Audio Transcript

#200: Circle K's Subscription Car Wash Loyalty Programme (49m)
Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals. I’m your host, Paula Thomas. And if you work in loyalty marketing, join me every week to learn the latest ideas from loyalty specialists around the world. This episode is brought to you by Epsilon and their award-winning Peoplecloud loyalty solution personalization should be integrated into the entire customer experience, including of course your loyalty program. With this in mind, Epsilon recently released a guide outlining six key components that will put you on the path to personalizing your entire loyalty experience.
Paula Thomas

00:00:51
This guide challenges you to do some housekeeping and reconsider how you think about your current and future loyalty personalization efforts. So to download your copy of the report, visit epsilon.com/LetsTalkLoyalty. Hello, and welcome to episode 200 of Let’s Talk Loyalty. And even as I say that I can’t believe I’m recording and releasing our 200th show. So before I get into talking about today’s guest, I want to, first of all, thank my team. First of all, James, who’s been with me as my editor since the very beginning and also Carolyn my new show producer.
Paula Thomas

00:01:37
This would definitely not be possible without both of you. So thanks a million to you, James, and you Carolyn. Then of course the show simply wouldn’t make sense if it wasn’t for all of you listening, would you believe that every show is listened to by about 500 people all over the world? I find that truly extraordinary. And I just wanted to say a huge thank you for all that you do to listen to the show, to share it with your colleagues and to send me your questions and feedback. So thanks a million for being part of my incredible journey now onto today’s guest, who was also quite extraordinary.
Paula Thomas

00:02:17
Lars Hecht is a true marketeer at heart and a man who has taken some huge decisions to try some radically new ideas for his business. They were also quite risky, but they’ve definitely proven to be hugely successful. Lars Hecht is the global lead category director for carwash for Circle K a world-famous retail brand that operates gas stations, convenience stores, and also carwash services today. Lars shares some of the most important lessons that he has learned. Launching carwash subscription services in several markets with some extraordinary insights on how different customers have behaved and how Circle K has had to balance their value propositions to ensure they stay profitable in each of those markets.
Paula Thomas

00:03:12
We also discuss some unexpected ways to use beacon technology, to drive operational efficiencies, as well as the importance of being brave enough to risk failing when you’re developing new ideas to drive your customer loyalty. So I hope you enjoy listening to Lars Hecht from Circle Ks carwash team, as much as I did So Lars, heck I waited a long time to have you on the podcast. So I’m really pleased to welcome you. First of all, to Let’s Talk Loyalty.
Lars Hecht

00:03:49
Thank you very much. I’m very pleased to be here.
Paula Thomas

00:03:52
Wonderful. So I want to talk with you all things subscription, Lars. I think we’ve, we’ve talked about this together before and the context being an article I wrote about the Circle K carwash subscription program, about 18 months ago originally. But before we talk about all of your incredible work and that innovation, as you know, I always like to get some insight in terms of what loyalty programs you like or use or respect. So let’s start off Lars with the usual opening question, please tell me your favorite loyalty program.
Lars Hecht

00:04:32
Thank you, Paula. Yeah, well, I think this is going to be on my tombstone, that it it’s not one size fits all and it depends on where you are because I’m gonna, I’m gonna probably speak about two loyalty programs, not just one. And it depends on where I am. Obviously, I’m born and raised in Denmark and I’ve done a lot of my traveling in Europe and in Denmark, and there, there is an airline called SAS Scandinavian airlines system. They have a Euro bonus program. I liked that very much because it creates what is very, very, very much needed in that region. Fast track at access to lounges and last minute check-in and all that thing.
Lars Hecht

00:05:15
So you can come straight to the airport and walk straight in, basically with the professor, say a priority status. Very, very important for me. If, if I’m in Europe, if I’m in the us where I live now, it’s, it’s different. And of course, as, as does not exist over here, but then it’s American for me. And the reason why is not because of the FastTrack service or the lounge access, because that does not literally exist in the, in the U S anymore, especially after the pandemic, but this is the priority you get. When you get on board a plane, when you have access to two flights, when you have availability in the, in the, in the, in the planes last minute, changes, cost optimization, et cetera.
Lars Hecht

00:06:01
So it’s basically, and this is my point. It’s not one size fits all a loyalty program needs to be good where it is in that particular region and not necessarily across the world. So two loyalty programs stands out for me, you’re a bonus in the European market and American airlines in the US market.
Paula Thomas

