Having recently climbed to 183rd position on the prestigious Fortune Global 500 ranking, Couche-Tard is a Canadian company that is best known for its extraordinary scale across the US and international markets, where it operates gas stations, convenience stores, and car wash services such as Circle K.
With more than $54 billion in sales in its 2020 fiscal year, Couche-Tard and Circle K stores together operate a network that prides itself on a de-centralised operating structure and decision-making as well as a culture of entrepreneurship, with a mission “to make their customers’ lives a little easier every day” by offering a seamless customer experience.
And it’s this spirit of innovation that seems to drive Lars Hecht, who was appointed Global Lead for the car wash category for Circle K in 2016, and since then, has guided the business through the complex yet compelling journey to carefully evaluate and eventually adopt a whole new business model – car wash subscriptions.
Circle K is certainly famous with consumers for its fuel and convenience stores; however, it is also widely respected through the convenience industry as the world’s largest car wash network with 2,750 locations across Europe and North America. As a brand, it demonstrates a strategic focus on the category in the way we’ve written about previously in our article “Why Car Wash is CEO Agenda”.
After introducing his colleagues to the power of subscription programmes in 2016, Hecht has been instrumental in leading the development of a world-class concept that has been successfully implemented in test markets in Denmark, Canada, and across North America.
In this article, we share some of his insights from the initial idea in 2016 to the success of the subscription-based car wash business today. And Car Was is in the CEO Agenda.
Lars Hecht – Global Lead, Category Director at Circle K
Hecht highlighted that he is directly supported by a talented global car wash team including regional and business unit car wash managers as well as an extended team of analytics, marketing and operations colleagues whose support has been invaluable.
Why Subscription?
The context for car wash in 2016 is a familiar scenario for many business owners. Circle K was relatively successful at maintaining profitable prices with its car wash customers, but by protecting margins, sales volumes had stagnated, so Hecht started to explore a new concept that could drive both.
The subscription model was operating in several other industries, but it seemed that only companies with a monopoly in their sectors such as Amazon or Netflix were truly proving their power. And yet, Hecht was confident that the model could work, given how well it aligned with the needs of Circle K’s global business.
Subscription Strategy Insights:
- Customers want to wash their cars as quickly and as easily as possible. Anything that reduces the steps needed along the way increases their overall positive perception of the brand. Eliminating the need to go in-store to buy a car wash code brings “true convenience”.
- Customers love the idea of “unlimited” benefits from their subscriptions with Amazon and Netflix, so unlimited car washing promises equally positive experiences for customers.
- Subscribers are known to spend on impulse when they are near a convenience store for gas or car wash, so it was reasonable to expect some cross-sell and up-sell from car wash subscribers.
- While Hecht had no reason in 2017 to expect that customers would want 100% contactless solutions so soon, given Covid19 concerns, Circle K’s subscription product has now become an important way that the company is helping customers to wash their cars safely and easily by simply scanning a QR code, so no touch is needed.
- Most importantly, a subscription program allows Circle K to set targets for a 100% share of their customers’ “car wash wallet” as no subscriber will ever go to competing for car wash service once they’ve subscribed to one. By being the first to launch the product in most of the convenience markets that Circle K operates in, it could measurably increase the lifetime value of each car wash customer, resulting in “extreme loyalty”.
With so many compelling benefits, Hecht saw great potential in the power of subscription and while he admitted that at first, it felt like “stepping on ice”, he worked alongside his team to learn, evaluate, model and analyse, the potential for subscriptions, until Circle K launched its first programme in January 2018.
Why Liquid Barcodes?
When Circle K was clear on its business objectives and needs, it went in search of a global partner that could build its car wash subscription concept and ensure the consistency and flexibility it needed globally.
Everything about the technology solution they needed was different. From the unique product functionality within the app, to the process of recognising customers, as well as a requirement to use the geolocation of the mobile phone in combination with the outdoor payment equipment.
Circle K wanted to minimise investment in hardware, and with no existing solution in existence, a unique system would have to be designed from scratch with the chosen vendor.
Even more importantly, Circle K needed a platform that could capture, simplify and report detailed analytics from its global car wash business in order to succeed.
Hecht found very few suppliers with the capabilities he needed. Liquid Barcodes was the only European-based company shortlisted and also proved to be a company that shared the entrepreneurial mindset that Circle K values so highly.
