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Adding credit card acceptance to a car wash location is one of the upgrades every business owner must consider if they want to maximize their earning potential in 2009 and beyond. Every year that passes a new generation of car owners hit the street and they do not carry any cash. The next generation of consumers relies heavily on the ability to use their check cards and credit cards to make every day purchases. Adding credit card acceptance to your wash services is the key to getting more business from current customers and gaining the business of new customers.
What is the cost of doing nothing?
- Wash owners that are not currently accepting credit cards at their wash services are missing out gaining the business of a younger (and successful) demographic of consumers.
- Businesses that are cash-only are susceptible to theft and silent partners – at least with merchant processors they send you a statement at the end of each month that details how much they cost you. Vandalism and employee theft leaves you in the dark and no longer in control of the fate of your own business.
- Carwash owners need to make more money per car and conclusive studies have proven that the psychology of paying with plastic will increase customer conversion to more expensive wash packages.
- Cashless card payment systems eliminate the ‘beat the clock’ mentality that is the primary reason for customers to wash faster and spend less in the self service bay.
What are the real reasons for resisting change?
Over the years wash operators that have been resistant to adding credit card acceptance at their wash have a few reasons and none of them have anything to do with their business becoming less profitable. Some businesses can’t get the financing and others are resistant to change.
Those business owners that are resistant to change usually say things like, “The government doesn’t need to know how much money I’m making” which is quickly followed up with, “I don’t want those credit card companies taking a percentage of my money, they are just a bunch of thieves.”
Oh really? Funny that they say that.
- Can you imagine if your existing customers spent more time washing in the self service bay and were happy about spending more money?
- Can you imagine spending less time counting coins and making fewer bank runs?
- What would happen to your business if you could attract more business vehicles and younger consumers?
Buying new washing equipment will not impact the profitability of your carwash in the same way adding card acceptance hardware and software will. Testimonials of successful car wash owners commonly recommend that credit card acceptance works best when added in conjunction with a customer loyalty and fleet management program. These options commonly bundled with the advanced credit card retrofit systems.
The decision to add credit card acceptance on site and bring in additional business is best illustrated by reading the story of a midwest couple that purchased their first car wash several years ago. They learned a lot and made some smart choices to bring additional value to their customers by retrofitting the wash they purchased with card acceptance hardware and software.
David and Miriam purchased an eight bay self service wash from Ron, an older gentleman that had owned the wash for close to 15 years. They had requested to look over Ron’s books to evaluate the kind of investment they could have and make sure the bank would finance the purchase of the wash. When Ron handed over the bankers box filled with file folders and an assortment of black 3-ring binders with fading tape on the spine. It took the better part of an evening to go through the books for the wash and a full pot of extra strong coffee. It was rather apparent that the business was not as profitable as the owner had claimed and it certainly did not justify his asking price. The next day when they met with Ron he assured them it was a solid business and with that gave them a wink and implied that the actual numbers were close to 30% higher than the most recent years reported. This made David and Miriam a bit nervous and they asked Ron for a few days to think about it. They went out for a lunch at the local cafe to go over their options and knew that the bank would never approve the financing based on the numbers that Ron provided.
After taking the reported numbers they copied down from Ron’s books to the bank they were able to get a better idea of what a realistic offer would be based on the ‘reported’ income of the wash. Miriam said that she thought Ron was going to punch her husband after hearing their new offer which was over twenty-percent lower than the asking price. Ron excused himself and said he would be in touch with them.
Months went by before they heard back from Ron and he called to accept their offer. According to David’s friend who was a commercial realtor, Ron had three other interestearties since the first offer was made and they all had backed out because they had all decided it was too risky dealing with a business with off the books income, what else could they be hiding? Since David and Miriam felt the risk was acceptable with the lowered offer they were thrown into the car wash business before they knew it.
Within the first year of operating the car wash Miriam was able to verify that the previous owner had not been reporting all of his earnings, although not the full 30% that he was claiming. It’s a good thing that they were cautious during the negotiation process for the wash.
In their second year of owning the wash Miriam and David attended a seminar at the Western Carwash Association on customer loyalty programs and credit card acceptance. They had the chance to meet a lot of other car wash operators during the education sessions that had taken the plunge with credit cards and decided that they would retrofit half of their self service bays with credit card acceptance. With the additional revenue that was previously “off the books” under the old management they were able to get approved for financing the they needed.
Their decision to start with half of the bays was because David has always been a “cash guy” and was skeptical about adding card readers on every service. They compromised on four bays and four vacuums on the west side of their property. Miriam had been the one to do most of the research at the trade show and felt that they would take the recommendation of veteran operators they had talked with at the show and purchased a system that cost a little bit more than they had planned. The extra money got them a flexible fleet management program and a customer loyalty card program out of the deal. Her decision was in large part because of the QuickBooks accounting integration and cash-counting features hat would save her close to four full days of administrative busy-work every month. Several of the operators that had been running card systems for the past few years suggested that Miriam and David strongly consider leveraging business-to-business accounts (fleet) since very few car washes ever seem to do a good job meeting the needs of local businesses. Buying the right card system could allow them to not only build their business through credit card acceptance but build an entirely new side of their business up in their community that was under-represented.