00:06:19
Brilliant, brilliant, super fascinating Lars. Yeah, I absolutely agree that every country absolutely has its own requirements. And, and it’s something actually that I’m very pleased has come out through a lot of the conversations that I’m having with people, because a lot of the time, I think certainly with them, big companies and Circle K is such a huge company. It’s probably a lot simpler to say, you know, let’s build one brand, obviously globally, which absolutely makes sense, but you know, you always add complexity in when you start tailoring to local markets, but I think it’s the only key to success. And I, I know you’ve done a huge amount of work on that with our car wash proposition.
Paula Thomas

00:07:03
So I’d love to get into the whole, I suppose, subscription concept for you, Lars, because as I mentioned, I wrote an article interviewed you back in 2020, and I was working with our friends in liquid barcodes at the time. And I was really amazed with the depth of research that you had done in terms of coming to the conclusion that a subscription business model made sense for the carwash industry. So I guess my first question is, you know, maybe just to explain to listeners a bit about your journey in terms of that whole process, because you put so much work and time into making your decision.
Lars Hecht

00:07:40
Yeah, thanks, Paula. Obviously we’re a team and without a team, I’m not an a, so I have a regional in us, one in Canada and one in Europe and a fantastic support about analytics and insights. This whole company that I’m proud to be associated with and working for is built on insights and analytics. My first boss in this company said, it doesn’t really matter what you think or what I think it matters or the customer things. So we always make a very high priority of asking our customers, what do they think? What is their opinion? What do they believe? And that’s what we rule on. And that’s how we develop this program because a subscription can be many, many things.
Lars Hecht

00:08:23
And eventually, it’s all about loyalty and making sure that people keep their business with you, whoever is offering the subscription program. So you can say it’s either a loyalty program or not, but it’s, it’s in my opinion, a very important tool in the loyalty box subscription. In, in many ways, our volume driver, it adds substantial volume to any category and it kind of makes a bed for the whole category. And especially in commerce where we have seasonality weather conditions, super important to have a foundation in the category, which keeps on paying whether it’s raining or snowing or good weather or not. So basically we started asking ourselves, how can we make, what, what, what does success look like when we’re at the end of this project?
Lars Hecht

00:09:11
And as we develop the platform, which is a global platform, and we are global player with more than 15,000 stores and more than 2,700 car washes on those locations, we of course have a, a foundation which is our brand, our concept, et cetera. And we started out with one solution. And quite honestly, we ended up with three solutions. And as we implement this in the different markets, I’m sure we’ll see many shadows or many shapes that will be different from originally thought. And I think that’s part of the journey to success is to listen to your markets, to listen to your customers, to understand what they want and what they don’t want.
Lars Hecht

00:09:57
And then you adjust accordingly. You can do that within a framework and an umbrella. You just need to be aware of these changes and constantly measure the success. We do that too. NPS net promoter score, where we constantly ask people about certain initiatives and basically if they would be willing to recommend this to any of their close relatives.
Paula Thomas

00:10:21
Yeah. Yeah. Well, we’re huge fans of MPS on this show. Lars is, you know, so wonderful to hear that you’re building that into your feedback model, but, but I’d love to pick up on the research that you mentioned Lars. So for me, it’s very clear that, you know, every business needs to think about subscription, whether they decide to launch and go ahead, of course it’s a different decision, but I absolutely believe it has huge power, as you said. And I think he used some nice terminology around becoming a stabilizer for the business. And I thought that was a brilliant word, actually, Lars, because seasonality must be an absolutely huge factor for the car industry.
Paula Thomas

00:11:05
And you really explained that very clearly. But while I understand the business rationale, I’d love to hear some insights on what did the customers actually say to you? Like, like in some ways it’s, it’s a little counter-intuitive to me, if I can go and wash my car, whenever the weather is right, you know, to use the seasonal piece or the seasonal idea, then I only pay when I actually need the service. So why did they like subscription? Which clearly they do give them that you, you know, expanded globally, as you said.
Lars Hecht

00:11:36
Yeah. So part of the reason is the people find cows in many regions, no matter where it’s us or Europe, a to B and a relatively expensive, but a, a very, a nice thing to add to your everyday commute, to have a nice, nice shining car. And that makes everybody feel good. And that’s what we understood. It makes you feel good. It makes you feel content, it boost your ego, et cetera. So everybody basically wants to look good. I mean, people dress up to go to the office to go to events and the cars is part of that journey. And when you arrive, whether you’re a salesperson or whether you’re going to a funeral or you’re going to any kind of event, people will always look at you and the vehicle that you arriving in, and that’s, that’s kind of the label.
Lars Hecht

