Your Machines Depreciate. This Appreciates.

I've been reading through Adam Smith's work, “The Wealth of Nations," lately, and something clicked for me about his Law of Accumulation that applies to our industry.

Smith argued that capital accumulation drives economic growth as you reinvest profits into productive assets, which generate more profits, which you reinvest again. It's the foundation of compound growth.

But what if we applied his law differently? What if instead of accumulating capital, we accumulated something way more valuable, client goodwill and loyalty?

The Real Compound Effect

Here's what I mean. Every small gesture you make for a client doesn't disappear. It adds up. Compounds. Builds on itself until you've created something unbreakable.

Opening a door for someone carrying laundry might seem insignificant. But do it 50 times over a year, add in helping with bags, remembering their name, that free bottle of water on a hot day. Each gesture builds on the previous ones. You're not just providing a service, you're making deposits into an emotional bank account that pays exponential returns.

We saw this play out at The Soap Box. A client mentioned she was expecting a baby during a drop off. Months later, when she returned, one of our manager asked about the baby. Her reaction? Complete amazement that we remembered. That moment wasn't just client service, it was compound interest on accumulated goodwill over the time of her using our service.

The Industry's Blind Spot

Many in our industry talk about getting better equipment. New machines. Fancy payment systems. Digital this, automated that. Meanwhile, they're ignoring the most powerful form of accumulation available, “Relationship Capital”.

The research backs this up dramatically. Bain & Company found that increasing customer retention by just 5% can boost profits by 25% to 95%.¹ Harvard Business Review confirms it's 5 to 25 times more expensive to acquire new customers than retain existing ones.² And here's the kicker, 80% of a company's future profits come from just 20% of existing customers³, the 80/20 rule in full effect.

Yet what does our industry obsess over? Equipment ROI. Machine efficiency. Utility costs. Turns per day. All while ignoring the compound returns of human kindness.

Small Investments, Exponential Returns

The beauty of accumulating relationship capital is how little it costs:

• A free laundry bag when theirs breaks: $3.00
• A bottle of water on a hot day: $0.25
• A free plastic bag when they don’t have one: $0.15
• Remembering their name: $0
• Checking in while they are doing laundry: $0.00
• Helping carry bags to their car: $0
• The loyalty you build: Priceless

These aren't expenses, they're investments that compound. Research shows client experience leaders grow revenues 4-8% above their market.⁴ Why? Because they understand that small, consistent investments in the human experience create outsized returns.

The Multiplication Effect

Here's where it gets super interesting. Financial capital compounds linearly, you reinvest at a certain rate, get predictable returns. But relationship capital compounds exponentially because:

1. Happy clients tell others - One loyal client becomes three through word of mouth
2. Emotional impact leverages - A $0.15 gesture can create $50 worth of loyalty
3. Trust reduces price sensitivity - Loyal clients stop shopping around

We've seen clients drive past three other laundromats to come to ours. Not because we have newer machines. Because we know their names. Because we helped them during a rainstorm. Because we've accumulated acts of small kindnesses that add up to a strong bond with our brand.

Technology Amplifies, Not Replaces

Now here's what really excites me. Imagine using technology to accelerate this accumulation. Picture an unattended laundromat where the owner monitors remotely and greets regular clients by name over the PA system, "Good afternoon, Mr. Williams!"

That's not removing human connection, it's amplifying it. Using tools to accumulate goodwill even when you're not physically present. This is gold!

The Uncomfortable Truth

To owners who say "I don't have time for all that," I say, fine. But don't complain when someone opens nearby who makes time, and they become the market leader while you're still waiting for clients.

The real question isn't whether you have time. It's whether you understand that relationship accumulation isn't optional anymore. In a world where everyone can buy the same machines, your only sustainable advantage is the relationships you build.

Start Your Accumulation Today

This week, try these compound investments:

1. Learn three clients' names and use them
2. Help five people with their bags
3. Give away ten bottles of water or small snacks
4. Remember one personal detail about a regular and ask about it

Track what happens. Watch how these tiny investments start compounding. Notice how clients' entire demeanor changes when they realize you actually care.

Thinking about the thinking of laundry:
When you realize that a laundromat's wealth isn't in the quarters dropping, you understand why some stores with old machines outperform ones with new machines. They’ve been accumulating the real currency all along.

Many in the industry preach about income, equipment ROI, and automation. Meanwhile, the real winners are quietly accumulating something far more valuable, loyal clients who wouldn't dream of going anywhere else.

Adam Smith was right about the Law of Accumulation. He just didn't realize it applies to more than money. In our business, the highest return on investment isn't in machines or technology. It's in the compound effect of human kindness.

Every door you open, every bag you carry, every name you remember, it all accumulates. The question is, are you making deposits or just collecting quarters?

That's all I got for you today.

Waleed

PS: will be sharing more on how this got our newest store from 0 to 9+ turns per day at the Laundry CEO Forum

Echoing the thoughts of Albert Einstein.

Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it.

Footnotes:

¹ Retaining customers is the real challenge - Bain & Company, 2024
² The Value of Keeping the Right Customers - Harvard Business Review, 2014
³ 14 Customer Retention Strategies That Help Increase ROI - Shopify, 2024
⁴ Value And ROI Of Customer Experience - Lumoa, 2022