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Rick BrokawManaging Partner of Vintage Security, LLC
• 1982 – 1996 Austronic Security, Columbia, MD– Started as install helper at $4.00/hr and ended as GM with 80 employees, UL Central Station and over 10,000
customers
• 1996 Republic Industries purchased Austronic– Company went from 150 installs to 400 per month via mass market methods
• 1998 SecurityLink - Ameritech purchased Austronic from Republic– Regional Operations Manager of 26 branches from Tennessee to Connecticut
• 1999 Southwest Bell purchased Ameritech– Retained position with new ownership
• 2000 Cambridge Security Purchased SecurityLink– Retained position with new ownership
• 2001 ADT Purchased SecurityLink– Resigned to start Vintage Security
• 2001 Started Vintage Security
• 2012– 15,000 monitored alarm customers– 80 employees– 2 offices around Washington D.C.– 77% Residential/23% Commercial– Significant concentration in Homebuilding/Home Technology market
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Did you know….
There are many other educational classes about our industry that are far more interesting than this
discussion of reducing attrition
HOWEVER
Nothing is more important than growing your RMR Base!!
Attrition is a true indication of your company’s health!
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• RMR Multiples range from low 30x for an account base of less than $50,000 RMR to low 50x for greater than $500,000 RMR companies
• An account that pays $30 a month is representative of approximately $1,200 of your company’s valuation at a multiple of 40x
• At a rate creation multiple of 25x, a $35 per month customer costs the company $875 to create.
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What is Attrition?
Simply stated:
• Gross Attrition is the loss of RMR by cancellations and reductions stated as a percentage by month. To annualize, multiply by 12
ExampleBeginning RMR = $100,000Cancellations = $1,000Reductions = $100
($1,000+$100) / $100,000 = 1.1%
Based on the information above, the company would have a monthly attrition rate of 1.1%, or an annual attrition rate of 13.2% (1.1% x 12) if they lost RMR at the same rate all year
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Know Your Enemy!
• Our industry averages approximately a 12% attrition rate– Are you an average company or a good company?
• Know your rate of attrition by cause/reason
• Vintage cause/reason codes for cancellations– Moves– Bad Debt– Do Not Want– Acquisitions– Models Sold– Lost to Competition
• Decide on a strategy that fits your company– Personnel Responsibility– Personnel Focus
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Vintage Attrition by Account for 2011
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Date
MonthActive
AccountsMoved Bad Debt
Does Not
WantBGE Adroit Models
Lost To
Competition
TOTAL
Disconn.
New
ConnectionsGrowth
Gross
Attrition
Rate
Recons Reactivations
Net
Attrition
Rate
RMR Attrition $
Monitoring
RMR Attrition $
Maintenance
Total New
Accounts
Jan-11 13290 30 22 19 10 0 1 2 84 175 91 7.58% 22 6 5.06% 2,451.07$ 552.87$ 13381
Feb-11 13381 13 17 15 6 0 2 4 57 159 102 5.11% 15 4 3.41% 1,662.09$ 199.45$ 13483
Mar-11 13483 23 18 26 11 0 4 1 83 173 90 7.39% 18 6 5.25% 2,315.75$ 645.04$ 13573
Apr-11 13573 39 23 17 9 0 3 3 94 167 73 8.31% 22 0 6.37% 2,544.52$ 369.17$ 13646
May-11 13646 48 27 20 10 0 9 9 123 170 47 10.82% 23 1 8.71% 3,216.89$ 508.73$ 13693
Jun-11 13693 64 19 24 12 0 5 3 127 177 50 11.13% 31 5 7.97% 3,302.19$ 267.64$ 13743
Jul-11 13743 49 21 22 2 0 1 0 95 187 92 8.30% 32 7 4.89% 2,767.34$ 329.00$ 13835
Aug-11 13835 43 23 16 10 0 4 3 99 185 86 8.59% 34 9 4.86% 2,809.55$ 398.51$ 13921