00:12:27
You will have. The, the foundation that we want in the category is a consistent payment of some sort too, to, to provide us with the, with the stabilizing elements of this category, which is very well depending and seasonality, depending where I live in, in, in North Carolina, we got the pollen effect and everybody excited about that. I’ll be in Canada, it’s the snow and slush, which is exciting people. So it’s really about where do you live and what triggers a customer’s behaviors. So once we understood that it’s all about the shine and it’s all about feeling good and clean and presenting an image of, of yourself or your family, whenever you travel, then we can start shaping that offer.
Lars Hecht

00:13:14
We have a premium wash, seasonality adjusted as well. And that’s part of our offer in our subscription program. We believe in most markets, but not all markets. And that’s the interesting part that we should have an offer that hits three or four different packages. Now we’ve made one change in one market where we only offer one package and that’s the very top package. And that’s because we can’t afford to offer a mobile or to get more volume in because we have such a tremendous seasonality that if we add more volume at a lower price, we’re actually losing out on business.
Lars Hecht

00:13:55
But what we learned in some markets is that customers in certain European markets have a very flat usage of their subscription program. We, it starts with the honeymoon period, which is what we call the first month, perhaps to everybody excited. It’s just like going to the gym. Everybody’s excited, they’ll go there everyday. And they they’ll try it and use as much as possible. And then what we also see is after a month or two, well, I know that that should, by my own experience, then perhaps the gym is not the most exciting place to be every day and the same with ours. And so we see people fall off and then in month, two and three, they come to a certain level of excitement with whatever product they have done.
Lars Hecht

00:14:41
And, and then it kind of falls to an average. What we see in Europe is so far, and we have only rolled out to one about to get the hit. The second market in Europe is that there is a honeymoon period, and then it falls down to a certain factor. If you take that factor and then look at the U S that factor multiplies by two in the U S so people knew us that has a subscription, exactly the same program, exactly the same setup. They use it three times as much in the U S. Now, if we go up to Canada, it’s even a multiplier by six times. It’s really amazing to see how people uses these programs differently.
Lars Hecht

00:15:23
And there that’s things you need to consider when you do your math, when you do your price setting, when you do your calculation, when you do your communication, and that’s what you need to think about to do your retention of your customers after the campaign period. So lots of interesting insights. We did not know this. When we started this whole journey, we’ve learned a lot. Basically when I started saying to my, my management team, we need to have a subscription system, a subscription program. We had no idea where this would end, and I’m sure I’ll be even more surprised in a couple of years down the road, because I don’t think it’s one size fits all. And we keep on learning new things around this concept.
Lars Hecht

00:16:05
Very interesting and very insightful as we continue this journey.
Paula Thomas

00:16:11
Wow. Well, I think I said to you before Lars, this show is all around education and inspiration, and you’ve certainly delivered on that with such incredible insights. I remember you said to me, when we spoke that time in 2020, that it felt almost like stepping on ice when you launched the subscription program. And from my new, was that the US was that the first market you launched in for, for subscription?
Lars Hecht

00:16:38
We actually simultaneously launched in a, in Denmark, in one of our European markets and in the North American market, the Heartland in the Chicago area at the same time. And then, we added Canada as step three. We’ve got a total rolled out commercialization in, in, in Denmark. Now we having all the other countries lined up as well as us. Now,, we work in business units. So we launched a complete in three business units and in the US and three up in Canada is now we’re getting everything in now because we understood the mechanism.
Lars Hecht

00:17:19
We understood the mechanics, we understood the mathematics, the revenue, and, and, and we’re very pleased with the results, but it has been quite a journey. And, and it’s been, and, and interesting education for us as well as for our, our management team. Because when you have a very profitable category and you say, let’s give it away for whatever number of months, people start shaking their heads and say, this is never going to work. My friend, you’ve got to be without a job very soon. I don’t think so. I think this is, while you can say, you don’t want to have a subscription system, and then customers will probably look for other suppliers of this service because the whole world is a subscription.
Lars Hecht

00:18:06
Look at books, look at music, look at whatever you do at subscription has a subscription offer. And I think that’s a, well, we haven’t seen the end of this in the near future
Paula Thomas

