1
Rick Brokaw               Managing Partner of Vintage Security, LLC•   1982 – 1996           Austronic Security, Columbia,...
Did you know….  There are many other educational classes about our     industry that are far more interesting than this   ...
• 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...
What is Attrition?Simply stated:• Gross Attrition is the loss of RMR by cancellations and reductions stated  as a percenta...
Know Your Enemy!•   Our industry averages approximately a 12% attrition rate     – Are you an average company or a good co...
Vintage Attrition by Account for 2011                                                                          Vintage Sec...
Vintage Attrition by $ for 2011                 RMR              RMR               RMR         RMR Attrition   RMR Attriti...
Other Evaluation Methods• Attrition by:  – Commercial/Residential  – Acquisition Company  – Year account originated (Age o...
Focus on Reducing Attrition•   Moving (vacating premise, death, etc.) – 38.84%•   Bad Debt – 22.42%•   Do Not Want – 22.33...
Moving – 38.84%           Go After The New Occupant• Disconnection Form gathers info and directs recapture  efforts• Sales...
12
NewCurrentResident Letter           13
Current Resident Postcard – Front                                    14
Current Resident Postcard – Back                                   15
Bad Debt – 22.42%• Immediate and compassionate phone response  to customers with financial hardship – Work It  Out!• Have ...
Collections Procedure         Vintage SecurityDAY            DESCRIPTION 1      Bill 30     Late Statement 45     1st Phon...
Do Not Want – 22.43%    Customer Doesn’t Value Your Service!• Have specific people designated to handle cancellations• Spe...
BillingResponse  Card           19
Service Response Card                        20
Disconnection    Letter                21
Lost to Competition – 2.91%• Sales, Install, Service, Monitoring and Billing must be high quality  and customer focused• E...
Account Cancellation Form                      Done By:                        Jessica                                    ...
What Is Your     If you want               your customersCompany’s                to be happy, Quality        your people ...
Sales-Installation-Service-Monitoring-Billing• Install Quality Control after every install by individual on phone who  giv...
Installation  Quality  Control  Phone  Survey               26
27
28
How Sticky Are Your Monitoring                  Services?• Offer Informational Monitoring services to give your  customers...
RMR     Make It Easy For The Customer• Auto-pay from bank account or credit card• $1.00 per month discount for auto-pay• O...
Don’t Let The Competition Takeover           Your Company        Bigger = Less Flexible = Poor Service  Do everything they...
Upgrade Program For Customers With         Good Pay History• Residential         Service Update/Additions         Descript...
Summary•   Track and Evaluate cancellations and prepare a strategy to attack each area of disconnections•   Focus your com...
Upcoming SlideShare
Loading in …5
×

Electronic Security Expo 2012 Attrition Toolbox

392 views

Published on

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
392
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
11
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Electronic Security Expo 2012 Attrition Toolbox

