2009 – Survival of the Smartest, I don’t care how Strong you are.

 

Making the best of your situation.

 

 

What I have to say could be seen as unpopular to a lot of business owners because with it comes both a condemnation in addition to a message of hope. The truth is that there are many car wash businesses that that are not having the same issues that are being reported by failing wash owners. The success of one business means that there is going to be the failure of another – this is the very nature of competition. Right now there may be fewer vehicles being washes, although this does not mean that all washing has stopped. The simple truth is that there are a vast number of vehicles that will need to be cleaned no matter the economics of the day. For most American’s, car care is a necessary expense, no different than fuel and engine maintenance.

I’ve seen some amazing wash business operators thrive in areas that previously were according to failed business owners, “a terrible market for a carwash”. And this just strengthens my beliefs that there are car wash operations that have far too long been taking advantage of what we will look back on as “the golden years of car washing”. There was a period of strong business for carwash operators and it required nothing more than some land, a building, and the equipment to fill it. You could build a carwash in the middle of a corn field in Iowa and customers would line up. But the sad fact is that our current economic ecosystem can only handle limited number of car washes at any given time. Those car washes that are currently not experience economic woes are those that are operating with a plan and it is plainly obvious to me that the businesses having difficulty have no plan and no exit strategy.

So why are so many businesses having difficult times? Unfortunately there are no simple answers that can be applied to every situation but there are indications and trends that have been identified since rising energy costs have started to take their toll on the complacent business owner.

Trend 1) The businesses that are largely unaffected by the current economy in the United States are those that make a concerted effort to appeal to a wider range of consumers. I’ve noticed that all of the washes that I drive by with open bays are doing nothing to advertise, promote, or understand what customers want.

Trend 2) Business owners that will succeed in 2009 will be those that invest in new technologies to modernize their carwash. Is it only me that sees all of my nieces and nephews getting their first car and carrying no cash in their pocket for the car wash? Do you see that the cash-only carwash a sinking ship with limited profitability? Business owners that will come out ahead of the pack over the next few years of economic downturn will be those that increased spending on advertising, marketing, and new technologies – the same was true of businesses that survived the disastrous effects of the great depression that took Wall Street and Main Street to it’s knees. Sound familiar?

Carwash Monitoring and Video Surveillance

Car wash operators are always looking for ways in which to both cut costs and save time. Most new car wash facilities start with both a monitoring system and a video surveillance system from day one. Many existing facilities are seeing the need to create accountability for not just criminals, customers, and employees. Monitoring systems keep honest people honest and helps eliminate shrinkage as well.

Video Surveillance – Be aware when your not there.
Car wash operators already know the value of having a digital record of what happens at their wash when they are not there and when employees ARE there. Having cameras in each bay that can be viewed from the comfort of your home office can help you sleep better at night knowing all is safe and secure. Modern camera systems are now accessible through a Internet connection at your wash which puts you one click away from seeing your facility.

Settling Customer Disputes
A second value in getting a video system is in an instance in which a customer makes a false damage claim. “Your machine dented the side of my car, you need to pay to get it fixed!” is a common thing heard by a wash operator. These instances are quickly put to rest when an operator can show footage of the vehicle (already damaged) when they drove in onto the lot. If a picture is worth a thousand words, imagine the worth of 10 seconds of video footage!

Capturing Crimes of Smashin’ on Video
Having quality video footage can help you work closely with local law enforcement to catch destructive vandals and would-be thieves as they destroy your wash equipment in order to get at the money inside. Most DVR equipment can be wired directly into your alarm system which upon triggering an alarm all cameras can begin to record at full resolution in order to have a better chance at getting the footage needed to convict.

Carwash Monitoring – The Secret of the All-Stars
The most successful carwash operations rely heavily on their carwash monitoring system to keep them well-informed about the health and wealth of their wash business. Information is the most powerful tool that a business owner can have to help make informed decisions. Carwash owners and operators that have monitoring systems are able to maintain a higher degree of control over their entire wash operation.

It’s a Coin Changer, not an ATM
One of the big loss-leaders at a carwash facility is uncounted money from changer units. One dishonest employee that had been caught told the investigator that the change machines were just like an ATM that was never counted. Many wash operators report that they have been the target of theft involving stringing scams or stolen credit cards that wipes them out of their coins and tokens. Carwash monitoring equipment can detect these types of crimes in the act and simultaneously cut power to the changer, send a text message to the wash owner, and turn on a video camera wired into the security system. Even employee theft will drop to zero when every coin, token, and bill is accounted for throughout the wash facility.

Never Run Out of Chemical
A huge benefit of a carwash monitoring system is that you can make certain that the main tanks never run out of chemical. You can configure your sensors to alert your wash manager and your chemical distributor with a text message and an email when a monitored tank starts running low. This saves you money on rush service calls for chemical fills and delivery. This saves chemical distributors the time it takes to send a driver around on their route the ‘check’ chemical levels. Wash owners that never have to worry about running out of chemical before a busy weekend means they never have to worry about the associated losses of having to turn away business. Now you can go on vacation and know that if chemical runs low your chemical distributor is also sent the same text message and will have a delivery sent out without you even making the call.

Your Evening Status Report Delivered
Wash owners with carwash monitoring equipment tell me that they sleep easier at night because every evening they get a text message to their phone that gives them their car counts, daily totals, cash counts, credit card counts, and loyalty card counts. Knowing whether you hit your number for the day was never possible before monitoring systems were installed. The following morning a followup text message arrives to the wash owners phone while sipping a cup of coffee with the full report for the previous day.

Monitoring Makes Investors Happy
For wash businesses that have investors or would like to attract potential investors will be pleased to know that having a remote monitoring system is exactly what the doctor ordered. Investors want to be getting regular reports on how the investment is doing. Since monitoring equipment tracks all revenue including cash it makes it easy for investors to remain the silent partner and allow wash operators to do their day to day operations without being bogged down with regular progress reports and financial updates. Consider how you can get more done during the day if your most of your paperwork was automated by a monitoring system?