00:18:18
For sure. And I think, you know what, it’ll be fascinating to see it in other casual Grey’s Lars, you mentioned, you know, two airlines, obviously at the beginning of the discussion. So I can definitely hear a lot of people, even in that industry, wondering what they can do with the subscription model, which is a very different proposition, obviously to, you know, what you’re doing in the carwash cash degree. And I do think, well, Sam, what you’ve managed to do, you know, from, you know, the positioning piece of, of innovation, I think has an immense value of course, to a brand like Circle K but also I think what you’ve managed to achieve Lars is that first-mover advantage, because I really think that once a customer does sign up and you’ve talked to me, for example, about, you know, customers actually tend to stick with one location.
Paula Thomas

00:19:08
So there is a lot of loyalty to single locations, but I also think that, you know, if you do have a subscription product, you can certainly expect that they won’t ever go for a carwash to any competitor, like Circle K can then assume, I guess, for your modeling and correct me if I’m wrong, but that you can get a hundred percent share of wallet in terms of the carwash cash degree with your customers.
Lars Hecht

00:19:31
That’s exactly why we do this. And, and without being able to put hard numbers to this obvious reasons, we see that we actually build traffic and we, we, we get a bigger average purchase out of our customer or an average spent. And we, the whole traffic piece is so important, right? Because whether you have a, a normal combustion engine or whether you are in markets where Evie charging is, is big or hybrid, or in between, you gotta have, you see people gonna have to hydrate, they have to have a clean car. We know that’s important to people. So, so it’s all about driving traffic to our sites.
Lars Hecht

00:20:12
Our colleagues in other departments is doing other types of subscriptions. I’m sure you’re aware of our program or sip and safe. And so on. Very interesting things. I don’t think we’ve seen the end to this. I think what is important and what we were able to, to crack a code with our supplier liquid barcode was the fact that we didn’t meet all the fancy hardware that we normally see in other types of industries, in the commerce business with RFID tags, with the installation of those maintenance of those, the whole hardware piece of readers and Beamers and whatever they’re called. We only use customer’s unique cell phone because we believe that this is a, probably the most personal thing you have is your phone.
Lars Hecht

00:21:02
You would never think about giving your phone away to anyone else. A lot of us have apple pay or any other wallets with our credentials. In some markets, you can put your driver’s license in there and, or in your, in your watch as well. So I believe that the phone is, is pretty much the only thing you won’t have handle what to someone else, but your absolute closest people, and perhaps not even them. And that’s why we made the phone as a very unique identifier in our prescription. So the system, so we don’t need all these fancy hardware installation and with a big operation like ours with more than 2,700 locations.
Lars Hecht

00:21:46
I mean, can you imagine the installation costs for hardware approximately five to $10,000 a location it’s gonna kill the business? So very pleased with the solution we found with the geo-fencing would be a unique phone identifier and the plan, we even have family plans where you can have children, is what we call them in the family plan. And that could be business plans as well, with, with children, however many children or associates you want to a plan, you can build it a module, it just exactly as you want. And that is what we need in a convenience store that’s flexible and not one size fits all.
Lars Hecht

00:22:32
And then we need for sure, a very low investment demand because of the markets.
Paula Thomas

00:22:39
Of course, absolutely. And I’d forgotten about that point, Lars, because again, I was all about the loyalty piece and the, you know, the actual commercial side of the decision, but, you know, I guess it was obviously pre COVID. In fact, when you were going through this thought process, so the cost of potential hardware and eliminating that need was extraordinary, as you said, you found a solution to do that, but also, I guess if the activation for the carwash is in the control of the individual subscriber, there’s also the hygiene benefits, I guess, as well, which would have stood you in good stead through the pendant again.
Lars Hecht

00:23:19
Yeah, correct. And we actually, we, we, we are now in stage three now in our development. And as we started this program, we said, let’s, let’s just make sure the phone speaks with the outdoor payment terminal. So as the customer drives up, you’ll have to scroll down their window and then enter a code that you will see on your phone, on your outdoor payment terminal. We moved to second phase, which was, let’s use a QR code because of the pandemic. It’s not touch the screen, just put up the camera and use a QR code to identify that you’re on the right location in front of the cow’s bay and not in front of the, on the, on the pump, on the forecourt, because that could be a risk, a safety risk, for sure.
Lars Hecht

00:24:03
And then now the third thing that we’re doing and actually adding to our business in the US and a assume Canadian market is a beacon. It’s a little bit backwards in the technology, but we want to make sure that we have a good customer interface. We understand that people have different settings on their phones and different permissions to be recognized and, and communicate with other devices. And that’s why now we’re installing a very inexpensive, but very reliable beacon, so that as you roll up to the outdoor payment terminal, the beacon will ping you and say, hello, Ms. Paula, we see you’re here. Would you like to activate your wash? And then you do everything from your phone.
Lars Hecht

