Why Pest Control Customers Cancel Service
So, why do pest control customers cancel service? Because your pest control service sucks! That's it. No really...that is it. But there may be more that goes into your sucky service than you might think. Put another way, pest control customers cancel service when the customer experience being received doesn't match the expectations established.
This disconnect can happen in a lot of ways. Sometimes it happens quickly, like when you schedule the initial pest control service for 1:00 pm and your technician shows up at 3:00 pm (or 1:10, for that matter. If you haven't yet come to terms with the fact that even a little bit late is late, then your service automatically sucks. Quick tip...don't ever be late). Other times it may happen more slowly over a period of months or years through a combination of less obvious events. But as a pest control operator, your focus must remain on optimally managing the customer experience of each of your customers so that their unique experience exceeds their unique set of expectations. In order to accomplish this, you must operate with a heightened level of understanding and awareness as to the variable needs of each customer, and this awareness must permeate through every department and facet of your organization. Every member of your team should be able to readily and easily discern during each customer interaction what matters most to that particular customer. Either your company has the processes in place for this to come to fruition, or it does not. And if it does not, your service probably sucks.
Is it ever ok to lose a pest control customer?
Nope. Sorry for you old school pest control operators or managers who exist in the safety net of something like a 2% residential or 1% commercial cancellation rate as being within a range of theoretical acceptability. 2% cancellation? Let's consider that for a moment...
Let's say you've got 1,000 residential pest control customers, and you're operating with a cancellation rate of 2%. That means every single month you're losing 20 customers, and every single year you're losing 240. At the end of just 4 years, then, you will have lost 960 of your 1,000 customers. Hopefully, of course, your company will be adding new customers at a rate that far exceeds this 2% rate of attrition. But just to maintain your existing customer base, the first 20 new customers added each month are needed simply to offset your cancellations. And that's just plain silly.
But some customers, you may say, are going to cancel their pest control service for reasons beyond anyone's control. A small percentage of customers are likely going to die or move, for instance. Some others are going to experience a financial hardship that may cause their account to fall into a state of delinquency. Others may just stop service because their pest problem has been resolved. The reality is, however, that none of these reasons are actually justifiable, even though some of them may indeed be beyond anyone's control. If your company was optimally managing the customer experience, for instance, an ownership change of a property would seldom lead to a customer cancellation. Instead, the pest control service plan would simply be assumed by the new owners. In the event of a death, a similar scenario would likewise typically play out.
By maintaining the right levels of communication throughout the duration of the customer experience, the customer relationship will evolve according to the pre-established flow predicated by the company. And those customers canceling because you've solved their problem and they no longer need you? Well you've obviously fallen short of educating them on what a pest control service plan is actually all about. Educated pest control customers understand that a pest-free environment is the result of a high quality pest control service plan. The purpose isn't just to get the pests out...it's to keep the pests out. And for that, your services should always be in need. For these reasons, efficient pest control companies with open lines of customer communication lose far fewer customers than pest control companies without that same level of commitment.
What is an acceptable cancellation rate due to bad debts?
0%. Realistically, that's what it should be. On the residential side, collections should be altogether a thing of the past. If your residential pest control delivery process revolves around the ancient methodology of providing a service, sending an invoice, and waiting for payment, you're wasting plenty of time, money, and resources on activities that need not even be part of your protocols. In today's world of home pest control, there should be just 2 ways of having a recurring pest control service plan (and the objective of every prospective customer interaction should be conversion to a recurring customer):
- Automatic Payment Plan
- Year-In-Advance Payment
Why should these be the only 2 options for payment? For several reasons, but most markedly this: for ongoing, recurring, or membership-based customer relationships, whomever controls the money controls the relationship. (A pest
control company is functionally similar, even in some way identical, to a membership company). There is a reason why fitness centers, for example, don't allow their gym members to pay their monthly membership fees by cash or check on a monthly basis. They know that if they transfer the power of money control to their customers, many of them will choose to stop paying. They will have built in an automatic, guaranteed customer attrition simply by their process of billing. The same can be said of pest control companies who invoice their residential customers.