Learn from Your Mistakes – Historical Trends
Monitoring systems are powered by powerful software that can compare months against previous months or the same time period the year before. By looking at weather data, car counts, and pricing at the time you can help identify trends and business growth or loss. The reason monitoring systems play such a large role in a successful wash operation is that wash owners are able to find out where the loss leaders are early on before it can largely impact overall revenue. Just as important as knowing when something is wrong, monitoring lets you know when things are going right. The key to growth is to identify what works and replicate those efforts. Many wash operators have told me that with the assistance of their monitoring system that they learned that they were not charging enough. Bobby Willis of Cool Wave Carwash says that if you have more than 20% of your customers buying the top wash package your not charging enough. How valuable would it be to know whether or not your leaving money on the table?

Catch the Small Problems before they become BIG Problems
Lastly, if not most importantly monitoring systems can tell you when there are issues at the wash. Error codes from entry stations, faulty equipment errors, doors that stay open in the winter and won’t close, and any number of other potentially disastrous problems. Monitoring systems are invaluable for a wash operator that wants to operate lean and make the most out of the equipment that they have. As any vehicle owner can tell you, it’s better to catch a problem early on before you end up replacing entire engines or having to get a whole new vehicle all together.

Ignorance is not bliss and running a business in the dark is no means to run a business at all. Whether your building a new facility or have an existing site – wash monitoring and video surveillance may be exactly what you’ve been looking for because if you aren’t, employees and criminals looking to rip you off certainly are.

Car Care Expo 2008 (Orlando, FL) – Trend of the Show

I went to the Car Car Expo and spent a lot of time talking to wash owners and operators about their goals, their dreams, and started looking at what this years trends were.

1) Multi-location owners; This year more than any other I found more wash operators that had 2 or more locations that were looking to do several things to make them more successful.

a) Remote Monitoring – These owners were looking for a retrofit solution that would provide them with accurate wash counts, cash intake, chemical monitoring, credit card auditing, and ways in which to bring ‘Big Brother’ into their business and keep the honest employees honest.

b) Multi-site Loyalty Promotions – The wash owners that had multiple sites were looking for a way to leverage the many wash locations. There were a number of highly successful car wash operators in attendance this year and they made it VERY clear that the only way to maximize profit potential was to ‘link’ the multiple locations together under a unified loyalty program. Whether this was a prepaid gift card program or a commercial fleet management solution that could be pitched to the local city and large business accounts. These were the tools that were being sought after.

2) Credit Card Acceptance Retrofits; I don’t want to seem like a complete broken record, but HEY it’s 2008 and consumers are being very vocal about their desire to use their credit card at the wash according to nearly 3/4 of the people I spoke with. I suppose the most common thing I heard at the show was, “I know I need to do SOMETHING, I just don’t know what direction to go.” or “Wow, that SURE is a lot of money to retrofit!”

Now seriously. If your customers are asking for a service and are willing to pay you MORE per visit for the convenience to use their credit card, what are you waiting for!?

Interesting Note: I spoke with a company called HLC Capitol, they do equipment financing for car wash owners and according to their representative Jeff Grong, with the way rates are right now a car wash owner can finance an ENTIRE credit card solution ($25,000) for $15 bucks a day with the way rates are right now. Based on the way customers that are currentyly accepting credit cards in the bays and vacuums, vending machines, and pet washes ALL substantiate that the additional profits made by credit card acceptance can easily make that monthly payment and still have profits above and beyond that cost. In my world of entrepreneurial investments I call that a win-win situation.

More observations to come later.

Successfully Managing Commercial Fleet Business

Car wash operators that are seeking to improve their wash and bring consistency to their cash flow should consider approaching local businesses and making arrangements to wash their company vehicles.  The greatest challenge is that many car wash owners overlook the vast number of company vehicles in their community. Most car wash owners disregard commercial fleet accounts because it can seem a bit overwhelming and without the right tools it can be a lot of work. The good news is that with the proper tools and armed with the right information, catering to commercial businesses in your community is far less difficult that you might think.

Why Commercial Fleet?

Commercial fleet business is perhaps one of the most reliable sources of regular vehicle washing for successful car wash businesses today. Most companies with fleet vehicles have strict policies on keeping their vehicles clean both inside and out and must adhere to local environmental guidelines. Drivers of these company and municipal vehicles that do not have car washing facilities of their own will use professional car wash facilities within their community. The average commercial vehicle is washed at least three times a month! Some of the larger vehicles, especially those that work around fertilizers, chemicals, and on industrial sites are required to be washed daily due to environmental regulations.

There are many wash businesses that have found it easier to sell the services of their wash to a single business owner that represents multiple vehicles than it is to reach out to each individual consumer that makes up customers from the public sector. If you can cater to the needs of the businesses owners in your community your wash will never have a slow month again.

Succeed Where Others Have Failed

There are many car wash operators that claim to have gone after commercial fleet business in the past and failed. The reason why those efforts failed is because without addressing the biggest problems of these business owners the negotiations will always come down to discounts. Once you make the conversation about price you have failed in differentiating your wash from a competitors other than whether they are willing to discount more than you.

You can be highly successful with fleet business and avoid discussions about discounts all together if you can address the number one fear of every business owner which is that their employees are stealing washes from them. Business owners with commercial vehicles are forced to either reimburse their employees or distribute untraceable coupons or tokens to their employees. There is nothing about coupons or tokens that provides the level of accountability that business owners can truly feel comfortable with. By finding a way to provide the accountability that business owners desire you will enjoy the same levels of success that many highly profitable car wash operators enjoy due to their commercial fleet business revenues.

How to Manage Fleet Business and Create Accountability

The only way to give business customers the level of accountability that can earn you their business is by having some way to track every employee wash transaction. Tracking systems range from low-tech paper logs to software solutions that make use  fleet cards or proximity passes with automatic reporting and online account access.

The most successful car wash operators find that the key to successfully managing all of the details of a commercial fleet operation lies in using technology to automate the busy work of administration. Wash owners from around the country have reported drastic improvements in their commercial fleet business once they were able to provide a detailed invoice to their fleet customers with complete wash transaction data.

