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Car wash company cleans up: Mike's Express grows by luring loyal clientle

November 27, 2006

The state's best-known car wash company has found a new formula for success it hopes will rival its popular multiwash books: monthly passes that practically guarantee a permanent shine.

Indianapolis-based Mike's Express Carwash already has enrolled more than 3,000 customers in a monthly membership program, launched in September, that allows unlimited washes in exchange for a monthly fee. Express wash passes are $39.99 per month, and "Works" passes are $69.99.

"It's truly for the person who always wants a clean car," said Mike's Express CEO Bill Dahm. "You never have to worry about the weather any more."

The passes are just the latest innovation for a family-owned company that opened the state's first car wash in Fort Wayne in 1948 and has since grown to 34 locations in Indiana and Ohio.

The company retains control over every store and grows slowly, adding two or three locations a year. More than half the equipment in each car wash is designed and built by Mike's, and all its employees are trained at Mike's headquarters in Indianapolis.

It all adds up to intense loyalty among customers.

"Mike's is arguably one of the top 10 or 15 car wash companies in America," said Mark Thorsby, executive director of the International Carwash Association, a trade group based in Chicago. "That's based on their size, customer service and ability to replicate a high-quality carwash experience."

Other top car washes nationwide are trying out monthly membership passes, too, mainly in markets where corporations have shown an interest in buying such passes as gifts for their best customers or perks for senior executives, Thorsby said. The passes are particularly popular among real estate agents and other professionals whose cars double as offices.

"It's not a concept that's new, just one they're executing well," Thorsby said of Mike's monthly plans. "They enjoy huge brand loyalty."

Mike's Carwash has doubled in size in the last 10 years. The secret to the company's growth has been in keeping a tight geographic footprint, hiring the best people, and finding great locations, Dahm said.

Mike's builds its car washes around retail "generators" such as Wal-Mart, Meijer, Target or busy restaurants. The company's 35th location is now under construction in Noblesville at a new Simon Property Group Inc. lifestyle center at Exit 10 on Interstate 69. The car wash is slated to open in the fourth quarter of 2007.

"We like to be in a cluster of retail," Dahm said. "We're truly in a business that thrives on convenience."

Nationwide, more than 102,000 professional car washes generate $23.4 billion in annual retail sales volume, according to the International Carwash Association. Most of the largest chains are like Mike's, dominant in a narrow geographic area.

Now is a good time to be in the car wash business, Thorsby said. Americans have more discretionary income to spend on their cars, and less discretionary time to wash them on their own.

But there are also challenges in the industry. The high profit potential has brought an influx of competition, Thorsby said. Some startups are even willing to set up shop across the street from existing washes. In the last three or four months, attendance at investor seminars hosted by the International Carwash Association has quadrupled.

And record low unemployment and competition from other service industries make it difficult to find and keep good employees.

Mike's, though, has found a way to recruit and retain quality people, Thorsby said. The company is picky about whom it hires, bringing onboard only about one of 50 applicants. They require employees to wear ties and undergo a rigorous training program. Employees don't accept tips, instead working for company bonuses and incentives.

"It's almost like they're cloning their employees," Thorsby said. "They're that good at hiring and training."

In addition to friendly service, Mike's is known for the stuffed cartoon characters that help make a ride through the car wash inviting even for young children.

They've also got the wash part down to a science.

"It's quick, and they do a good job," said City-County Councilman Ron Gibson, who stopped by the downtown Mike's for a quick wash between meetings on a recent weekday. "You don't have to do any detailing after."

Mike's does not share revenue figures, but Dahm said the company is "having a good year" now that gas prices have fallen.

"It wasn't quite business as usual when gas went over $3 a gallon," he said. "But we're in this for the long haul. We don't live quarter by quarter."

All of Mike's locations are owned by the company, which is run by second-generation owners Bill, his brother Mike Dahm, and their cousin Jerry Dahm. In 2008, Mike's will turn 60.
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