Building Long-Term Success - Grass-Roots Marketing Delivers $10 Average Exterior Ticket

By: Anthony Analetto
Originally Published in AutoLaundry Magazine

Everyone loves a dramatic success story. An entrepreneur invents a new product, or way of doing something, and the dollars flood in. Although inspiring, true success occurs more often as the result of persistent trial and error, hard work, and attention to detail. Several weeks ago, while talking with a friend and colleague about his latest experimentation with a new automated cloth drying system, and looking at a picture of one of his 5 express-exterior car washes, I asked “Kelly, how old is that site?” Now anyone who knows Kelly Reilly, owner of Kelly’s Express Car Wash in central California, knows that he is a fanatic for maintaining his properties, but this picture showed something truly remarkable – it looked like a newly built location just about to open. When Kelly replied “I think we built that one in 1994, so it’s about 18 years old,” I realized I had a true success story that anyone in the business of washing cars could benefit from.

Kelly has always done things differently. One of the first pioneers of the express-exterior wash format, Kelly’s early struggles to remain one step ahead of bankruptcy helped shape the definition of what express really was, and is. Long shot gambles he took decades ago are now standard practice for most new express operators. Having recently broken ground on one of three new locations he has planned to build over the next 18 months, Kelly is at it again. Looking to leverage the latest innovations to deliver a unique customer experience, he agreed to share some of his plans for this latest expansion. Below are some excerpts from our conversation.

Analetto: “When did you first decide to enter the car wash industry?”

Reilly: “Decide? I don’t think my entry into the car wash industry was actually a decision. I was about 11 years old when my dad bought a full-serve wash. I was the window man – jumping over the tire-brush into cars rolling down the conveyor. I suspect OSHA must have been a bit more lenient back then. My time was split between working at the wash and at our shop where we also made self-serve equipment. I really enjoyed working in the shop and am, to this day, passionate about the nuts and bolts of getting a clean car. But, I suppose my first decision to enter the industry was in 1987 when I bought a coin-op.  After doubling the business in a year I was able to buy a 3-bay self-serve with a 60-foot conveyor. That, too, went well until I decided to replace the tunnel with the latest novelty, a touch-less in-bay automatic. It was a disaster. Volume dropped 75% and after 8-years it went to nothing. Fortunately, in 1992 I was able to buy another 60-foot conveyor. I got that running pretty well and was able to sell it a couple of years later to buy some land to build our first express-exterior wash with a 110-foot conveyor and 12 self-serve free vacuums.”

Analetto: “Even today, exterior washing hasn’t caught on in much of California. What inspired you to build an express-exterior in that market nearly two decades ago?”

Reilly: “During those first couple of years, pretty sure I was going to go broke, I asked myself that same question. But having started in full-serve, I knew I didn’t want to manage that type of business. I couldn’t reach the kind of numbers I wanted with the coin-ops, and the in-bay automatic I tried was a fiasco. Exterior intrigued me. Back then I was able to build the place for 1.4 million including land. That seems small compared to today’s costs, but it was a huge back then and I had everything on the line. I opened at $3.99 and in the first year only washed 49,000 cars. It was pretty clear the formula wasn’t working. People weren’t sure what I was. All I could do was search for something that worked. I decided to raise the price to $5 and started to towel dry. The wash is in a dry climate and I have lots of horsepower on my blowers. Towel drying required very little labor. What it really did was make the customer see more value in our service. Volume started to build by 3,000 to 10,000 cars per year and at $5, the numbers started to work.

Analetto: “Would you say that raising your base price to $5 and towel drying was the turning point for that first location?”

Reilly: “Not entirely. It was really a combination of factors. At the time, I was still using self-serve vacuums, and giving a free token to wash customers. In the beginning, that was lifesaver, bringing in $2,000 per month.  But once I was washing more cars, customers started to get ticked having to wait for a vacuum. At this point, the vacuums were only pulling $400 per month and I switched to a central vacuum to process cars faster.  Volume continued to grow and I changed very little until 2002 when I went to a $7 base wash.  I remember thinking we’d have a drop in volume, but it didn’t happen. Instead, both volume and our average ticket grew, and that year we built two more washes. There’s really no single event that I can say was a turning point. I remember, for example, when I installed the gated entry system there was a 20 cent jump in our dollar-per-car average. Again, incremental growth, but not a real turning point. Our growth has come from trial and error and constant improvement.”

Analetto: “I know you’re currently building another wash and have two more in the works. Have you considered any of the flex-serve models offering interior or express detailing services?”

Reilly: “Absolutely not. I got out of the full-serve business back in the late eighties and have no interest in going back. I like the express-exterior model. Like I said before, I really enjoy the equipment side of things. Right now we’re experimenting with some of the new application systems and cloth dryers that are coming out. I feel there’s still room to improve the value we deliver online. I know there’s money to be made with the flex-serve model, it’s just not for me.”

Analetto: “You have locations that are nearly 20 years old, how do you keep on top of maintenance?”

Reilly: “I believe in the McDonald’s theory of creating processes and procedures to deliver a consistent customer experience. All preventive maintenance is scheduled. Three times per year new flowers are planted. I paint every fourth year. Once a year I take an inventory of everything that needs to be done at each wash. During the rainy season I’ll order everything I need and store it at our warehouse. I then wait for a rainy stretch and pull all my managers to one location that we’ll attack for 1 to 2 days.

Everything starts with how you treat your employees. I treat my managers how I want them to treat their staff, and if you met one, you’d think they owned their wash. We have good pay, health insurance and profit sharing. In all the years I’ve been doing this, I’ve only had to fire one manager, and nobody has ever left.”

Analetto: “It’s amazing how fast the years seem to evaporate. If you could give a recommendation to a new operator of one thing you’ve done that has had a long-term payoff, what would it be?”

Reilly: “Actually, I have two. First is to never underestimate the customer. All I sell is a car wash. I have to constantly invest both time and money to make sure everything works properly every time. I’m always amazed at how quickly people recognize if even a single foamer isn’t working. What I’ve learned is that as long as I can keep things working and keep things consistent – the customer will keep coming back.

The second is to never underestimate your staff. One of my managers once came up with an idea to get a small counter display filled with cards that include our logo and a code to try our top $14 wash for $10. We worked out deals to put the displays at local restaurants, gyms, and other businesses. It’s really simple grass roots marketing, but the result has been phenomenal. We print an expiration date on all the cards but we let them run longer. Customers share the codes, email them to one another, and post on Facebook. Once I saw a kid enter a code that was expired. He immediately pulled out his phone, emailed a friend, and had a new code within seconds. I now have thousands of customers talking about my wash on a monthly basis, and I’m getting $10 per car! To take it a step further, when they buy the top wash, we print a coupon on the receipt that lets them get their next top wash for half price, only $7. What’s amazing is that I’ll see months where 40% or more of our customers are buying the top wash. Of those top wash customers, 50% are using one of the $4 coupon codes, and 10% are using the half-off receipt coupon.

My goal is to enter into a partnership with my customers. When I went to the $14 top package, I felt that I was moving above what a customer in my market could afford to spend on a car wash and still feel good about it. That worried me. But by giving that $14 customer a coupon entitling them to their next wash for half price, I’m providing a value they can’t match anywhere else with no strings attached. I believe that as long as I can do that, customers are going to enjoy the experience at my wash and keep coming back – a formula that, so far, has worked pretty well for the last 20 years.