Success Story

A car wash operator from the midwest recounted a story about how his fleet business grew to over 80% of his annual wash revenue after he made an investment in a fleet card system and replaced his token sales. Robert was well known in his small town community since he owned his four-bay self service carwash with a single in-bay automatic for close to ten years. Back when Robert pre-sold tokens to businesses he would make his rounds to the ten businesses in town that purchased tokens from him on the first week of every month. Robert recounted that he had a landscaping company that would purchase $60 worth of tokens for $50 every month from their petty cash. The owner of the landscaping company would then distribute the tokens amongst his six drivers. The owner had made several complaints in the past that he was certain his drivers were skimming tokens and used them to wash their personal vehicles on the weekends. There really was very little that either the car wash OR the business owner could do about it. Token sales fail to give businesses the accountability that they want. Robert claims that many of the businesses in town turned down token sales for that very reason. Business owners would either mention that they couldn’t trust their employees with the tokens or that the business owner did not like the idea of tying up funds by pre-buying tokens each month.

Robert did some research and found a company that specialized in adding cashless payment systems to existing car wash equipment. He bought the hardware and software that allowed him to retrofit all of his bays, vacuums, and his old automatic entry unit to use a proprietary card to active the wash. Robert had created customized cards with a photo of his wash location, his company logo, his website address, and contact information on the back. That next month after Robert got his cards back from the printer he decided to approach his ten commercial business customers about his fleet card program. Robert had no idea how popular his fleet card program would be in his community and over time it changed his entire wash business.

Robert arrived at the landscaping company and was greeted by the company receptionist who cheerfully started pulling out the usual $50 dollars in petty cash to buy their usual allotment of tokens. When Robert explained to the receptionist that it would not be necessary to pay now, she had no idea how to react. She called the owner of the company out to the receptionists desk and it was then Robert took out the fleet cards he had pre-programmed for them and placed them on the desk that things became clear. He explained that each card was to be given to each driver and that his software at the wash would track every single wash made by the landscapers. Robert pulled out an example invoice that showed how every wash made by an employee would be recorded and displayed on a monthly invoice. Robert pulled out a notecard with a login and password written down on it along with a website address. From the website the fleet account owner would have “online banking” style access to his entire company account. This way he could monitor all employee activity, set monthly spending limits, set price limits, pay his monthly invoice online with the company credit card, and even limit when the fleet cards would work. The owner of the company was amazed and excited to hear that he no longer had to hand out cash or tokens to his employees. He also now had the ability to limit employee card use to company business hours. His fear of his employees washing their personal vehicles on the weekend was completely gone thanks to Roger’s new fleet card solution.

Roger received equally positive feedback from his other fleet accounts when he continued his rounds that week and issued the cards to his other customers. One of the best things that came out of eliminating pre-sales was that with all of the added value that a card system brings to the bargaining table wash owners did not haggle over discounts. More surprising was that Roger had an average +300% increase in spending by those fleet accounts because they were no longer limited in how many times or how long they could wash based on the number of tokens in their pocket. Roger believes that the reason tokens and paper coupons fail to hit the mark for commercial washing is that you effectively create an artificial ‘limit’ to the amount of washing those customers can do based monthly pre-sales of tokens or coupons.

Roger pulls out a long printout from his fleet management software and points to the long list of commercial fleet accounts that he now has after only one full year of promoting the system to business owners in his community. He has customers that range from city motor-pool vehicles to the automotive dealerships from down the street. Roger indicates that he has customers with anywhere from a single vehicle to several hundred vehicles that wash far more frequently that your average consumer will wash their personal vehicle. Roger describes how his cash flow has lost most of the peaks and valleys that he experienced the first nine years he owned his wash due to the regularity that commercial fleet washing has brought. Since Roger implemented his fleet card program the drivers of commercial fleet vehicles became so used to using a card for activating the wash that close to 70% of the commercial fleet drivers purchased prepaid loyalty cards for washing their own personal vehicles.

Time is Money

A car wash owner that wants to become more successful has to find ways in which to duplicate their efforts, automate the busy work, and rely on the advice of experts to improve their chances at succeeding right out of the gates. Roger admits that he would never have had the ability to manage as many commercial accounts if he had to continue to make rounds to sell tokens and coupons for the automatic wash every month. Roger mentions that he only has to visit a customer to talk to them for the first time to sign them up for the fleet account and issue their first set of cards. The online interface that every customer has access to gives the fleet owner the ability to request additional cards, deactivate lost or stolen cards, and take care of the day to day administration without ever having to directly deal with the wash owner or wash employees. Roger uses the extra time that he has gained to focus on bringing on new commercial accounts, marketing his wash, and focusing on promoting his wash throughout his community.

Is Fleet Right for You?

By now you should have a good idea whether or not commercial fleet accounts are something your business is ready to take on. Some wash owners have no desire to leave their property in order to bring in new business. Other wash owners that recognize the cash flow potential of fleet business will hire employees to go out into the community and sell businesses on the value of signing up for a commercial fleet account. If you have found that token sales and paper coupons are not as profitable as you would like then perhaps it’s time to try something new. Find a way to build-in additional value beyond the price of your wash and give commercial business owners the accountability that they are looking for, they will give you their business in return.

Happy Hunting.

Industry Trends of 2007

Trends of the Self Service and In-bay Automatic market for 2007-2008

I am thrilled and excited about the recent trends in the car care industry and I eagerly look forward to what 2008 has to bring. This report will examine the past and future for a wide assortment of areas within the car are industry. Each of these areas of the industry deserves it’s own in-depth analysis but for the sake of this report we will only discuss the top trends within each area.

Trends for Carwash Operators
In the past year I have interviewed car wash operators from all areas of the country hit hard by natural disasters, high costs of living, draughts, and rising prices at the pump. I spoke with operators that are claiming huge losses in their business, yet on the other side of town their competitors are claiming that they are seeing a huge increase in their business. Which side of this equation does your business fall into?

One consistent trend that carries over from year to year is that successful operators have within their power to determine their own success regardless of the hand that was dealt them. In evaluating published studies from the International Carwash Association and the Regional Associations the 2007 data suggests that there are some localized communities that have been hit hard across the board and business owners are taking the brunt of these changes in local economies. But I could not find a trend that supports an overall decline in car washing in the United States, but rather an increase. For years, business owners of car washes with declining revenue have been eager to point fingers at external variables such as gas prices and automotive sales to justify their losses to others and themselves. These variables may have impacted business in past years but recent data suggests that it is no longer the case. As more detailed and comprehensive business comparisons are done it is becoming far more clear that businesses that succeed and business that fail have one very common variable that is within their control and that is their ability to make changes to their own business over time.