Sep-11 13921 43 18 8 6 0 3 4 82 218 136 7.07% 21 7 4.65% 2,241.09$ 771.76$ 14057
Oct-11 14057 29 21 20 8 0 2 1 81 580 499 6.91% 20 5 4.78% 2,181.09$ 259.67$ 14556
Nov-11 14556 21 15 18 10 2 2 1 69 207 138 5.69% 19 5 3.71% 2,004.95$ 429.35$ 14694
Dec-11 14694 12 15 33 7 3 2 0 72 222 150 5.88% 23 7 3.43% 2,108.30$ 410.77$ 14844
Total 2011 414 239 238 101 5 38 31 1066 2620 1554 7.97% 280 62 5.20% 29,604.83$ 5,141.96$
38.84% 22.42% 22.33% 3.56% 2.91%9.94%
Vintage Security LLC
Attrition Report
Attrition Code New Accounts
Acquisition
Vintage Attrition by $ for 2011
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Attrition total by $ takes into account $3,400 in RMR lost during 2011 for price reductions to save accounts and discounts to existing accounts
DateRMR
Monitoring
RMR
Maintenance
RMR
Total
RMR Attrition
Monitoring
RMR Attrition
Maintenance
RMR Attrition
Total
Gross
Attrition
Recon
Monitoring
Recon
Maintenance
Total
Recons
Net
Attrition
Jan-11 338,224.24$ 87,281.15$ 425,505.39$ 2,451.07$ 552.87$ 3,003.94$ 8.47% 507.00$ 83.00$ 590.00$ 6.81%
Feb-11 339,502.98$ 88,775.46$ 428,278.44$ 1,662.09$ 199.45$ 1,861.54$ 5.22% 334.00$ 26.00$ 360.00$ 4.21%
Mar-11 341,716.10$ 90,340.75$ 432,056.85$ 2,315.75$ 645.04$ 2,960.79$ 8.22% 430.00$ 27.00$ 457.00$ 6.95%
Apr-11 345,111.48$ 92,691.23$ 437,802.71$ 2,544.52$ 369.17$ 2,913.69$ 7.99% 537.00$ 31.00$ 568.00$ 6.43%
May-11 349,019.07$ 92,210.29$ 441,229.36$ 3,216.89$ 508.73$ 3,725.62$ 10.13% 530.00$ 37.00$ 567.00$ 8.59%
Jun-11 349,409.98$ 93,570.65$ 442,980.63$ 3,302.19$ 267.64$ 3,569.83$ 9.67% 838.00$ 110.00$ 948.00$ 7.10%
Jul-11 353,719.81$ 94,675.68$ 448,395.49$ 2,767.34$ 329.00$ 3,096.34$ 8.29% 746.00$ 56.00$ 802.00$ 6.14%
Aug-11 355,161.10$ 94,753.43$ 449,914.53$ 2,809.55$ 398.51$ 3,208.06$ 8.56% 814.34$ 80.00$ 894.34$ 6.17%
Sep-11 358,416.56$ 95,851.94$ 454,268.50$ 2,241.09$ 771.76$ 3,012.85$ 7.96% 582.00$ 48.00$ 630.00$ 6.29%
Oct-11 367,502.60$ 97,912.39$ 465,414.99$ 2,181.09$ 259.67$ 2,440.76$ 6.29% 471.00$ 32.00$ 503.00$ 5.00%
Nov-11 374,521.79$ 99,474.38$ 473,996.17$ 2,004.95$ 429.35$ 2,434.30$ 6.16% 451.00$ 40.00$ 491.00$ 4.92%
Dec-11 378,226.06$ 99,191.33$ 477,417.39$ 2,108.30$ 410.77$ 2,519.07$ 6.33% 579.00$ 48.00$ 627.00$ 4.76%
Total 2011 4,250,531.77$ 1,126,728.68$ 5,377,260.45$ 29,604.83$ 5,141.96$ 34,746.79$ 7.75% 6,819.34$ 618.00$ 7,437.34$ 6.09%
Other Evaluation Methods
• Attrition by:
– Commercial/Residential
– Acquisition Company
– Year account originated (Age of Account)
– Accounts with/without maintenance
– Accounts with/without interactive services
– Price reductions/changes
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Focus on Reducing Attrition
• Moving (vacating premise, death, etc.) – 38.84%
• Bad Debt – 22.42%
• Do Not Want – 22.33%
• Lost to Competition (service issues, etc) – 2.91%
• Models Sold – 3.56%
• Acquisitions – 9.94%
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Moving – 38.84%Go After The New Occupant
• Disconnection Form gathers info and directs recapture efforts
• Sales Team Focus – Specific people for reconnections/takeovers
• New Occupant Letter within 30 days• New Occupant Postcard every 180 days after initial letter• Gift Certificate to encourage your customer to select your
company for their next residence
Although this attack will not slow attrition by moving, it will alleviate loss of accounts (Net Attrition)
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New Current Resident
Letter
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Current Resident Postcard – Front
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Current Resident Postcard – Back
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Bad Debt – 22.42%
• Immediate and compassionate phone response to customers with financial hardship – Work It Out!
