competition you mentioned that has already trained the population on the benefits of memberships.

Considering these factors, a better question might be how do you get your member counts into the hundreds? How do your plans compare to your competition? How are you emphasizing to your customers, your value over the competition? How do you get more low users to join you membership?

This article goes a bit deeper into this logic (warning! a bit geeky on the math)
https://touch4wash.com/members.php
This article talks about a strong loyalty program vs a membership approach
https://touch4wash.com/loyal.php
Hope this helps..

 

[Greg Pack]

Can't help but Car Wash Guy is a big advocate of his program, maybe he can comment on what makes his program so successful.

3.9 average per Month doesn't sound like excessive/abusive. What is your estimated net off a person that washes four times per Month?

I'm doing loyalty with an approximate 15% discount through the program. It's growing steadily and I don't really have to fool with it. But I can only assume it's helping because the express that opened down the street earlier this year threw a wrench in the works.

 

[AnalyticWash]

a better question might be how do you get your member counts into the hundreds? How do your plans compare to your competition? How are you emphasizing to your customers, your value over the competition? How do you get more low users to join you membership?

This.

 

[tylerwash]

I launched Everwash at my wash in Columbus Ohio 6 months ago and I have 60 members/3.9avg uses, but it seems like 90% of these members were already coming multiple times a month, so this membership just reduced my overall revenue as they no longer have to buy it multiple times. Plus there are so many private equity-backed membership locations nearby I almost want to drop the membership model and go back to pay only.

Has anyone ever done this?

Your average is pretty good. I just cancelled the Everewash for one of my washes. Before cancelling it, our average had been hovering around 5. We had never gotten it lower than 4/mo since we signed up 2 years ago. When you run into several hundred members, it will give you more headache especially on the fraud. You get to watch it like a hawk and report it to Everwash in a timely manner. Sometime, you have to follow up to make sure if Everwash bans or warns a customer. If you don't it can become widespread pretty fast.

It does impact your overhead costs if you have a higher average like my wash and the multipliers are low. If you want to increase the prices or multipliers, you get to talk Everwash out. Plus, now they can remotely start a wash for a customer if he's not happy with a wash - without the owner knowing it. Who is the owner of your car wash?

Admittedly, Everwash has done a great job on marketing. It brings more traffic to your car wash. But overall, I don't think Everwash is suitable for a IBA that operates 24/7.

 

[Axxlrod]

The trick to a strong membership plan is to attract the 3rd level of membership customer. The low users! This is the group, that will see the value in your offering, but only use it once or twice a month. It is this group the will dictate your pricing plan and it is this group that will offset the sacrificed revenue from your heavy user group.

Actually the trick is attracting the 4th level of membership customer... the zombie customer. This is the group that joins your membership club, and forgets about it. They never use your wash, so you don't spend any money on them, but they keep paying you every month.

Just like the gym customer that never goes to the gym.

 

[JLanman]

If you want to increase the prices or multipliers, you get to talk Everwash out. Plus, now they can remotely start a wash for a customer if he's not happy with a wash - without the owner knowing it. Who is the owner of your car wash?

Ouch! For sure you want a system that YOU are in control.

 

[Waxman]

Actually the trick is attracting the 4th level of membership customer... the zombie customer. This is the group that joins your membership club, and forgets about it. They never use your wash, so you don't spend any money on them, but they keep paying you every month.
Just like the gym customer that never goes to the gym.

It's a nice idea but it's not exactly a viable membership plan strategy. It's more like finding a shiny dime out by the vacuums every once in a while.

 

[Car Wash Man]

I launched Everwash at my wash in Columbus Ohio 6 months ago and I have 60 members/3.9avg uses, but it seems like 90% of these members were already coming multiple times a month, so this membership just reduced my overall revenue as they no longer have to buy it multiple times. Plus there are so many private equity-backed membership locations nearby I almost want to drop the membership model and go back to pay only.

Has anyone ever done this?

We had the exact same experience you have had. We ditched the membership model and we continue to have the same customers come through. Best decision we have ever made. We offer a quality wash for a good price and our customers are happy with the service we offer. If you have any questions feel free to reach out.

 

[JLanman]

We had the exact same experience you have had. We ditched the membership model and we continue to have the same customers come through. Best decision we have ever made. We offer a quality wash for a good price and our customers are happy with the service we offer. If you have any questions feel free to reach out.