What are the consistent trends amongst successful wash businesses in 2007?

Trend #1 – Successful washes update their business to meet consumer buying trends: What successful car wash owners of 2007 have been reporting is that consumers have been changing what they want, how they want it, and how they want to pay for it. This is the number one variable in whether business is good or bad. It comes down to the buying trends of the customers themselves. Successful car wash operators are quick to point out that by making the necessary changes to their own wash business they have been able to capitalize on competitors that have become complacent and fail to keep their appeal with their local customer base. Are you doing what it takes to keep your existing customers or are you doing business the same as always? Try new things and do not be afraid to go outside of your comfort zone.

Trend #2 – Successful washes make investments in new software programs: Business analysts have been able to identify that car washes that had made new capitol investments to update their wash in the past two years are now showing positive returns. Survey results from 2007 indicate that 80% of car care operators saw “Real & Immediate” gains from new software purchases according to industry trade publication data. The number one software investment in 2007 for self service and in-bay automatic washes was remote management systems (including video, money tracking, and high-speed credit card clearing) and commercial fleet management software. Wash operators have found that in the past few years there are a wide variety of new software programs that save operators time and allow them to make more money. For most car wash operators their time IS money. If a software program can free them up to focus on running their business rather than running around their business it is an easy decision to make. Capitol investments must be made on a regular basis to remain competitive.

Trend #3 – Successful washes learn to tell the difference between marketing and discounting: Successful car wash owners are taking business away from complacent car wash operators through superior marketing, not slashing prices. A successful west coast operator that wished to remain anonymous commented that his competitors have been slashing their own wrists by slashing their prices in an effort to increase business and bring old customers back. Running razor thin margins not only devalues your product but it also hurts your bottom line since price is such a low consideration to a modern wash customer. The successful wash operator explained that by providing additional value to his location by offering loyalty incentive programs, commercial business opportunities, and a well-lit clean location he was able to come out on top. Within every community there are only a finite number of customers that will wash their vehicles because they drive by your location as part of their daily routine. The challenge for wash operators is how to get new customers that normally do not drive by your location to give your wash a try. This is where wash operators that market their wash find increased traffic through fundraisers, charity washes, gift card sales, and becoming involved in their community. The wash business that supports it’s community will be supported by it’s community in return.

Trends in Consumer Spending Habits

How do customers decide where they wash?
At the 2007 Petroleum Marketeers Association Expo an amazing two-year study was discussed in one of the education seminars on car washing. The study was conducted in the midwest and set out to determine what factors play into the decision making process for consumers that want to wash their vehicle. When consumers choose where to wash they make their decision based on the four following criterion in the following order.

1. Convenience
2. Speed
3. Quality
4. Price

Convenience: In our consumer driven economy it should be no surprise that the number one concern of a wash customer is convenience. Consumers ask themselves many questions before the commit to their decision. Is it easy to get in and out of the facility? Will the wash accept my credit card? Will they give me a receipt if I use my credit card? Does the wash offer a fleet program for business customers? Are the wash packages easy to figure out? Is the location easy to get to? Are there easy access vacuums on the lot and do they require using bill breakers or will they take credit card payment as well?

Speed: Can you get in and out of the wash quickly? Does the wash have high-speed credit card payment? Is there any inefficient downtime where customers have to “hurry up and wait”? Are customers forced to run back and forth between changers or centralized activation systems causing back-ups? In-bay automatics that require customers to go inside a building to purchase a wash code were among the highest noted instances of customers that chose not to wash again due to issues of speed of service. Those customers interviewed said that had cash or credit card payment acceptance been available at the entry station they would wash more often at the location.

Quality: Most wash operators are very surprised that customers are more concerned about their own personal needs over the quality of the service provided. It goes to reinforce that customers will always pay for a better quality service, especially if the higher quality comes with factors of convenience and speed. Issues of quality are easily resolved in the in-bay automatic and self service business since a call to a chemical specialist can provide you with ways in which to improve the cleaning power of your wash equipment. Another way wash operators have increased quality for self-service markets is to properly convey the message to customers such as, “Use pre-soak for best results” through signage and onsite instruction for new customers.

Price: Consumers will always ask whether the price for a service is reasonable or not based on comparisons between multiple washes. What many wash owners are figuring out is that pricing is more art than science in many cases. What works for one wash location may not work for another. Realize that IF you meet a customers needs for convenience, speed, and quality that you can charge more even if your competitor offers the same wash service!

Trends in Equipment and Technology

The past few years the car washing industry has seen a surge in new and innovative technologies. In past years the focus of car care technology has focused on the business of pumping soap and water better and more efficiently. Development of new and revolutionary technologies has slowed in regards to the large stainless steel behemoths that tower over the visitors of trade show exhibit halls. Although every year we see amazing advances and engineering in car washing washing equipment it is by no means revolutionary in comparison to other applications of new technology. The past few years has seen many new technology-driven companies and products. These new products and technologies will make a lasting impression on the modern carwash of the future.

Trend #1 – Software Development: Wash equipment manufacturers continue to find new applications for computer-driven systems as wash owners and wash customers create these demands. It should be no surprise that like your car, small computers go into every new piece of complex wash equipment. There are now as many software engineers on staff as there are mechanical engineers at many of the major wash equipment manufactures throughout the world.

Trend #2 – Integration of the Internet into Wash Operations and Marketing: The use of the Internet has completely changed the business world. The car care industry is no exception as to how influential the Internet has been in recent years. Thousands of “connected” wash operators could not imagine what it would be like without their digital camera systems accessible from their home or office. Business owners now spend less time on the phone when they give their customers the ability to sign up for loyalty promotions and pay their commercial fleet bill from a website. This saves wash operators time that they don’t want to give back now that they have it to spare on other things. Car wash accountants can quickly bring up cash and credit card accounting with the click of a button for greater employee accountability. The list of innovations that takes advantage of an Internet connection grows rapidly within the car care industry benefiting car wash operators, car wash customers, and car wash manufactures alike.

