Free dry numbers

[chad]

Ok, I am getting tired of these morons in my area competeing and I feel it's time I do something back.

I have thought about not doing 50% off but going free dry... mind you my prices already are 50% higher during the week with the other stores.

My dryer income is 28% of my gross sales. Using the card system I can make sure the free dry does not be abused. I plan on sending direct mailers out to about 20,000 homes and flood the whole area with my promo.

My store is big enough to handle the volume... What does everyone think?

[laundryboy2]

Leverage your card system. You will probably be able to make really good decisions based on your data. Atleast your not doing this by-the-seat-of-your-pants.

[Adamski]

Chad,

My feeling is that you'll end up (after about 90 - 120 days) with slightly higher gross Sales, more customers, higher utility costs and about the same Net. Perhaps more importantly, you will get the attention of your nearby competitors. It's hard to predict how they might react though.

[chad]

Well what I like about the card system is the free dry can not get abused.

For every wash I will assign a credit that goes toward a free dry. Gas right now is pretty low, I already charge at least 50% more then these other guys during there 50% off promo... I do have brand new machines and I do have them set where the water level saves me money.

I would be able to maybe add .25 for a hot wash to add some extra revenue on top of the wash.

It will cost be about $5k to send out around 15k really nice looking home mailers.

[Howard]

I have mixed feelings. I think one should either be the high price quality leader, or the cheap no frills volume player -- anyone in the middle gets hurt. Sounds like it could work for you, do it for a couple of months and then decide if it makes sense. If not, go back to your high price formula and you will probably keep a few of the people that came for low price anyway. Keep us informed on how the experiment goes.

[jh]

How will you limit the free dryer usage? Will it prevent a customer from using as many dryer pockets as available (i.e. 10 pockets for one load), which will increase the utility cost per load and possibly create a bottleneck? I like the idea of free dry because it seems to push K.I.S.S. rule a step further. Most customers will know exactly how much they will spend before they come to wash.

[CanCanCase]

Originally Posted by jh

How will you limit the free dryer usage? Will it prevent a customer from using as many dryer pockets as available (i.e. 10 pockets for one load), which will increase the utility cost per load and possibly create a bottleneck? ...

John, that's one of the beauties of a card system... for every washer started, the system can credit a customer's card with ONE dryer start. If a mat has particularly large washers that might require a load to be split across 2 dryer pockets, then that particular large washer can trigger TWO dryer starts...

I've toyed with the same idea for a while now. In our first 3 stores, there's little or no competition, so I don't really have a need to offer free dry... just premium prices for the newest and best facilities around. After our renovation at #4, however, I'm predicting some steep competition with the established laundromat down the road... She's already charging my premium prices, and we're both rather well capitalized. I may experiment, not with "free dry" but with including the price of a dry cycle in the price for a wash... i.e.: if a double loader currently vends for $3.00 and most customers spend $1.50-$2.00 drying, put up signs talking about "wash AND dry: $5.00"...

Chad, My gut feeling is that in your market, it may be a good way to compete. As others have said, leverage the data you gain with the card system, make sure the numbers still work out (even on the worst of days) and don't hesitate to pull the plug if it's not working well. At the very least, you WILL get the competitors' attention, and some of them may try to copy without the benefit of the card data, experience and planning that you bring to the game.

-Case

[bo]

If you can afford to gamble a little, I think you will get a much higher return than any promotion you have ever tried before . If it were my store , I would off the promo for a month only. Summer is a good time to give it a try. Like you say , gas is as cheap as it has ever been. I have also seen free dry promo's where only the bottom pockets on stack 30 dryers were free. I might save that one for a later date. Go for it and educate us all!

[chad]

Case, I have thought about it for some time now and worse case I can always pull the plug... I figure every customer spends .75 to dry in 1 dryer so it will still work out for me as I charge more then anyone else and at the same time I will lower my water by just a few gallons per machine to save it a little.

I will also take away the $2 bonus I give when you insert $20 into your card which alone will save me at least $2,000 per month right there.

The card system is amazing and if you use it right you can really do wonders.

Here is my take

Top Loads 1 dry credit $2.35ea I charge highest in all of Los Angeles
20lb 2 dry credit $2.10
30lb 3 dry credit $3.30
60lb 4 dry credit $5.85
80lb 4 dry credit $8.25

I figure that I am already saving on water, I will mark up the hot cycles by .25-50 to help cover some dry time.

[chad]

Originally Posted by bo

If you can afford to gamble a little, I think you will get a much higher return than any promotion you have ever tried before . If it were my store , I would off the promo for a month only. Summer is a good time to give it a try. Like you say , gas is as cheap as it has ever been. I have also seen free dry promo's where only the bottom pockets on stack 30 dryers were free. I might save that one for a later date. Go for it and educate us all!

Bo having the card system means 0 abuse will happen and I will be able to track any new customers that come in and also track how well the promo will work. That is the only reason why I would do this is because it really has 0 risk.