• Have a concise, organized and well managed collection procedure and Stick With It!
• Finally, don’t sell to people who can not afford– Consider credit checks and salesperson chargebacks if
account defaults in 1st year– Give price break for 5 year accounts– Offer auto-pay to allow customers easy, no-hassle
payment process
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Collections Procedure
Vintage Security
DAY DESCRIPTION
1 Bill
30 Late Statement
45 1st Phone call from Vintage Security
60 60 day late statement with 1st letter
70 2nd Phone call from Vintage Security
90 90 day late statement with 2nd letter.
120 120 day late statement with 3rd letter.
145 Certified letter from Vintage Security
155 Monitoring cancelled; account closed; sales
rep is charged back if account within the 1st
year. Accounts submitted to IC for intense
collections, including credit reporting to all 3
credit bureaus.
Do Not Want – 22.43%Customer Doesn’t Value Your Service!
• Have specific people designated to handle cancellations• Speak to the customer about value not contracts• Honest, reliable and easy services
– No Voicemail Jails– Never place on hold– Be Positive!
• Quality Controls– Billing Response Card– Service Response Card– Call after every install
• Communicate with customers via newsletters• If you lose them, don’t close the door
– Send a disconnection letter keeping reconnection possibility available in the future, say Good-Bye with a smile
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Billing Response
Card
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Service Response Card
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Disconnection Letter
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Lost to Competition – 2.91%
• Sales, Install, Service, Monitoring and Billing must be high quality and customer focused
• Employees treat customers as management treats employees• Do your employees care?• Do your employees have the power to give great customer service?• Does your company approach all decisions from the customer’s
perspective?• Does your management get involved when customer relationships
are weak?• Never leave an unhappy customer without expending your best
efforts• Senior Management knows each and every disconnect
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Done By:
Monit Acct #:
Cust Name:
Install Address: County:
City State MD 20723
Date Received: 5/3/2012 Date Received: 5/3/2012
Initials: JM Initials: JM
Contract: $15.00
MIC: $0.00
Lgth of Cont.: $0.00
RMR: $15.00
Bill BOC: No Date Billed: Intitals: $0.00
Chargeback: $0.00
Write off: $0.00
Refund: $0.00
Name:
New Address:
Alt Phone #:
Computer: Monit CXL:
Comptroller: Comm. ADJ:
Salesperson: Date Given: A/R #:
Test Date: Monitoring #:Reconnection
Lead Info
Gift Certificate Sent:
Account Cancellation Form
$0.00 Tot Maint:
Written Confirmation
John called in w/ verbal passcode. He is selling home and moving to SC. Thanked us for our service for 7 years.