Trend #3 – Credit Card Acceptance: Credit card acceptance is practically a standard feature with every piece of new equipment that already accepts cash these days. There is no denying that consumers want to pay with their credit card; especially younger customers who never carry cash. The market has been saturated with cashless acceptance systems that can be built into new equipment or old. Wash owners that own other businesses understand that you cannot afford to not-accept credit cards. Giving card carrying customers the ability to pay with their plastic is the only way to remain profitable moving forward. Credit card acceptance reduces security risks, increases the dollar per ticket in the bay, reduces employee theft, and empowers your customers by appealing to their needs for convenience and speed at the wash. There are few investments that a wash operator can make that actually makes them more money.

2008 – Are you up to the challenge?
Although the car wash industry is getting competitive these days it should only worry those operators that do not have the desire to build their business through marketing or are unwilling to make the necessary capitol investments to bring their wash operation up to date. The power of the consumer in a service-based industry such as car washing is both exciting and frightening depending on who your talking to. According to the America’s Car Care Business reader survey results, 8 out of every 10 respondents where confident that they will attract new customers in 2008. The real question that should be asked is whether or not your business is in a position to cater to the next generation of consumers getting behind the wheel?

Will it work out of the box?

I was recently asked to comment on how consumers in the car care industry have voiced concerns over initial product quality and performance. Below are my answers to two seemingly HUGE questions and I would be interested to hear what others would have to say about it.

Q: Manufacturers are making performance claims that are not being met once installed according to car care operators. What can industry groups do to improve the initial product quality of their products?

A: Manufacturers cannot be pressured into delivering products before they can be properly tested. This is a burden that should be shared both by management and sales reps eager for a sale. It is up to the manufacturer to manage the expectations of their customers if they are purchasing a pre-released product. We are in an industry of constant change in which there are demands for new innovations and updated products. These demands for innovative new products typically contributes to this pressure to release a product prematurely.

Question 2: With these concerns over products working out of the box (or barrel), what steps or recommendations can be taken for individual manufacturers to improve initial product quality, reliability, and in-service support?

A: Manufacturers will have to accept that releasing a product prematurely will require a greater degree of service support and customer education after the sale has been made. New investors and care care operators must be aware that in any product they buy that in exchange for the latest in innovations a certain degree of fine tuning or calibration will be required. Wash operators from around the world will agree that every car wash business does things a bit differently. This trend has pushed the industry into growing it’s reliance on new technologies to create custom applications, and location specific solutions to meet the needs of numerous business models . The car care industry is seeing an end to long product life cycles in favor of products that can scale to the needs of individual businesses. With these shorter product life cycles it is up to the manufacturers to ensure that support structures are in place assist the customer in fine tuning their applications.

How Cashless Aceptance Got It’s Start in the Wash Industry

“I bought my first car wash in 1989 in Saint Paul Minnesota and then City of Saint Paul decided they were going to tear up the entire length of the main road that my wash was on. I had a brand new wash and traffic through the wash was at an all time low once construction started. I was certain it was going to ruin me if I did not figure out something to drum up more business.”  -Dan Yarusso

Nearly every car wash operator has read an article or has seen a presentation on the benefits of accepting credit cards and loyalty cards. In fact there are dozens of equipment manufacturers that now offer built-in credit card acceptance and loyalty card programs. Car wash operators in 2007 can’t swing a stick at a car wash trade show without hitting the latest cashless acceptance solution for the car wash. But how did cashless acceptance within the car wash industry all start?

The Origin of Cashless Card Systems in the Wash Industry
Eighteen years ago accepting credit cards in the bay was unheard of and loyalty programs were nothing like they are today. The concept of a loyalty program consisted of discounted tokens, token notes, and coupon books. Seventeen years ago the concept of card-based cashless acceptance in the wash bay was only realized and evangelized by one man in the wash industry while the rest of the car wash industry was content selling tokens, paper notes, and coupon books. You may remember seeing a guy at the Car Care Expo trade show in the early 1990’s with a fish tank in his booth that had goldfish and a card reader in the bottom. The fish tank was to demonstrate the readers ability to work in “wet conditions”. That man with the fish tank was Dan Yarusso and he started a company back in 1990 called WashCard Systems. Based out of his garage in Hugo Minnesota, Dan started his business as a one man show. In a recent interview, Yarusso admits that WashCard was not invented in order to be sold to other car wash operators. In fact, it was created out of a necessity to market his own struggling car wash.

On the Road to Ruin
Dan recalls, “ I bought my first car wash in 1989 in Saint Paul Minnesota and then City of Saint Paul decided they were going to tear up the entire length of the main road that my wash was on. I had a brand new wash and traffic through the wash was at an all time low once construction started. I was certain it was going to ruin me if I did not figure out something to drum up more business.”

What Dan thought was was to be a profitable little side business when he bought the wash was quickly becoming a huge stress factor for Dan and his family. Dan spent nights and weekends at the wash keeping things in repair and doing whatever he could to keep his customers happy while the road construction in front of his wash dragged on. Unfortunately for Dan the construction project was encountering many delays and his business was on the verge of failing if business did not increase.

Pet Peeve Leads to Inspiration
Yarusso’s full time day-job was working for a company that designed access control technology for security systems. It was with this knowledge of access control technology that gave Dan an idea how to fix a pet peeve of his. Dan hated carrying pockets full of tokens around just so he could wash down his self service bays and wash his own vehicle. After weeks of tinkering he had wired in waterproof access card readers into each of his bays. The readers were wired into programmed control panels in his equipment room that were then wired into the bay timers. For each swipe of an access card the system was supposed to simulate coin drops and add time to the meter just as if cash or tokens had been used. In theory, each swipe of the card would add more money to the timer without having to dig for more coins in his pockets in the middle of a wash.

Eureka! The Big Breakthrough
It was late one weekend when Dan finally got the system working. He was excitedly running around from bay to bay sliding his card adding money to the meter. After turning all of the bays on he would then would run back into his office to check his results.  Dan could verify the bay activity on the black and green terminal monitor that sat on his desk which displayed each card swipe, time/date stamp, and associated dollar value.