  1. 1. 1
  2. 2. Rick Brokaw Managing 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 2
  3. 3. Did you know…. There are many other educational classes about our industry that are far more interesting than this discussion of reducing attrition HOWEVERNothing is more important than growing your RMR Base!! Attrition is a true indication of your company’s health! 3
  4. 4. • 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. 4
  5. 5. 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 12ExampleBeginning 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 5
  6. 6. 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 6
  7. 7. Vintage Attrition by Account for 2011 Vintage Security LLC Attrition ReportDate Attrition Code New Accounts Acquisition Gross Net Active Does Not Lost To TOTAL New RMR Attrition $ RMR Attrition $ Total NewMonth Moved Bad Debt BGE Adroit Models Growth Attrition Recons Reactivations Attrition Accounts Want Competition Disconn. Connections Monitoring Maintenance Accounts Rate RateJan-11 13290 30 22 19 10 0 1 2 84 175 91 7.58% 22 6 5.06% $ 2,451.07 $ 552.87 13381Feb-11 13381 13 17 15 6 0 2 4 57 159 102 5.11% 15 4 3.41% $ 1,662.09 $ 199.45 13483Mar-11 13483 23 18 26 11 0 4 1 83 173 90 7.39% 18 6 5.25% $ 2,315.75 $ 645.04 13573Apr-11 13573 39 23 17 9 0 3 3 94 167 73 8.31% 22 0 6.37% $ 2,544.52 $ 369.17 13646May-11 13646 48 27 20 10 0 9 9 123 170 47 10.82% 23 1 8.71% $ 3,216.89 $ 508.73 13693Jun-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 13835Aug-11 13835 43 23 16 10 0 4 3 99 185 86 8.59% 34 9 4.86% $ 2,809.55 $ 398.51 13921Sep-11 13921 43 18 8 6 0 3 4 82 218 136 7.07% 21 7 4.65% $ 2,241.09 $ 771.76 14057Oct-11 14057 29 21 20 8 0 2 1 81 580 499 6.91% 20 5 4.78% $ 2,181.09 $ 259.67 14556Nov-11 14556 21 15 18 10 2 2 1 69 207 138 5.69% 19 5 3.71% $ 2,004.95 $ 429.35 14694Dec-11 14694 12 15 33 7 3 2 0 72 222 150 5.88% 23 7 3.43% $ 2,108.30 $ 410.77 14844Total 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% 9.94% 3.56% 2.91% 7
  8. 8. Vintage Attrition by $ for 2011 RMR RMR RMR RMR Attrition RMR Attrition RMR Attrition Gross Recon Recon Total Net Date Monitoring Maintenance Total Monitoring Maintenance Total Attrition Monitoring Maintenance Recons AttritionJan-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% Attrition total by $ takes into account $3,400 in RMR lost during 2011 for price reductions to save accounts and discounts to existing accounts 8
  9. 9. 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 9
  10. 10. 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% 10
  11. 11. 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) 11
  12. 12. 12
  13. 13. NewCurrentResident Letter 13
  14. 14. Current Resident Postcard – Front 14
  15. 15. Current Resident Postcard – Back 15
  16. 16. 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 16
  17. 17. Collections Procedure Vintage SecurityDAY 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 17 credit bureaus.
  18. 18. 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 18
  19. 19. BillingResponse Card 19
  20. 20. Service Response Card 20
  21. 21. Disconnection Letter 21
  22. 22. 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 22
  23. 23. Account Cancellation Form Done By: Jessica Sales Person: Phil Kruer Monit Acct #: 1234567 Customer #: 1234 Cust Name: John SmithCustomer Info Install Address: 123 Main Street County: City Laurel State MD ZIP: 20723 Premise Telephone: 301-555-1234 Alternate Telephone: Passcode Written ConfirmationVerification Date Received: 5/3/2012 Date Received: 5/3/2012 Initials: JM Initials: JM John called in w/ verbal passcode. He is selling home and moving to SC. Thanked us for our service for 7 years.Reason Contract: Out Allied: $15.00 MIC: 84 Tellular: $0.00 Lgth of Cont.: 36 Vintage Inter: $0.00 RMR: $15.00 Tot Monit: $15.00Account Info Bill BOC: No Date Billed: Intitals: RSP: $0.00 Chargeback: No VIP: $0.00 Write off: No Test/Inspect: $0.00 Refund: $0.00 Tot Maint: $0.00 Old Customer New Owner Name: John Smith Name: Harry Homeowner New Address: Phone #: 410-555-9876 Alt. Phone #:Moving Info Alt Phone #: Gift Certificate Sent: Current Resident Letter Sent: Balance of Contract Billed: Recon Letter Sent: Computer: Monit CXL: Vint Inter/Tell: VIP:Office Use Comptroller: Approval GM: Comm. ADJ: Salesperson: Phil Kruer Date Given: 5/3/2012 A/R #:Reconnection Test Date: Monitoring #:Lead Info New Cust. Name: Harry Homeowner 1st Phone#: 410-555-9876 Settlement Date: 2nd Phone#: n/a 23
  24. 24. What Is Your If you want your customersCompany’s to be happy, Quality your people Culture? must be happy! 24
  25. 25. 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 25
  26. 26. Installation Quality Control Phone Survey 26
  27. 27. 27
  28. 28. 28
  29. 29. 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 29
  30. 30. RMR Make 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 30
  31. 31. Don’t Let The Competition Takeover Your Company Bigger = Less Flexible = Poor Service Do everything they do with much better service! Fight them for every account! 31
  32. 32. Upgrade Program For Customers With Good Pay History• Residential 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• Commercial – Negotiate and be flexible 32
  33. 33. 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

×