Tot Monit:
RSP:
No VIP:
No Test/Inspect:
Passcode
Out Allied:
84 Tellular:
John Smith
Balance of Contract Billed:
Current Resident Letter Sent:
Old Customer
1234567
Recon Letter Sent:
Vint Inter/Tell:
123 Main Street
Customer Info
Verification
Reason
Account Info
Moving Info
1234
Phil KruerSales Person:Jessica
Vintage Inter:
ZIP:
Customer #:
VIP:
Harry Homeowner
301-555-1234
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Alternate Telephone:
$15.00
Office Use
John Smith
Name:
Phone #:
Laurel
Premise Telephone:
New Owner
Harry Homeowner 1st Phone#: 410-555-9876
n/a
New Cust. Name:
Approval GM:
Phil Kruer 5/3/2012
Settlement Date:
Alt. Phone #:
410-555-9876
2nd Phone#:
What Is Your Company’s
Quality Culture?
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If you want your customers
to be happy, your people
must be happy!
Sales-Installation-Service-Monitoring-Billing
• Install Quality Control after every install by individual on phone who gives the GM all unhappy responses
• Service Response Cards/Contest• Billing Response Cards• Newsletter
– Do you have email addresses for your customer base?• Monthly information on new products/happenings• No Voicemail
– Live person answers the phone in less than 3 rings in every department 24/7 365 days a year
• On Call Service and On Call Sales within 15 minutes of contact – On Call Tech has 15 minutes, Management has 15 minutes and then General Manager
• Maintain same day-next day service for routine calls• Customer satisfaction contests and recognition monthly and at
company functions
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InstallationQualityControlPhoneSurvey
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How Sticky Are Your Monitoring Services?
• Offer Informational Monitoring services to give your customers more reasons to stay with your company
• Interactive Monitoring (Alarm.com, Total Connect)– Smart phone notifications with alarm, video and texts– Weather on keypad– Control HVAC and Lighting– Lock and unlock doors
• Cloud Based Access Control (Brivo, Keyscan, Honeywell)– Requires no customer infrastructure– Access to system from anywhere– No network support– Automatic updates– Automatic notification of system troubles to your company
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RMRMake It Easy For The Customer
• Auto-pay from bank account or credit card
• $1.00 per month discount for auto-pay
• Offer discounts for annual and quarterly billing
• Establish simple, easy to sell maintenance pricing that eliminate unexpected costs for customers
• Enforce quotas in sales for auto-pay and maintenance agreements
• Avoid non-RMR deals that divert your company focus
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Don’t Let The Competition Takeover Your Company
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Bigger = Less Flexible = Poor ServiceDo everything they do with much better service!
Fight them for every account!
Upgrade Program For Customers With Good Pay History
• Residential
• Commercial– Negotiate and be flexible
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Service Update/Additions
Description Regular
NEW 5 YEAR CONTRACT EQUIPMENT CREDIT
Out of Contract (New 5 Year Contract) -495.00
5th Year of Contract (New 5 Year Contract) -370.00
4th Year of Contract (New 5 Year Contract) -245.00
3rd Year of Contract (New 5 Year Contract) -120.00
NEW 3 YEAR CONTRACT EQUIPMENT CREDIT
Out of Contract (New 3 Year Contract) -345.00
5th Year of Contract (New 3 Year Contract) -270.00
4th Year of Contract (New 3 Year Contract) -195.00
3rd Year of Contract (New 3 Year Contract) -95.00
Summary• Track and Evaluate cancellations and prepare a strategy to attack each area of disconnections
• Focus your company on Customer Care – Upper Management sets the example!
• Avoid Non-RMR sales that divert focus from RMR growth
• Focus your company on growing and keeping RMR with as low a Rate Creation Multiple as possible
• Reward your employees when they demonstrate superior customer care (Don’t miss the little things)
• Make sure upper management demonstrates a willingness to get involved with Customer Care when needed
• Empower your employees to make decisions to satisfy your customers
• Embrace new technology that enhances RMR growth and keeps your competitive edge against all others
• Channel cancellations through capable, friendly and creative personnel who will save accounts, not process the cancellations
• Sell Service Agreements
• Offer auto-pay with billing notifications
• Evaluate your company’s sales, installation, service, monitoring and billing from a strict customer perspective – Make it very easy for the customer
• Grow your RMR!33