Why Circle K’s subscription model is a good idea
Circle K recently extended its car wash subscription program to Norway, after successful implementations in Denmark, Sweden, Estonia, the United States and Canada. Learn why the offer is so succesful.
For starters “the service is very easy to use”, says Anders Hagen, car wash category manager of Circle K, in a very interesting video that accompanied the launch. “Just download the app and let it know I am ready to wash, please open the gate. It all happens immediately.”
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Hagen admits the subscription model is not for everyone. “Some will still buy only one wash. But we’ve seen in countries like Denmark and Sweden that customers are very interested in this”.
In a country where winter temperatures can sometimes go as low as -40, it’s very convenient that customers can stay in their car during the process. “That is very important”, Mats Danielsen of Liquid Barcodes confirms. “It means less friction for the customer. Making it (the process) simpler.”
“There is nothing more convenient in terms of buying the service than buying the service as a subscription.”
During the interview Danielsen, who can be considered a specialist shop loyalty, stresses the convenience for the customer a few times. “There is nothing more convenient in terms of buying the service than buying the service as a subscription.”
Furthermore, with products like car washes, coffee and gasoline, it’s often an impulse purchase. Danielsen: “You want to turn that impulse customer into an automatic customer. An automatic customer has made his choice and no longer wanders around different brands.”
With the subscription model, a branch creates a more loyal customer. At the same time, it probably means you get much more traffic in your stores. So upselling becomes easier.
The average customer in Europe washes its car every other six weeks. “In a country like Norway, with lots of salt and dust on the road during winter it makes sense to wash more often”, Anders Hagen of Circle K points out. “You will then keep the value of your car”.
Even though they call it unlimited washing, Circle K allows its subscription customers to wash their car maximum twice a day and offer a maximum of 30 washes a month. Which is probably sufficient for most consumers.
Last but not least, it becomes clear in the video that the subscription model offers a different kind of revenue to Circle K. This annual recurring revenue or ARR, represents a much more solid financial base for the company. Historically, the convenience industry has been focused on impulse customers. But now they already have about 60% of their car wash revenues covered at the beginning of the year.
Circle K Norway offers four different car wash plans, starting from 429 NRK (€38,95).
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