Taking care of your existing customers can lead to greater RMR growth down the road.
Photo credit: (Image courtesy freeimages.com/kikashi)
Many of us recall the marketing slogan: Reach out and touch someone. And while that adage has changed dramatically because of the way in which we communicate, it remains sound advice for systems integrators and central station companies who want to keep their existing customers and solid, qualified streams of recurring monthly revenue (RMR).
Instead of trying to add as many new accounts as possible through cold calling and prospecting, how about giving a little TLC to your current accounts? According to Bob Harris, owner and president of The Attrition Busters, West Hills, Calif., it costs anywhere from $33 to $44 to replace $1 of RMR when a customer cancels. Take a good look at your current customers and make sure you are providing valuable services so they stay with your company.
A Bird in the Hand
Let’s face it—happy customers don’t leave. They add services and become further entrenched in your offerings if you are doing it right. Harris has spent the bulk of his career focusing, on, yes you guessed it: attrition, with a fine focus on sales and marketing training. So just what is attrition?
“Many people define attrition differently,” says Harris. “In terms of customer attrition, I look at it in terms of customers you once had but no longer have. Regardless of gross or net attrition, I believe any customer that leaves counts. Even if you replace that customer, there is a very high cost associated with it. I think many people measure attrition incorrectly. I know many folks who measure attrition by counting the number of accounts they had at the beginning of the year and subtract (or add) that number from what they have at the end of the year. This is a pretty sloppy way to look at it. Does the word ‘fuzzy math’ apply here? Another thing folks look at to measure their attrition is the RMR. Again, I don’t feel this gives anyone a true picture of the direct out-of-pocket cost associated with lost customers because revenue doesn’t equal profit.”
Harris says there are numerous ways to fire up the sales force when it comes to preventing attrition. The first thing he advises is to have a differentiator, be it a new technology or services. The second is to create added value that the customer can perceive. Finally, Harris says that alarm companies have to “roll up their sleeves” and investigate fully why customers may be canceling.
Having the ability to engage your team and your customer is critical. Sales and marketing training drives success, and keeps the team focused on the customer. For the sales force, they have to know what the numbers are and how keeping their customers – while adding to their services on a continual basis if possible – makes for stronger company profitability and stability.
While sales and marketing training is critical, there are other ways to stave off attrition. The first way is to contact every customer, if possible, with a POTS line and get them to move to cellular or GSM signaling. Some companies have been doing this for years, and now with the demise of POTS on the horizon, they are better prepared for the future.
Another way is to stay current with services customers value. For many customers, the home network has become indispensable. So why not offer them remote monitoring and management of that network with new products available on the market? What about mobile PERS, or GPS fleet or asset tracking? And don’t forget about interactive services such as apps that allow customers to see into their premises and control security, energy and automation.
The important thing is to stay in touch customer to see if their circumstances have changed. Maybe they are now caregivers and you can offer PERS. But you wouldn’t know this if you hadn’t checked in with the customer. What about service and maintenance contracts to adjust cameras, check wireless signals or sensors and detectors? Technology is important – but it’s everything as a service that will elevate the industry’s stature as a full-service solution provider.
Reach out and touch your customers on a regular basis – and watch your RMR streams stay steady and strong.