David had the new credit card system installed in his four bays and four vacuums seven weeks after returning from the WCA show. While David worked out all of the installation logistics Miriam had been out in their community approaching businesses that might be interested in phasing out the use of tokens or handing out cash to employees in exchange for a fleet card for washing their business vehicles. Miriam worked closely with the marketing support department of her card system provider and put together brochures that outlined her talking points and value statements. Within the first three weeks Miriam had over 85 business vehicles committed to washing at their facility once their card system was in place. Miriam said that the business owners she spoke to looked visibly relieved when she talked about never having to hand out untraceable tokens or cash out to their employees anymore.
Two months after turning their card system on it was clear to David that he was in the minority as a “cash guy” based on the numbers they were seeing. The couple made a few other big investments at the wash including updating their sign and putting the “we accept all major credit cards” to where it was visible to all of the drive-by traffic. Within days of making the sign changes over 40% of their customers started using their credit card in the four self service bays outfitted with readers. Weekends had lines two and three deep waiting to use those bays with the card readers. 70% of the revenue generated during busy weekends was from the bays and vacuums with card acceptance. Whereas the cash bays had an average dollar per ticket of $3.50, the bays with card acceptance was averaging $6.00! Customers buying time with a card spent more time washing and purchased a vacuum roughly 80% of the time. The vacuums which had a .75 cent cash start for 4 minutes had a $1.50 minimum for card users (committing them to 8 minutes per card swipe), this pushed the average dollar per ticket to $7.50 for eight out of ten customers which is $3.25 higher than the average cash customer in favorable conditions. After they had the chance to monitor their success and David and Miriam had no trouble going back to the bank for the financing to add card acceptance to their four other bays and vacuums at the wash. Miriam jokes that David agreed to make the additional updates because he was just sick of putting up with the complaints from card carrying customers that didn’t want to wait in line all the time for the bays or vacuums with card readers.
Self Service (Cash-only bays)
Minimum Purchase $2.00 / 4 minutes
Average Time Purchased 7 minutes
Average Cash Ticket $3.50
Vacuum Add-on rate 5/10 customers
Minimum Purchase $0.75 / 4 minutes
Average Time Purchased 4 minutes
Additional Revenue $0.75 cents
Conclusion: 50% of the time the average cash transaction is $4.25
Self Service (Credit Card Customers)
Minimum Purchase $3.00 / 6 minutes
Average Time Purchased 12 minutes
Average Credit Card Ticket $6.00
Vacuum Add-on rate 8/10 customers
Minimum Purchase $1.50 / 8 minutes
Average Time Purchased 8 minutes
Additional Revenue $1.50 cents
Conclusion: 80% of the time the average credit card transaction is $7.50
David and Miriam’s story is not all that unusual in many regards – they made smart informed decisions and made sure they properly advertised to the public that they now accepted credit cards. Their runaway success with credit card acceptance in their bays and vacuums could also be attributed to their being the first in their town to offer this service. Consumers had been asking the previous owner for years for card acceptance and fleet accounts. He was both unwilling to make the capitol investment and was in hindsight afraid of having a data-trail of his income. Success comes in many different forms and for David and Miriam they were able to meet a demand at the right time. Several local businesses had recently issued company gas cards and credit cards to their drivers and David and Miriam were the only ones that could capitalize on what is a growing trend throughout cities across the country. Businesses with employees are looking for car washes that can accept business credit cards or issue fleet cards and send an invoice each month for employee wash usage. Trusting employees with cash or tokens for washing their business vehicles is apparently too much to ask these days. According to business owners one of the top fears is that their employees are ripping them off.
Do it before your competition does
Never assume your safe from competition – American auto makers made the same mistake by not capitalizing on new technology and new business models. Cashless acceptance programs like credit card in the bay is no longer “new” to the car washing industry. It is rare to see a new construction car wash that doesn’t include credit card acceptance on every service. Get established now and start earning more right away – if competitors already accept credit cards in the bay then there is no time like the present to start making up lost ground.
Things to Remember
- Cash is NOT King with Consumers Anymore – Nearly every person on the street has a credit card in their pocket. A much smaller percentage of those same people will have enough cash on hand for a car wash. How do you take everybody’s money that comes to your wash?
- Credit Card Acceptance Increases Spending - By changing the way customers spend in the bay and influencing their purchasing decisions at the automatic entry station you make more money as a result of card acceptance. The increased dollar per ticket will always outweigh the cost of transaction fees.
- Fleet Management Programs Increase Business Opportunities – Most credit card acceptance solutions that allow you to keep your existing hardware through a retrofit kit that generally includes fleet management options. Establishing and managing these business relationships are incredibly important to any car wash business that wants to make it big in their community.
