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Ken: Re: Attrition
We have seen year after year an attrition rate between 2 & 3%. We have clear records of the clients we loose. The two things we have done to get to that low attrition number are 1- better branding 2- including a note in every bill asking if they plan on moving in the coming year. When we find out they are leaving we remind them to let us know when the time comes. This gives
us a chance to pro rate their bill and a final reminder to have our company info at the closing with a possible note of recommendation.
Many homeowners just move without letting us know. They are just gone. We'll find out when their bill is 60 days past due. If there is no company identifying info ( yard sign, large sticker on control panel, or company name and phone number on all keypads (This is the most important) then the clients first knee jerk is to call ADT. Besides asking in the annual bill if they plan on moving that year we will also ask things like give us you e-mail address or offer some new product. We even have the nerve to, once ever four years, to do a fund raiser inside our billing.
Each time, we have raised thousands of dollars for some great charities.
Many in the DC area remember Dictograph. They were a dominant force here. What they accomplished was rare. They got the public to think that when you bought from them you weren't getting an alarm, you were getting a Dictograph. They had amazingly loyal customers. It doesn't take a lot to make your relationship real and have your name out there in their home with your client base. National firms with Dealer programs will have a very difficult time doing this because there are no incentives.
Dave Huthwaite
Digital Security, Inc.
Leesburg, VA
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Hi Ken;
With rare exceptions, I lose customers two ways: They move away or they die. I can count on one hand how many customers I have lost over the last ten years for other reasons. And two of those customers had lost their jobs and weren't sure they were going to be able to stay in their homes. Customer Service is key.
John from NJ
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Ken
So, to be clear, what is the formula for figuring attrition? You would have to be a mathematics professor to get an actual, correct number due to the fact that the number of accounts you have changes DAILY.
I assume you guys are using the number of accounts you have at the end of the year and dividing that into the number of accounts you lost? Or, are you using your year beginning and year ending number and averaging that to divide?
This is one of those things that many people get very "creative" with. Sometimes to fool others and sometimes to hide their head in the sand and fool themselves.
I would like to hear from a few people on how they figure their attrition.
Thank you,
Ken Hagerty
Arkansas Security
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Ken
Speaking of attrition, if anyone ever has the chance to listen to Bob Harris from Attrition Busters, listen to him! We have implemented some of the things I learned from him at the Annual SedonaOffice Conference in Florida this January and we have received great feedback from our customers. His website is: http://www.attritionbusters.com/
We are also going to be doing an online survey with all of our customers to get some ideas on who is interested in all of the new technology, pricing, etc. Plan to have everyone who completes the survey entered into a drawing, hoping that it helps us get a good response.
Donnetta Byrd, Office Manager
Security One, Inc.
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Response
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Attrition is more than a mathmatical count year to year of the RMR. It's a count of the subscribers you've lost, not added. You should categorize the lost accounts so that you have a good idea whether the loss is attributable to aging subscribers, a dwindling housing market or a downturn in the commercial market. If your subscriber base suffers loss from these factors then perhaps they are out of your control. Your answer to the problem may be to look for a different and more stable subscriber base, if you can find it in your area.
But other reasons for attrition may be the consequence of poor quality of service, from either installation, service or even office personnel interaction with your subscribers. Maybe your central station is not as responsive as it could be, or the equipment you use is not as reliable as it should be. Your prices could be too high, causing subscribers to look for alternate choices for their alarm services. You could be the target of fierce competition from one or more of your competitors, or perhaps former [or worse, current] employees are competing against you with the knowledge of your subscriber information, pricing and sometimes more familiarity with the subscribers than you have. When attrition is caused by these factors you need to know it, and you need to do something to address and correct it, fast.
What about when you lose your subscriber but another subscriber signs up at the same house or commercial premises. Have you lost an account? Probably not, especially if you didn't have to do any additional work or give any discount to keep the premises under your services.
Subscribers who ask for, demand, and receive reduction in their RMR. Does that count towards attrition? Yes, if you're counting the RMR dollars and not just the number of subscribers. By the way, attrition statistics should include more than the RMR dollars; it should include subscriber count. Theoretically you could over time end up with a higher RMR and a single subscriber. Something about putting all your eggs in one basket comes to mind. It's not generally a good idea, if you can help it.
Adding new subscribers will of course balance out attrition. But no matter how many new accounts you add there is no reason to turn a blind eye to your attrition rate and the reasons for it.