Some people would consider Henry Dubinsky a visionary, a man ahead ofhis time. As far back as 1970, he realized that carwash and gasoline were naturalbedfellows. Dubinsky, chairman and chief executive officer of Waterway Gas &Wash Co., knew even then that the two profit centers would complement each otherperfectly. But that was hardly his only forward-thinking idea.
"In the 1970s, for whatever reason I had the idea for a program that wouldallow customers to make a single payment to buy washes for an entire year’stime," says Dubinsky, who founded the 15-store chain of carwashes, conveniencestores and fueling stations 35 years ago in the St. Louis area. "When we firststarted, it was a relatively small program with 300 to 400 members."
The program grew quickly. Early on, Dubinsky was a "raging skeptic" of the value of advertising, so when Waterway hired an ad agency, he challenged the outfit to grow its Clean Car Club® loyalty program. Dubinsky now considers himself a "convert," since the agency helped double the number of Clean Car Club members within six months. Today, the Clean Car Club consists of more than 20,000 members across the three markets in which Waterway does business: St. Louis, Kansas City and Denver.
To join the club, customers pay a fee of $275, entitling them to an unlimitednumber of washes per year, along with a 5′ per gallon discount on gas purchases,among other benefits. Membership also provides access to wash specials on Tuesdayof every week.
The Clean Car Club began as a paper-based program but, with the evolution of technology, has since evolved into a more sophisticated electronic program, according to Vice President of Marketing Mark Witzling.
"The Clean Car Club has been an evolution," says Witzling, who joined Waterway earlier this year after spending much of his marketing career in the consumer products sector. "We treat our members as our most loyal customers. At the same time, we’re continuing to please other customers that aren’t members of the club so that ultimately they also become members."
Realizing the benefits
While carwash and gasoline provided a powerful one-two punch for Waterwayin its earlier years, Dubinsky and other members of the management team knewthey needed to offer an even more compelling service package in order to buildup their customer base. About 17 years ago, the company added its first largerconvenience store. It also added interior cleaning services to its still growingcarcare menu.
"Our customers are a little different than most convenience store customers,"says Dubinsky. "Throughout our chain, the average income of households surroundingour stores is $110,000; at some locations, it’s quite a bit higher. Today, wecan’t let our convenience stores overwhelm our carwashes, especially since carwashis still our most important source of gross profit."
While a sparkling wash acts as the centerpiece of its success, Waterway’s cultureof service enables the company to differentiate in a field of many. Unlike somechains in the convenience retailing business, Waterway has a put strong career-pathinginfrastructure in place—a necessity in order to maintain its desired growthschedule of one to two new stores per year. Exceptional retention among management-levelemployees fosters a positive work environment, which, in turn, enables the companyto maintain an above-average rate of retention among store-level associates.
"The best kind of manager for our company starts working for us when they’reabout 16 years old," says Dubinsky. "They work for us in high school then gooff to college and come back to work for us during vacations or time off. Thenthey come back to us after graduation and stay with us."
That was the case with Laura Evashenko, Waterway’s current market operationsmanager in Kansas City. At the age of 16, Evashenko started working for thecompany as a line attendant in St. Louis. She stayed with Waterway through highschool then moved to Kansas City in 1991 to attend the University of Kansas.Her hours fluctuated week to week while in college, but she continued to servethe company, primarily in a hiring and training capacity. Upon completing hereducation, she moved into Waterway’s management training program, over timegraduating from general manager to senior general manager to territory manageruntil moving into her current position nearly two years ago.
"My realization came after I did my internship for a brokerage firm," says Evashenko. "I had always wanted to become a stockbroker, but after fulfilling that internship I wasn’t happy with what I was getting into; I missed the face-toface contact with our employees and customers. I always say this is the next best thing to teaching because of the interaction with people. In my experience, it’s unusual for a company of this size to take such good care of its people."
Because of her education and years of diverse experience with Waterway, Evashenko is poised to help the company expand from its base in Kansas City. She intends to keep busy off-hours as well since she recently gained acceptance into a master’s program in management.
Such success stories are common at Waterway. Comprehensive benefits and incentive programs have helped the company establish a good track record in hiring new college graduates, as well as those who never went to college but want to build a career at Waterway.
"We believe we have a good combination of programs for employees that includes a lot of non-cash incentives, like college scholarships for our best employees and auctions so they can buy things at low prices for college each fall," says Dubinsky. "Our turnover is less than most of our competitors’. The real tip-off for us is that there are quite a number of families with four or five employees working for us. That just doesn’t happen if they’re not happy."
Room for growth
Waterway didn’t even think of expanding outside its St. Louis turf until1985. It had been considering a number of cities but eventually settled on KansasCity as its next market to conquer because of its growth potential and relativeproximity to the company’s headquarters in Chesterfield. It opened its firstsite in Kansas City in 1988 and focused on building up that market through 1999,at which point it pressed farther west into Denver. And it’s hardly done growing;in 2007 or 2008, the company intends to branch out into a fourth market, accordingto Dubinsky.
"Obviously more sophisticated computer systems make it easier to manage stores," says Dubinsky. "But clearly in order to manage the stores effectively you have to have strong independent managers in each city. We need strong independent people who behave like managers and owners. And we have to foster that independence within our template so they can feel and behave like entrepreneurs."
At an investment of roughly $5 million per site, Waterway doesn’t go quietly into new markets. After some acquisitions in the 1980s, the company now follows a ground-up strategy almost exclusively. When it presses into a new market, the company strives to generate an "a-ha effect," according to Dubinsky, by showing customers things "that they’ve never seen in other carwashes."
Waterway President Bob Dubinsky says a few carwash companies have a similaroffer in terms of its "physical plant." Where Waterway strays from the pack:the level of service offered by its people.
"Our offer is not all that unique," he says. "But the attention to detail—the operational excellence—is. From the very beginning we were focused on delivering consiste
ntly outstanding service and quality. The way our sites look and the way we clean cars has evolved. And our team has evolved along with them in terms of their skill and depth and ability.
"It looks like the industry is gravitating toward a less laborintensive offeringwith unattended exterior cleaning only," he continues. "As an industry, we’rein a kind of reactionary phase. If, as an industry, we commoditize ourselves,then there is no reason for the consumer to choose one option over another.It’s hard to make money in that kind of environment."
Waterway makes history
1970 – The first Waterway Gas & Wash opens in St. Louis,after founder Henry Dubinsky left a career in law to launch a carwashcompany based on the principles of excellent customer service in a professional,high-performance environment.
1974 – Waterway implements the Clean Car Club®, a customerloyalty program that serves as the cornerstone of the company’sgrowth and success.
1985 – The company decides to expand outside of St. Louis,and three years later opens two locations in Kansas City.
1990-’95 – Waterway’s locations in the St.Louis market undergo renovations.
1997 – Waterway evaluates and re-develops its ManagementDevelopment Program, and selects Denver as its third market. Its firstDenver location opens two years later.
2001 – Two more locations open in Denver along with a fourthin Kansas City. Waterway renovates another St. Louis location and introducesthe concept of “exit vacuuming.”
2002 – Denver opens its fourth location.
2003 – Another store in St. Louis is completely renovated,and additional sites in St. Louis and Denver are pinpointed as targetsfor further expansion.
2005 – Waterway, which today operates 15 locations, intendsto grow at a pace of one to two stores per year. It continues to evaluateopportunities for expansion into new markets.