With all of the running around from bay to bay it did not take long before a customer got curious approached Dan to ask him what all of the commotion was about. Dan recalls that he was perhaps a bit overly excited as he motioned the customer into the bay and explained, “Ok, so I take this card and slide it through the reader… and now the bay turns on just as if I added coins into the acceptor! When I slide the card again it adds more money to the timer! I have a screen in my office that records the wash so I can track any washing that either myself or my employees do with this card. Sure beats giving employees tokens to wash down the bays and since the first thing they do when they get in and the last thing they do when they leave is wash down the bays, it’s a time clock too!”

The customer standing in the bay listening to Dan was perhaps a bit overwhelmed by all of the enthusiasm. Dan recalls that the customer just stood there for a few moments before he said anything and just rubbed his chin in contemplation. He looked Dan in the eye and then said, “Thats REALLY cool. So if you can track each card use for employees how do I get one of those cards for myself??”

As if realizing something for the first time Dan motioned for the customer to wait just one minute.

Dan ran back into the office with a huge grin on his face and entered a new card into the system. It was then that Yarusso got his first card customer! He took a black marker and drew an arrow on the card to indicate the direction in which to slide the card through the reader with the hand printed word ‘SLIDE’ across it’s length. He handed the card over to the customer with satisfaction. They agreed to settle his bill on the first of every month for any washing that he or his family did using the card.

Customers Know a Good Thing when They See it
Several weeks later the same customer that got the first customer card came back with friend and he too wanted his own washing card! This time Dan ran back to his office and returned with the another card marked with the arrow indicating it’s use and the new customer asked, “My buddy told me about how he washes without needing tokens, that is SO great! So what do you call it anyways?”

Dan pondered for a moment and with his magic marker in hand wrote two words that would forever impact the car washing industry.

“I don’t know… I guess it’s a Wash Card” he said as Dan happily wrote the letters on the front of the plain white card before handing it over to his newest customer.

Success is Setting Yourself Apart from the Competition
It did not take long for Dan to realize he had something that no other car wash could offer to their customers.  At first Dan spoke with friends, family members, and business owners in his immediate area and got them set up with their own account cards. He eventually went to the local police departments and small businesses in the area and got all of their washing business which carried him through the remaining period of road construction. He approached anybody that would be interested in having an “account” with the local car wash. Within no time he had  six local police and sheriff departments on account and WashCard and was soon catching the eye of other local car washes. The first few washes in town that approached Dan asked if he would build them a card system of their own. He politely turned them down as it was the only thing that allowed his car wash to maintain a competitive advantage over any other wash in town. “Why would I give them the ability to directly compete with me?” remarks Dan. “Once somebody had my WashCard they would never even consider washing anywhere else even if it meant driving to the other side of town.” What experience had shown is that a business that used to buy $50 dollars in tokens or token notes a month would invariably double or triple their monthly washing expenses when they were put on an open invoiced account with a card.

It did not take long before word spread about the “wash with the cards” and wash owners from out of town offered Dan good money to build them their own card system. Eventually he agreed to build and install WashCard systems for several other car washes throughout Minnesota and Iowa.

Taking the Show on the Road
As interest in cashless payment systems would start to catch on Dan Yarusso had some difficult decisions to make. He could either keep his full time job and continue selling WashCard locally on the side or he could take his “idea” on the road. According to Dan, in retrospect the decision was an easy one to make. He then spent the better part of ten years traveling to numerous trade shows with his card readers telling car wash owners about the profit building potential of adding a card system to their car wash.
Imitation is the Highest Form of Flattery
With the success of so many car washes that attributed substantial increased profits to their WashCard System it was inevitable that competitors would appear on the market. As it turns out existing customers of WashCard felt so strongly that a cashless car wash system was a great idea that they decided to build and sell systems of their very own such as Express Key and eWash. These companies became the first competition for WashCard in the cashless arena. The notion of replacing dirty tokens with cards, keys, and bar codes swept through the car wash industry since consumers were demanding such conveniences at the car wash. The real challenge for these cashless pioneers had nothing to do with convincing consumers of the value, it was the car was owners that took some convincing in those early years of cashless adoption.

The Status Quo of Cashless Payment Systems
As of today the number of cashless payment solutions has skyrocketed as result of demand from consumers to use their credit cards or put their commercial vehicles on account at the car wash. Consumers get to use their plastic to pay for gas and groceries, why not soap and water for their cars? By finding a solution that caters to both the consumers desire for credit card acceptance and the ability to offer commercial fleet accounts is a sure fire way to take advantage of how potential customers are looking to spend their money in 2007.

These days it is just as important how customers can spend their money as it is where they can spend their money. If your wash business is not catering to the hundreds of thousands of card-carrying consumers you are losing money every day in potential profits. Credit cards and gift cards in the United States has change how consumers spend money. The “buy-now, pay-later” mentality of credit cards increases the dollar-per-ticket earnings of every wash and prepaid loyalty gift card sales increases customer visits by a factor of x2.5 times a month!” At the rate in which payment-by-credit card  is rapidly growing, wash owners that do not capitalize on credit card and loyalty card acceptance solutions now will feel the impact of their missed opportunity in years to come.

The Future of Cashless Payment Systems
Based on the current consumer trends is clear that in the near-future cash sales will no longer be the mainstream form of payment by the majority of your customers. Saving cash receipts and passing out tokens will recede into the past as more business owners with company vehicles have the capability to run their own activity reports and manage their employees and pay their car washing invoices online. Purchasing and managing car washes is now just as secure as online banking. Those businesses that fail to embrace this level of customer convenience will find themselves with a problem far worse that road construction on their main road. Car wash businesses that fail to make changes to their business today will see their customers going to the competitor that offers them a loyalty card or simply accepts their credit card.

It is clear that advances in technology will be playing a large role in how businesses such as a car washes will be operated in the coming years. There are now car washes that have CEO’s and influential investor groups funding continued growth of their company. It is more important now than ever for individual wash owners to re-evaluate how they are conducting business today. The car wash industry is full of new technologies and new solutions to bring in new business and maximize the business that you already have. Ask your sons, daughters, nephews, and grandkids how they pay for goods and services today, I can tell you now that they do not pay with cash. Will your car wash business struggle or will it thrive when these card-carrying customers become your primary demographic as they get their own vehicles?