00:24:45
You don’t rely on QR codes, anything the beacon will communicate and establish communication with your phone. And will you make your choices on your own personal phone, in your own personal space inside your vehicle? And the whole thing unfolds in front of you. It’s pretty cool stuff.
Paula Thomas

00:25:01
That’s incredibly cool stuff. Lars, the beacon part, I had no idea that you were starting to work, as you said. And probably something that in my mind, I have dismissed as a technology that felt like it was just going to be used to spam people with offers when they walked into a certain location, because like I’ve only seen marketing case studies, you know, certainly in my experience now, maybe I’m just not aware of the power of beacons Bush. It’s the first time I’ve heard it being used in an operational context like that.
Lars Hecht

00:25:34
We wanted to, we, we experienced some uncertainties and, and some irregularities in our current system, and it’s all about improvement, right? And it’s all about learning and we’re, we’re not too proud to say that we can improve and, and probably should keep on improving things. And we just understood that we need a more precision. We need that. One of my colleagues said, why do I have to open my window? Why do I have to do all these things? Why don’t you just provide it to me inside my vehicle? And I can do that. Well, that is what we’ve done now and successfully implementing it. We’re doing it together with an EMV rollout that we have to do anyway. So it’s, it’s really a win-win for everybody.
Lars Hecht

00:26:15
I’m pretty cool solution.
Paula Thomas

00:26:17
It’s a super-cool solution Lars. And I know my brain is going to be an overdrive now, wondering how beacons can be used for other operational things that I might need, you know,
Lars Hecht

00:26:27
You’re better to go, but I think there is a fine line here because we can pump messages out. We can prompt people and we can reach them on the forecourt and so on and so forth. I think we need to find very nice balance of not misusing the opportunity here, because this is actually meant as a tool to help giving a seamless customer experience and, and, and make the whole flow go very easy. And it’s, it’s quite difficult actually to get the beacon, just to react within a few feet or meters around the outdoor payment terminal, because you can get it to reach all the way out to the, on the road, on the main road, which is not really what we want with this beacon.
Lars Hecht

00:27:14
So I think it’s a fine balance. You’re not to spam people, if you want to use the express.
Paula Thomas

00:27:20
Exactly. No. As I said, if it’s exclusively used in a sales context, I don’t think I would welcome it. But again, I suppose, because travel is such a big part of the loyalty industry. And again, we’re all, hopefully being able to get back into travel. I’m also thinking, could it be used in those kinds of, you know, context and environment to your point earlier about what SAS is doing? So definitely one to watch Laura’s I think beacons definitely have a whole new purpose in the loyalty industry that I simply wasn’t aware of before.
Lars Hecht

00:27:52
There you go.I think as we speak about large and speak about subscription, I think it’s one and the same, and then yet not because we got very, very skilled and good colleagues working on a loyalty program and a revitalization of this as a global brand and all that good stuff. And I think we, as a subscription has the cow’s category and other categories for that matter with our subscription fits very well into that, but it’s not necessarily the rewarding part that the subscription should be rewarding in itself. And has it ha have its own customer value proposition and an old its own intent and purpose, but it could, and it should blend in with the entire loyalty platform and, and, and leading towards loyalty of towards the brand.
Lars Hecht

00:28:50
I mean, it’s a big jungle out there. We like to be the ones I’m sure others have the same desire to stand out and be something special. And, and aside from offering a good quality car was dry, clean, and dry and shiny car. Then we also like to keep people hydrated on the road, et cetera, et cetera, and show you with the quality fuel delivery as well. So I think there’s a lot of things in, in loyalty, and I think it’s super interesting. And just one, one part of it is in my opinion subscription
Paula Thomas

00:29:23
During Yeah. Yeah. And you mentioned to me as well as last time we met that you are certainly continuing to bring in, I suppose, expert resources into your own team, I suppose, to continue to, to learn. And that’s incredible. I’d love to know what, what are your kind of resourcing plans in order to, to keep this as, as compelling as it is?
Lars Hecht

00:29:46
I’m super excited to report that we’re actively onboarding a subscription director as of 28th of March a gentleman coming from the telecom industry. I’m super excited to announce that on the 28th of March,, we are a global organization and very proud to be part of a huge global brand. And so the director will be responsible for the subscription concept program with me or towards me and, and be servicing our, our three regions as of now, Canada, us and Europe.
Lars Hecht

