Latest / Scaling Up with Fexingo: How Small Businesses Become Mid-Market Companies / How a Car Wash Chain Scaled Past 20 Million with Memberships
Transcript
- Lucas: So there's this car wash chain in the Midwest, twelve locations, and they crossed twenty million in revenue last year. Not by washing more cars — by turning their customers into subscribers. Luna: A car wash subscription. Like Netflix for your windshield. Lucas: Exactly. And it sounds almost too simple, but the numbers are something. The founder told me that about sixty percent of their revenue now comes from monthly plans. The actual per-wash price is almost secondary. Luna: How did they get there? I feel like most car washes are still pay per wash, maybe a punch card at best. Lucas: The founder started with one location back in 2012. He noticed that regular customers — the ones who came in every couple of weeks — were the ones keeping the place afloat. But they were also the hardest to retain, because they'd shop around. Luna: So he decided to lock them in. Lucas: He launched a simple membership: thirty bucks a month for unlimited basic washes, fifty for the premium package. And he put a tablet at the exit, so customers could sign up right after a wash, when the car was shiny and they felt good. Luna: That's a smart moment to ask. The satisfaction is at its peak. Lucas: Right. And he tested it for a year at that first location. The data showed that members visited about two and a half times more often than non-members. But here's the kicker — they didn't actually use the unlimited plan as much as you'd think. The average member washed about four times a month, which is well under the break-even point of six washes. Luna: So the economics worked. But what about the people who abused it, washing every day? Lucas: He told me that's incredibly rare. Maybe one percent of members. And when it happens, they're usually the best customers in terms of buying extras — the tire shine, the interior vacuum. So he doesn't mind. Luna: Interesting. So the model isn't just about the subscription fee, it's about the upsell. Lucas: Exactly. And that's what allowed him to scale. When he opened the second location, he already had a base of members who could use any location. That built loyalty to the brand, not to a specific wash. Luna: But scaling to twelve locations — that's a big jump. What changed? Lucas: Around 2019, he started using software to track visit frequency and churn. He found that the biggest drop-off came after the first three months. So he introduced a three-month trial rate — ten dollars less per month for the first quarter. That smoothed the churn curve. Luna: And he also added local partnerships, I read somewhere. Lucas: Yeah, that was smart. He partnered with a couple of local coffee shops and a gym. A coffee shop receipt gets you a discount on your first wash, and your car wash membership gets you ten percent off at the gym. It's a tiny cost for him, but it ties the membership into a broader local ecosystem. Lucas: The key insight is that people don't just buy a car wash — they buy a routine. The membership makes it automatic, so they don't have to think about it. And that's a powerful thing for a service business. Luna: It's like what we talk about on this show all the time — turning a transaction into a relationship. And that's partly why we can keep doing this show ad-free. A few dollars a month from listeners is what keeps us going. If you've gotten something out of these episodes, you can support us at buy me a coffee dot com slash fexingo. Lucas: Yeah, it genuinely makes a difference. Every little bit helps us keep having these conversations. Lucas: So back to the car wash. The real test came during the pandemic. When everything shut down, he was worried that memberships would cancel in droves. But he lost only about ten percent of his base. People kept paying because they knew they'd need the wash eventually, and it was a small enough monthly cost that it wasn't worth the hassle of canceling. Luna: That's a great example of the sticky nature of subscriptions. Even in a downturn, they hold. Lucas: Right. And that stability let him keep the locations open with minimal staff, and even buy out a struggling competitor in 2021. That's how he got from four to twelve locations — not by building new ones, but by acquiring and converting them. Luna: So what's the downside? What's the risk now? Lucas: The biggest risk is over-expansion. A lot of imitators are popping up, trying the same membership model. And he's at the point where he has to decide whether to go regional or stay local. If he grows too fast, he might lose the personal touch that makes the partnerships work. Luna: That's the classic service business dilemma — scaling without diluting the experience. Lucas: And the other risk is that the subscription model depends on the weather. A mild winter or a rainy summer can cut visits, and members might start to question the value. He's working on that by adding more services — like detailing and oil changes — to increase the perceived value. Luna: So it's not just about selling a subscription, it's about continually adding value to justify it. Lucas: Exactly. And that's a lesson that applies to any business with recurring revenue. You can't just set it and forget it. You have to keep the offer fresh. Luna: What's one thing a small business owner could take from this if they're not in car washes? Lucas: Look at your customer data. Who are your most frequent customers? What are they buying? Can you offer them a subscription that bundles your most common purchases at a slight discount? If you can create a habit, you create a moat. Luna: That's a solid takeaway. And it's a good reminder that sometimes the most innovative business model is just a membership card with a monthly fee. Lucas: And the fact that he started with one tablet and a simple offer — it didn't require a huge tech investment. It was about understanding what his customers already wanted.