Stopping Attrition Before It Starts

What is your company’s policy if one of your subscriber calls to cancel his service? Do your employees inquire why the customer plans to leave? If that is your policy, that’s not enough; you need to do more and you must do it before the cancellation call comes in.

Attrition is a problem for any industry, but in a recurring monthly revenue (RMR)-based business it means much more. Most, if not all, of your profit is tied up in the long-term relationship and RMR. Additionally, the value of your business is directly correlated to your RMR under contract, so it’s a double loss when you lose the account.

Electronic security contractors need a plan to address attrition before it happens, not while it’s occurring and certainly not after it’s transpired. Establishing a department or designating certain personnel to contact the departing subscribers will not accomplish much. By conducting an exit interview to find out why the client wants to or has canceled will most likely be a day late and dollar short.

Some attrition is normal and unavoidable. Subscribers move, die or might experience financial hardship. In some instances, a competitor could be eyeing your firm’s accounts. If a competitor has targeted your clients, you must take swift and decisive action. That might mean bringing in a lawyer or complaining to your licensing or consumer agencies about deceptive business practices if that is part of the problem. One thing is clear, once you’ve discovered the issue, you must take necessary action.

What constitutes normal attrition is arguable. I’d like to put the loss rate at under 6%. You should expect at least 3%, so the margin is tight. Some have stated that the normal attrition rate for the electronic security industry is closer to 10% and up to 13%. I think that number is high unless your subscriber base consists of PERS accounts. However, one careful barometer is your historic rate.

If your firm experiences more attrition than what is normal, poor performance is likely the cause. That said you must get your house in order. It took you a long time to build up your subscriber base, but in a split second, your employees can lose them for you.

Communication with your subscribers is a vital tool to foster strong and loyal relationships, and communication should be a two-way street. You must pay attention to subscriber feedback, and you must have the mentality that the customer is always right — unless they aren’t — and you need to figure out how to appease and satisfy their requests, when possible. Even the pains in the butt might have a legitimate gripe that you should address before the malcontent spreads. Remember also that the buck stops with you, so make sure you understand the issues and have a plan in place to address them.

If your company is experiencing attrition, a few consultants specialize in combatting it. Check out Bob Harris of Attrition Busters and Bob Maunsell of Security Marketing Guru.

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About the Author


Security Sales & Integration’s “Legal Briefing” columnist Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters.

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