00:30:28
We also identified another position that we are feeling or expanding to as a business development of subscription. Because as I said to you, we constantly learn. And besides from running the business and the category, which is our daily work, we must ensure that we have focused on any future developments in this category. So that’s why we made some changes and upgrades to our organization. So pretty soon set for another interesting adventure and a new learning curve with new resources, very, very distinguished resources from this very special trait. I mean, it’s not easy to find good people these days.
Lars Hecht

00:31:08
Everybody knows that. And it’s a very hard market. I mean, we’re competing with the Amazons, the Spotify as the YouTube, whatever they are called, the subscription is a new trade. And those people that understand these algorithms and customer behavior trends and movements, they are in high demand. I can tell you that, but I’m very excited to report. We’ll get super results starting very soon
Paula Thomas

00:31:34
For sure. No, you’re absolutely right. You know, that expertise is extraordinarily popular and in demand and thrilled to hear that you found somebody that you’re so excited about and you have a big team of them, data analysts as well, if I’m right, Lars, and in order to help with your modeling, don’t you?
Lars Hecht

00:31:52
Yeah. I mean, that’s a key of whatever we do. We, we have our CMO have introduced us when he got into the company some years ago to a model of, of how to pilot the alpha-beta commercialization and then market rolled out and we have a whole project organization that runs around this and support this. We do the idealization, we scope out the projects. We let them run for a certain point of time. We got insights and analytics supervising us and working for the pilots. And we have a very nice atmosphere around this. It’s actually, we’re actually expected to fail.
Lars Hecht

00:32:34
And that sounds a bit, No, exactly. But that’s very interesting. Our, our, our CMOs said to us, if you don’t fail, you haven’t tried hard enough. So it’s quite appreciated when we recognize that we’ve done something we shouldn’t have done and failing is absolutely permitted. We just need to make sure we don’t repeat that error again. And that we take learnings. So it’s pretty cool atmosphere within this whole setting that we constantly have a lot of pilots going on and we have a lot of things undercover.
Lars Hecht

00:33:15
And then when we bring them out, they’re all vetted and proved and, and, and the documented through analytics and insights, because there’s both a soft side as well as a hard side to a successful pilot. I mean, we do customer intercept. You, you do NPS, you do in-depth interviews of people, of customers, of select groups. We use usability hops to get people firsthand impression on things, and then use of course, analytics, to dive into the numbers and predict a test. We call it a test and learn platform.
Paula Thomas

00:33:52
Mm yeah, yeah, absolutely incredible. Lars you’ve reminded me of a quote actually. And I love that your CMO has that extraordinary trust across the organization to give you permission, to be brave, to try new things. And, and I suppose, as you said, you know, permission to get it wrong once and, you know, please God, all of the learnings will mean that you’ll continually, as you said, continually improve, but you reminded me of a quote actually as well. And it’s a very famous gentleman. His name is Reid Hoffman and he actually created LinkedIn. He actually developed the concept and built that incredible network.
Paula Thomas

00:34:35
And Reed Hoffman apparently said that if you’re not embarrassed by what you’re doing today, one year from now, then you’ve launched too late. Like literally, and you know what I can tell you, Lars, it certainly gave me permission to launch a podcast when I had no idea what I was doing. And, you know, it’s just an incredible insight. So I love that you have all of that trust going on.
Lars Hecht

00:34:58
Yeah, that’s a, that was a total shift of paradigm. When, when Kevin do is started here and we’ve got so much focus, we got a whole entire pilot organization to support any of our categories. So it’s super exciting environment then. And that’s, I mean, w we can not all live off the same customers we got to differentiate. And you only different by testing out new things and conquered new customers.
Paula Thomas

00:35:28
Yeah, exactly. Let the market decide what they want and then delivered for them to the best of your ability. Wonderful. You with me, something else, ours, which I found really useful. And I know it’s just, I suppose, the guideline for people listening, but it’s the concept of what percentage of your customers you might want to be subscribers, because I think there’s a number of different, I suppose, views around, I suppose, different categories, you know, whether 40% or 70% of your, you know, your business should come from subscribers versus those ongoing, you know, I suppose one by one transactions.
Paula Thomas

00:36:10
So what’s your view on what a successful, I suppose, penetration is on subscription versus your overall business.
Lars Hecht