Car Wash Man, how many members did you have when you decided to pull the plug on the program?
How do you know the same folks are still coming to the wash and paying full price? Do you have a system to track this?

 

[Car Wash Man]

We had around 70 members. We are a car dealership as well and my desk is in the building right next to the entrance of the wash by a big glass window. Roughly 20 feet away. Our revenue and net went up when we ended the program. I recognize most of our core customers that go through and pretty much all of them kept coming back after we ended our program. The whole wash has been better to manage by ditching the program.

 

[JLanman]

We had around 70 members. We are a car dealership as well and my desk is in the building right next to the entrance of the wash by a big glass window. Roughly 20 feet away. Our revenue and net went up when we ended the program. I recognize most of our core customers that go through and pretty much all of them kept coming back after we ended our program. The whole wash has been better to manage by ditching the program.

Thank you for the reply. How long has it been since you canceled the membership plans?

 

[Car Wash Man]

Roughly two years and we don't plan to ever go back.

 

[STXCW]

The key with memberships is if you are going to do it, you need to be all in. 100-200 members isn't worth the trouble and is why you won't see any advantages to it. Once your numbers start building, the members that take advantage of the unlimited washes will be easier to digest. On our express sites we see 2.8 uses a month. We are on the fence about adding them to our in bays, but will most likely roll it out early next year. Have a colleague with a double TF and he has 982 members, he doesn't bat an eye with people abusing the usage. But the $25k hitting the bank every month sure does help

 

[Car Wash Man]

The key with memberships is if you are going to do it, you need to be all in. 100-200 members isn't worth the trouble and is why you won't see any advantages to it. Once your numbers start building, the members that take advantage of the unlimited washes will be easier to digest. On our express sites we see 2.8 uses a month. We are on the fence about adding them to our in bays, but will most likely roll it out early next year. Have a colleague with a double TF and he has 982 members, he doesn't bat an eye with people abusing the usage. But the $25k hitting the bank every month sure does help

I agree memberships can be very useful in express sites and tunnels, which is why most adopt that model. I haven't seen many IBA that have a really profitable membership plan that makes it worth while. If anyone else has any insight on their IBA and if they are running a membership please chime in.

 

[tylerwash]

I agree memberships can be very useful in express sites and tunnels, which is why most adopt that model. I haven't seen many IBA that have a really profitable membership plan that makes it worth while. If anyone else has any insight on their IBA and if they are running a membership please chime in.

Agreed with what you said. Before cancelling Everwash, we had more than 600 members. We would have had about 800 if we didn't ask Everwash to ban the ~ 200 users who had repeatedly abused the wash policy. And we really didn't track the usage for the first year and half since we signed up...we started getting serious and tracking the usage periodically at the beginning of this year. With so little control the car wash operators have, I don't think Everwash is a good fit for IBA setup.

 

[traveler17]

Agreed with what you said. Before cancelling Everwash, we had more than 600 members. We would have had about 800 if we didn't ask Everwash to ban the ~ 200 users who had repeatedly abused the wash policy. And we really didn't track the usage for the first year and half since we signed up...we started getting serious and tracking the usage periodically at the beginning of this year. With so little control the car wash operators have, I don't think Everwash is a good fit for IBA setup.

What was your average use for 600 members?

 

[tylerwash]

What was your average use for 600 members?

As I mentioned in this post, our average was around 5 before cancelling it. Once our member # surpassed 100, I don't think our average had been less than 4. On some busy month, we saw the # getting very closed to 6. That's not what I was told by my account manager when I signed up. He told me I should average 2.5 wash a month. It had never happened in reality. He said the more people signing up, the lower the average would be. That's not the case either. I guess my market is different...

 

[DavidM]

I think there are a handful of key factors that you have to get right for a monthly pass program to work in the IBA world. The two that are most commonly missed are plan pricing and the ability to link the plan to a single vehicle.
1) If you cannot ensure that each member isn't washing more than 1 car, you will always have too many washes per month per member.

2) The plan has to be priced aggressively to attract the most users. If you price your plans too high, it will be difficult to grow the membership base.

The tunnels figured this out. $/wash will make memberships look bad but net profit is more important than $ per car. Memberships trade average ticket to gain overall profit.

Just my opinion, worth every penny you paid for it, lol

David