After its global research and evaluation, the “spirit and attitude of the Liquid Barcodes team, its global capabilities and willingness to support the complex and evolving needs, combined with a fair and competitive price structure” resulted in the mutually beneficial appointment of Liquid Barcodes as the global partner chosen to support this world-leading innovation.
The project team eventually included global industry leaders Braintree (a PayPal service) which support the subscription payments, as well as the car wash machine teams in DRB Systems / Unitec in North America, and Washtec in Europe, as other essential partners that made the project possible.
After two years of learning, building, testing and evolving, the Circle K subscription car wash concept has become an outstanding success
Concepts
With differing IT infrastructure in each country worldwide, and vastly different customer expectations, Circle K has now tried and tested various technology models and marketing approaches to adapt to local needs.
In the US, the car wash subscription program has been built as a stand-alone app that can be integrated into the new generation app from Circle K at any time, however, in Quebec, Canada and Europe, the subscription platform is being integrated into existing Circle K loyalty apps, such as the Circle K Extra app in Denmark.
Customer options also vary by market – for example, in Canada, customers can choose from three different packages of unlimited washing. The app gives customers the ability to upgrade or downgrade their subscription at any time, and behind the scenes, the Circle K team uses the Liquid Barcodes platform to seamlessly manage the automatic monthly billing, as well as the pricing and promotions.
With the consumer subscription product selling well and enjoying high retention rates, Hecht and his global team are now also testing new multi-user concepts such as family plans and business plans. Once again, Circle K is the first car wash retailer in the world to launch these innovative products.
New subscription concepts include family and corporate subscriptions for car wash customers.
Learnings
Despite the complexity of the project, Hecht is very satisfied with the results. He shared that while the fuel category suffered a double-digit decline during the Covid-19 lockdown in certain markets, the car wash business did not suffer nearly as much, with subscribers proving considerably more loyal to the brand throughout.
Educating staff and customers is an ongoing priority, and Hecht has seen great results using “activation teams” on the forecourts, who enjoy meeting customers, explaining the concept, inviting the customer into the car wash with a free wash (from the app of course) and helping ensure they are fully set up with their preferred subscription programme for the future.
Most importantly, two years in, Hecht and his team are pleased to have found a way to drive both volume and margin. The subscription solution has provided the framework he needed to actually “make customers’ lives easier” and he particularly enjoys how subscribers buy more premium products, resulting in a significant lift in the car wash portfolio.
The Circle K car wash category is growing from strength to strength, powered by subscription success.
Future
The subscription model is certainly proving to be a powerful driver for the car wash in Circle K. Hecht believes it will continue to grow and hopes to add senior dedicated resources to his team to ensure its continued success.
From a partnership perspective, Hecht has been impressed by the support and attention from the operations team in Liquid Barcodes and from our side, we are delighted to be supporting and enabling this extraordinary brand and team with their vision for success.
Building on their mission to “make customers’ lives a little easier every day”, this article hopefully showcases how easy car wash growth can be when it’s powered by subscription.
About Us:
Liquid Barcodes is a leading global loyalty and digital marketing technology company specialising in the convenience store and food service industries. Our proprietary cloud-based technology platform allows retailers to create and manage their digital marketing campaigns with a proprietary process we call the “customer connection cycle’ to engage, promote and reward customers’ activities in real time across digital and media channels.
How we do it:
We have developed the most advanced loyalty and digital marketing technology platform specifically for convenience stores and food service retailers globally.
Retailers use our self-service dashboard to create and manage loyalty-driven marketing campaigns that increase purchases with their existing customers, as well as effectively target and acquire new customers through partners or paid media channels.
One core component of live loyalty is gamification. We have gamified branding, loyalty and promotions. We believe this approach is essential in order to get customers’ attention and ultimately truly engage them with repeatable actions thereby winning their loyalty.
Check out some of our exciting/proven results here:
About Me:
Chief Content Officer, Liquid Barcodes and Independent Loyalty Consultant
With over twenty-five years of marketing experience, I specialise in loyalty marketing consulting, managing consumer loyalty propositions, strategy and operations. In addition to working with Liquid Barcodes, my clients have included Telefonica O2 Priority, Three Mobile, Electric Ireland, Allied Irish Bank and The Entertainer Group (UAE), as well as Avios – the global points currency for some of the world’s top airlines. I am also a former judge for the Loyalty Magazine Awards and host of the “Let’s Talk Loyalty” podcast.
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