00:36:17
Yeah. Excellent. It’s a tricky one because I think, again, it’s not one size fits all, and I think it may be different from category to category in the cow’s business, which is traditionally a relatively high margin area. I’ve heard market communications and, and ideas and conversations. And people saying up to a 70% is, is okay as probably in the tunnel business that really runs on volume. I think if, if, if I were, if we can land somewhere around the 35, 40%, I would be very pleased. I mean, as a, as a customer, sorry, as a supplier, you don’t want to be too dependent on something you want to spread out your risk.
Lars Hecht

00:37:03
And I think at 35, 40% split towards a subscription would be a very nice platform to, to operate from, as I said again, and that’s why we liked subscription in the car was basis because of seasonality, some drops off during Selma and some come back during winter and it’s our job and our task to figure out what keeps them around for the next seat to start. And that’s the whole retention discussion, their algorithm. I read a book where people said, it’s, it’s all about understanding before the customer realizes that the customer will exit.
Lars Hecht

00:37:43
And then at least at the very moment when the customer exit be there with the right offer to keep that customer go on for another period, we talk about buckets and buckets is our month. And we look on a 13 buckets period of time where we see how people retain are retained in the system. Because of course we all know that we have acquisition and cost to acquire a customer into the program. And, and that, that has a price. And we need to make sure that that is still a profitable acquisition and, that we have a nice offer in place for that customer. Once that customer decides to move on to something else or is not pleased or find it outside of its season.
Lars Hecht

00:38:29
So on a one, a colleague of mine said to me that his wife was actually in a solarium subscription and during summer where she would typically turn it off, they would keep her on for just five bucks a month. And if she even used it every second month, it would be a brilliant business that that colleague of mine told that the wife was still on that subscription for the solarium, even though she didn’t use it because just easier to hang on to a system which he didn’t use and she didn’t actually cost any money. So that’s, that’s food for thought. And for my company, from my category in some markets, again for the new subscription director to work with
Paula Thomas

00:39:15
Indeed, indeed. And what I think is really nice as well, I suppose about that level of, as you said, maybe 35% of your business really being, you know, an ideal framework to, to, to aim for that’s I think is very reassuring as well, because I know you have a lot of franchise operation businesses in various markets as well are so a lot of decision-makers, I guess, who need to be reassured that this is going to be profitable and incremental, as you said, with cross-sell and upsell and not something that would dilute something that they would have got anyway.
Lars Hecht

00:39:52
No, and we got all the data to support that this is actually growing our business and it’s not, we see cannibalization, I would be lying, not saying we don’t, but we do. But the ops side of the subscription program is really by far much higher than the cannibalization. And we run reports and we got an online tool, which is quite a unique, we can see every user, how many times a month, a day per market, per site, we can slice and dice the data. And of course we can also see customers who are not using their subscription at all. And just keep on paying.
Lars Hecht

00:40:33
I read another book when I was getting myself introduced to this, a very interesting topic that that also said, if you haven’t communicated with your customer within the first three months of a subscription, you better not start doing it. You just shut up and just let the customer have his own life. Because if you communicate with the customer after three months, no matter what the customer will be, will be aware of the subscription and start questioning whether this is a fair spend of money. I’m not sure, actually, I agree with that at the end, I’m going to test that hypothesis more when I get my resources in place very shortly, and then I’m going to, if I can, because, because actually I wouldn’t like customers to find out that they’ve been paying for something for years that they would never used.
Lars Hecht

00:41:20
I would rather make them aware of the service and, and, and prompt them to come and visit us because there’s so much in, in our locations and just cowers there’s other facilities.
Paula Thomas

00:41:33
No, I think you’re absolutely right. And certainly as a consumer Lars, you know, to me, if I haven’t heard from a brand and, and then suddenly they start communicating, you know, it’s, it’s just a little frustrating, you know, it’s like you had the opportunity and you missed it. So you’re absolutely right. You know, you need to be adding value as much as possible and reminding people. And, and certainly I’ve, I believe that Netflix, for example, has a policy of automatically cancelling subscriptions on behalf of people who are not consuming content, which I think is quite a big decision, quite controversial, but they literally have this idea that, you know, that there’s absolutely no point.
Paula Thomas

00:42:15
And I believe it’s quite a small margin, actually. I think we all know, once you start subscribing to Netflix, you probably do consume a lot, but just to have these kinds of dummy people who are not realizing, or they’ve forgotten about it, it’s actually not good energy. So as you said, you’re better off kind of getting them engaged. So they do get the value.
Lars Hecht