Both of these payment options, if executed properly, will not only eliminate non-payment for services rendered, but will also optimize the efficiency of several of your departments, with the benefits rippling throughout the entire company. Technicians paid on receivables will no longer have to worry about not getting compensated for work done, and their routes will become increasingly saturated with paying customers, increasing productivity. A/R will no longer be spending unnecessary time with invoicing tasks. Service managers will no longer be tasked with managing the collection efforts of their technicians. And on and on and on. When you control the flow of money, bad debts become 0%.
A word of caution about YIA payments...
Although year-in-advance payments provide the advantage of having money in hand before services are rendered and thereby removing the need for collection efforts or bad debts, they do have some potential downsides. From an accounting standpoint, YIA payments create a potential liability for your pest control company that can be challenging to adequately mitigate. If, for instance, you sign up a 1,000 new pest control customers this month who each pay $500 for a year's worth of service on a quarterly service plan, you will have deposited $500,000 into the bank. Great! But what happens if 100 of them cancel each month for the next 6 months? What will your refund policy be on that? Regardless of how your service agreements may read, you'll be hard-pressed to retain a year's worth of money from a customer who only actualized one or two months of service. So consider the YIA payment option carefully, and be sure to have your legal team incorporate a refund policy that adequately protects both the company and its customers.
For these reasons (and a number of others), we typically advise companies to process automatic payments either on a monthly basis (regardless of service schedule) or at the beginning of each month of service (where permissible by local regulations). This system eliminates bad debts and collections as well as taking potential refunds altogether out of the equation. And perhaps most importantly, it establishes a relationship with the customer that is centered around the idea of paying for ongoing coverage as opposed to paying for any individual service.
So how do we prevent customer cancellations?
Yes, I'll acknowledge that some cancellations are always going to take place. But this number should be very, very few. As a recap of what we've discussed, keeping your customers can and should be a rather straight-forward process, but it requires buy-in from all members of your pest control team. Remember, pest control customers cancel service when the customer experience being received doesn't match the expectations established.
1. Set the Right Expectations: Sounds simple, yes? Unfortunately, many pest control companies are absolutely terrible at this. Expectations are being set from the very first customer interaction (could be when they first look at your website, when they first talk to your CSR, when they first meet with a sales rep) and continue to develop over time. The process needs to be such that what one part of your company establishes is substantiated and reinforced by the interactions to follow. Be completely open, honest, and transparent about how your service plan works, what it will cost, how payments will be processed, and what they should expect along the way.
2. Control the Money: Whomever controls the money controls the relationship. If they control it, you've set yourself up for high levels of cancellations. If you control it, the relationship is established on a mutually beneficial foundation designed to continue in perpetuity.
3. Honor Your Customer Commitments: This is all-encompassing, and requires the commitment of every last person on your team. If you commit to providing a service at 1:00, be there at 1:00. If you're not sure if you can make it right at 1:00, don't make that commitment. Maybe your commitment should be 1:00-2:00. Whatever you commit to, honor it. Always. Make sure what ever the customer has been educated to expect is being delivered upon at every turn.
4. Optimize Customer Communications: Make sure your customers are fully aware of what is going on at every stage of their service plan...when services are scheduled, areas of concern, treatments performed, payments processed, additional service offerings, etc...Let them know exactly what you're going to do, and then do exactly what you said you were going to do.
5. Solve their pest problems: This is the fifth and final element of preventing customer cancellations, and it's fifth because (contrary to what you might think) it is the least important of the 5. Resolving the pest problem does matter, and it does matter a lot. But that part is an absolute given, as that is the very reason they began a pest control service plan with your company in the first place. So it's assumed that you are going to take care of the pest problem.
But even if you are slow to resolve the problem, most pest control customers are willing to be tremendously patient provided their other expectations are being met, the communication is professional and comprehensive, and you are honoring your commitments. On the flip side, just resolving their pest problem in the absence of the other key elements is almost certain to result in a very short term customer. As they say...thank you, next!
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