Cashless 101: Selecting the Right Cashless Card System

Wash operators no longer question whether or not credit card acceptance at their car wash will be profitable. In 2007 nearly every for-profit car wash is built with some degree of credit card acceptance from the start. Wide-spread acceptance of this form of payment is in large part due to it’s many economical advantages. Credit card acceptance is more secure than cash, consumers spend more money per visit, and cashless acceptance reduces employee theft and equipment vandalism.

Is it time to make add cashless acceptance at my wash?

What keeps washes from accepting cards now?
Of the car wash owners that I interviewed for this article, I asked those that did not yet have cashless acceptance at their car wash for the reasons why they did not accept credit cards now. The initial answers I got were a combination of, “There are just too many options, I don’t have the time to make a decision right now” and “It’s expensive to buy the hardware, maybe when business picks up”. It was not until later in our discussions that we really got to the truth of the matter. Wash owners, just like consumers will put off making a decision or find an excuse to avoid changing how things are. This is especially true when presented with too many options or they don’t have the right information to make an informed decision. Either way, it is far easier to do nothing that it is to do something.

Teaching an old wash new tricks
My conversations with wash owners and operators that have cashless acceptance programs sing a different tune. When I asked the owner of Futura Carwash, Paul Taylor how cashless acceptance has impacted his business he said, “It has actually created more work for me because of the increased soap use and wear and tear on the building and equipment [because of the increased business], but this is a good thing! Paul informed me that after adding credit card acceptance to all of his wash bays and a machine that dispenses prepaid cards in his vending area he has consistently had his best months in 19 years of business for the past five consecutive months in a row!

All of the wash owners that I spoke with that added cashless acceptance to their older car washes had similar stories of how things really turned around for them. Younger card-carrying customers now frequent the wash, local businesses take advantage of commercial fleet programs, and wash customers spend MORE money per visit. One of the wash operators that made the switch to accepting cashless payment said to me, “It’s never too late to turn things around if your willing to listen to the little voice in your head that knows you have to do something. Hoping for business to pick up and not doing anything to bring that business in is the definition of insanity right? When you do the same thing over and over again and keep expecting a new result”. Wash operators have within their power to bring in new business and increase the spending from the customers they already have, it just requires changing up the status quo.

The cost of doing nothing
In the recent past I have been contacted by some really sharp business owners that were looking for ways to improve their business. In most cases they already knew the answers to their problems subconsciously, but needed to hear themselves talk through the thought process. These were conversations with wash owners that did not yet have a cashless acceptance strategy and knew they needed to do something about it.

I in our conversation I would ask, “So, after all that you have told me you know you need to do something. So tell me this… would you make more money at your wash if you accepted credit cards and perhaps loyalty cards?”

With no hesitation the wash owner replies, “Of course I would make more money, people WANT to pay with their credit card!” and as if it were magic, the wash owner realized they just vocalized what their subconscious has already been telling them.

Since they came to me for help I ask them, “So if you know you will make more money by implementing a cashless acceptance program, what is the impact of doing nothing right now?”

To which every wash owner has had to pause before they reply with, “By waiting, I suppose I’m losing potential revenue.”

“Bingo.”

And at this moment the picture has been made clear. To drive business you must either meet your customers needs, or give them something they never even knew they were missing out on. Before ATM’s consumers had to go to the bank to get their money, but the companies that made the first ATM’s created a demand. The same goes for the first wash owners in town to add credit cards, prepaid gift cards, and commercial fleet programs at their car washes. By giving their customers MORE ways to spend money at their business their bottom line is increased. The cost of doing nothing is in lost potential-revenue and losing out on opportunities to bring in new customers before your competitors do.

Which Cashless Option is Right for Me?

Step 1: Evaluate the needs of your business
Since every car wash does business differently it is my first suggestion that car wash owners consider what their plan is to make their business more successful. Most wash owners can not answer this question because they have not seriously thought about it. Many wash owners have day jobs, other businesses, or other issues at the wash that demand their attention, so it is far easier to just do nothing at all. If cashless acceptance is one of those things your subconscious knows you need to look into it’s time to listen to that little voice and start evaluating the needs of your business. Start by asking yourself some questions about your current situation and how you may be able to improve it. Now is not the time to worry about financing the project because the questions about money will only prevent you from properly evaluating your business goals. You may be surprised with what you come up with and the ideas you can generate when you broaden your horizons. And don’t forget to write your thoughts, ideas, and goals down! Did you know that people that write their ideas and goals down are 80% more likely to do something about it?

Basic Cashless Evaluation Questions
All of these are a few of the basic questions to consider when deciding on the size and scope of the cashless solution you want to implement. Many wash operators are now in a position where they have old washes that need updating, rebuilding, or are planning retrofits to upgrade existing hardware.

Credit Card Acceptance: Are your customers asking you to accept their credit cards? If you have had any customers ask about credit card acceptance chances they are not alone. In 2006 payment by credit card outpaced payment by check in the United States and in several demographics payment by credit card already is outpacing cash sales.

Fundraisers / Organizations: Are you being solicited by local charity groups to run fundraisers through your wash? If you are being contacted by schools and organizations, realize that these same organizations are talking to your competition too! You need to be in a position to take their business before somebody else does. If you are known as the business that supports the location community, the local community will support you. Why is this important? If you do your research, you will find that a number of your cashless system options will offer tools for running highly lucrative and successful fundraiser programs.

Commercial Fleet Opportunities: Do you have local businesses that would make ideal business account customers? Many business owners will not issue credit cards to their employees, but would be more than willing to issue a fleet card to each of their drivers! According to Paul of Futura Car Wash the local businesses couldn’t imagine washing any other way now that they have their fleet cards! He commented, “From the customers view point [cashless acceptance] has made it easier to wash their vehicles and keep track of spending [with the use of a his Fleet card program]“. There are washes that end up with over 70% of their yearly revenue that comes from washing commercial vehicles alone.