00:42:33
Yeah, exactly. And then you’ve got the whole trade-off, but business, which is something that we like to focus more on and that we have seen very promising results. I mean, the, the whole trade-off business is, is, is interesting. How can you trade up per visit? How can you trade out per monthly plan? And even we see all the plans coming in with half year panel, whole year plans. I mean, w what’s the limit here? I think this is so it’s very interesting product that can be used in many ways in shapes and forms. And, and we certainly see that we, we did a very nice study where we, we offer a very nice, very good product, which we call it max protection, our brand, a very hot wax tool to the vehicle.
Lars Hecht

00:43:21
And, and then when we ask our customers, even our, at our top wash, would you like to add more max protection, which is they already buy max protection? Would you like to add more max protection? We, the customer says, yes, of course. And then they will ask for another round of that. And in the past you would say, if you, if you purchase the best wash with everything, whistles and bells and everything, all way, you’re going to get them to art, to buy more on top of the best wash, but we proved them wrong. And they actually, they like to get more max protection, more wax. So it’s only this guy, which is limited. And if you don’t ask, then you don’t get the no, or the S right, you got to ask, but you got to ask all me so many times, otherwise you offend people.
Paula Thomas

00:44:08
Yes. And I love that you picked up on that point, Lars, you reminded me of one of my previous guests, and I always used to ask about favorite loyalty statistics. And it was a statistician from Australia. And he literally told me, you know, the assumption by loyalty professionals is that the biggest opportunity is I suppose, in those mid-tier customers. So to your point, they might not have bought the top package. So our assumption is that’s where we can drive more profitable behavior. Both what Adam actually said to me is, you know, it is the top tier of customers that will always have the appetite and be the most likely to, again, you know, convert even higher and buy more from you.
Paula Thomas

00:44:51
And that’s something I think that we just assume it’s impossible. But as you said, the sky’s the limit.
Lars Hecht

00:44:56
Well, I can’t take credit for that because that was this the same CMO Kevin Lewis would say to me, what are you offering? What are you offering to your best-paying customers as a team, think about what to do. And then we added the extra Mac protection and yes, he was so, right. So this is just so cool to see things come to fruition actually, and happen just in front of you and you actually pushed you something that you would have thought they would have happened, right?
Paula Thomas

00:45:23
Yeah, absolutely. Yeah. And I just want to give a quick credit. It was Adam scoffer and who’s now based in London actually. So I’ll make sure to link to him in the show notes, if anybody does want more insights, because definitely I’m using his brainpower right there. So I’m glad it’s something you’ve seen and shared and well done to Kevin Lewis as well and bringing those insights into circle. K. So my final question then Lars is secrets to success and you know, it’s probably, you know, we’ve touched on a couple of things already. I think you’ve been very clear that no one size fits all. I think the continuous learning is something that I’m hearing coming through in terms of your work and obviously that geographical piece as well.
Paula Thomas

00:46:09
So, you know, to make sure that you do factor in the, the behavior that is going to be so dramatically different, as you said, you know, Denmark, the U S was triple. And then I think you said a multiple of six, four carwash customers in Canada. So those are incredible insights and learnings. Are there any other things that you think are important for anyone listening when they’re thinking about particularly subscription type loyalty?
Lars Hecht

00:46:34
I have one of my, one of my sayings is from the day that we supposedly put a man on the moon and the sky is the limit. And, and, and I’m not a big conspiracy theorist, but supposedly we had a personnel then from that day on, everything was to my, in a possible, so test learn, fail, fail, fast, move on. There is, there is no end to this. There are versions. There are, there are not one size fits all and it’s just go out and kill it because if you don’t someone else will
Paula Thomas

00:47:13
Well, perfect words to close on. So listen, it’s been an extraordinary conversation. I have learned so much. So I want to say huge. Thank you to Lars Hecht, global lead category director for carwash at Circle K, thank you so much from Let’s Talk Loyalty.
Lars Hecht

00:47:31
This show is sponsored by The Loyalty People, a global strategic consultancy with a laser focus on loyalty, CRM and customer engagement. The Loyalty People work with clients in lots of different ways, whether it’s the strategic design of your loyalty program or full service, including loyalty project execution. And they can also advise you on choosing the right technology and service partners on their website. The Loyalty People also runs a free global community for loyalty practitioners, and they also publish their own loyalty expert insights.
Lars Hecht

00:48:14
So for more information and to subscribe, check out theloyaltypeople.global. Thank you so much for listening to this episode of Let’s Talk Loyalty. If you’d like us to send you the latest shows each week, simply sign up for the Let’s Talk Loyalty newsletter on Let’s Talk Loyalty.com.
Paula Thomas

00:48:40
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