Automating Time Consuming Processes: Do you currently cater to commercial businesses but need an easier way to manage the accounts you have? There are many car washes that have commercial business accounts but are still struggling with paper-based voucher systems, manually selling tokens and pre-selling token notes. These low-tech solutions are better than doing nothing, but they are inefficient and time-consuming which is preventing these businesses from taking their commercial fleet business to the next level and to higher profits.

Multiple Wash Locations: Do you have multiple wash locations that you would like to tie together under a single loyalty promotions program? One of the most successful ways to promote a loyalty gift program or commercial fleet program is by leveraging a single card that works at multiple wash locations. Systems that give multiple wash locations the ability to communicate offer a wide variety of financial savings as well. Running all credit cards through a single merchant processor means better rates and fewer statements. Managing a loyalty program from a centralized system provides for more accurate and convenient reporting which reduces administrative costs across the board.

Step 2: Evaluate your options
There are going to be car wash owners that are only looking to start small or take one step at a time in implementing changes to their car wash. This is completely understandable, especially for wash owners that are new to the industry. It is recommended to talk to other car wash owners that have already successfully implemented cashless solutions at their wash to get a better idea of what will work best for your business. When researching which cashless solution will be the best fit for your business it is very important to get referrals of existing customers from the manufacturer or distributor. By speaking with multiple wash owners that currently have the product you are interested in, they can answer all of the questions, concerns, and give you advice on how best to implement your cashless solution and make sure it is the right decision for your particular business.

Basic Options
Understand that there are dozens of cashless systems that you can purchase for your new or existing car wash. If you have identified what the needs are for your business and you have formulated a basic plan of how you want to generate additional wash income it is time to weigh your options.

Where to Accept Cashless Payment: Adding credit card acceptance to your equipment is going to be the easiest of the cashless solutions to implement. The decision will come down to whether you want to purchase a retrofit kit from your equipment manufacturer (if offered) or find a company that specializes in updating existing wash equipment to accept credit cards.

If you only plan to start small and add credit card acceptance to a single wash bay the basic dial-up retrofit kit is the most economical. The wash operators that I interviewed with the highest success rate with credit card acceptance found that adding card readers to every service at their wash set them apart from every other wash in town. If you plan to add cashless acceptance to more than a few bays you may want to consider finding a solution that will allow you to run all of your credit card acceptance through a single merchant account. This saves money on processing, statement fees, and reduces the number of phone lines required to processes standard dial-up authorization.

Dial-up Systems: The most common form of cashless authorization technology on the market is dial-up credit card batch processing. This is where the reader sends data to a “black box” which is connected to a phone line. The system dial’s up to a batch-processing center to validate the information that it was given by the reader. Note that the actual transaction is rarely processed at this time because the batch processor is only verifying that the information captured by the reader matches known data formats of credit cards. This is to ensure that consumers can’t swipe any random magnetic stripe card and purchase a wash. The batch-processor just makes sure that the card swiped resembles the data of a valid credit card or debit card. Dial-up processing is known as a “Good Faith Transaction”. It is not until the accumulated card transactions of the day, week, or month are “processed” by the merchant in what is known as a ‘batch’. This is when the card information is actually processed and money is deducted from accounts, funds transferred, and when cards would be declined for reasons of insufficient funds, reported stolen, or any number of other ‘failure to authorize codes’.

Computerized Authorization: The fastest growing trend in the car washing industry is the prevalence of computerized systems.The modern computerized authorization systems now make use of broadband Internet connections to process the entire credit card transaction in a matter of seconds. Within 3 seconds of swiping a credit card the authorization system directly connects with the merchant processor, validates the card, checks for sufficient funds, and will immediately decline the service if the account does not have enough money or if the card has been reported stolen. Have you ever gone into a fast-food restaurant where they accept your credit card in a matter of seconds? All of the big fast-food chains have moved to a broadband computerized authorization system that saves them money on every transaction by reducing the instances of credit card fraud at the same time reducing the risk to the bank by authorizing before any services, food, or products are provided. This means lower rates for the business, faster through-put for the customer. Win-win.

To Fleet or Not to Fleet: If your feel that targeting commercial fleet business will fit well within your business plan it is critical that you make sure the system your buying has solid fleet management tools. The last thing you or your book keeper will want is to find that your fleet system (although profitable) turns out to be hard to use, time consuming, or difficult to manage. You have many options available to you on the open market that offer fleet management software solutions to make your job easier and more efficient. Many cashless solutions come standard with simplified billing, online reporting, and there are even cashless systems with built-in Quickbooks compatibility which eliminates all of the double-entry and busywork associated with most fleet management programs. There are many wash owners I interviewed that said that ease of use and good management tools makes or breaks whether they promote a commercial fleet program. Just remember one thing about any technology, you get what you pay for.

Fundraising Options: If you plan to run successful ongoing fundraising programs it is going to take more than tokens and wash vouchers to make loyal customers out of fundraiser supporters. Find a program that will track fundraiser sales and give you the ability to turn a one-time sale into an ongoing fundraiser and you will never doubt the power of loyalty and community support.

Step 3: Plan for future growth
It may sound simple, but when shopping for a cashless solution that meets the needs of your business be very sure that you are future-proofing your car wash with this equipment purchase. As your business grows and your business goals get bigger you need to be sure that your cashless solution will grow WITH your company.

A number of wash owners I spoke with told me that they purchased hardware to accept credit cards in their wand bays several years ago. At the time they only wanted to accept credit cards and only in those few bays. One year later the owners of the wash wanted to start selling Fleet accounts and add cashless acceptance to their vacuums, vending machine, and a pet wash on site. As it turns out that they never evaluated the software for managing Fleets which turned out to be difficult to use and very limiting. It also turns out they could not expand their cashless acceptance to other devices at their wash as they had wanted to. Owners like this have two options and neither option if favorable. Buy all new cashless acceptance hardware and software, or accept their losses and run a crippled commercial fleet program and do without cashless acceptance at their other services.

My advice to car wash owners that currently do not have cashless acceptance capabilities is to ask a lot of questions before you buy. It is important to understand the technology behind what you are buying. The technology behind your cashless payment system is just as important has the technology behind the equipment that washes customers vehicles. Far too many new wash operations cut costs from their payment acceptance solution when things go over-budget. Does it make sense to limit your business by reducing the number of ways you can take your customers money?