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Issue link: https://securitysales.epubxp.com/i/141570
Industry Pulse HOT SEAT NOT TRACKING GROSS AND NET ATTRITION? YOU SHOULD BE JOHN BRADY President TRG Associates Inc. Each year TRG Associates Inc. and the Central Station Alarm Association (CSAA) collaborate to produce the Attrition Measurement Study. The report aims to measure the number of customer RMR losses (gross attrition) and the offsets to those losses through resigning like customers/locations and other increases in the RMR related to the same base of customers (net attrition). At press time, TRG President John Brady was fnalizing data for the 2012 survey. He joins the conversation to discuss the latest attrition results and related topics. What stands out for you in the 2012 Attrition Measurement Study? We are going to fnally eclipse $200 million in recurring monthly revenue. In fact, we are going to have more than $250 million worth of RMR reported to the study. Te beauty is that total 14 / SECURITYSALES.COM / JULY 2013 doesn't include ADT. Now that they are a standalone company they are far more forthcoming with their key metric information. We already know on the residential side that they were $252 million. Put that on top of what independent dealers reported and it really gives everyone a good feel what went on in 2012. Should dealers be tracking both gross and net attrition rates? Yes, absolutely. Te diference between gross attrition and net attrition is absolutely the measurement of each management team and their focus on customer retention. If you don't measure it, you can't manage it. It is absolutely vital that you measure both, but it's even more critical that you put in a system to understand the reason for the cancellation. Find out why the customer is leaving. Was it poor service? Did a competitor take them? Is it because they are no longer using the system? Are they moving? Every reason helps management analyze what they have done wrong and start to fgure out how to regain that RMR. Do you have some tough love for companies you advise that don't track both types of attrition? We have clients who will say their attrition can't be controlled. Tat could not be less true. We'll spend a day or two with them and talk to their service and installation technicians and we'll talk to the receptionist. After those two days we'll go back into the boardroom and I hand them a mirror and say, "Everybody look in this mirror because this is what's causing your attrition. It is manageable. You are the ones ticking of the customer. You are the ones who put in the automated attendant and they can't stand it." You absolutely need to understand your reason for attrition so that you can manage each reason. Are there indications in the 2012 data that illustrate sustained economic recovery? Residential attrition is going to go down a little bit versus 2011; commercial is going up a little bit. It is sort of a mixed trend but still solid, solid numbers compared to most industries. Te two things that were a little surprising were "[the customer] moved" category defnitely went up. Everybody's moves went up. It helped shift attrition upward. I view it as an opportunity for retention. I always call it the two-for-one. I want to get the house the customer left and I want to get their new house. Also, for the frst time in about fve years we started to see price increases of the older customer base. And we also started to see evidence of upselling, which obviously helps lower attrition. Tat is managing your customer base to put them on better technology, maintain them and lower attrition. What we saw was more evidence of price increases and we also saw more evidence of fewer rate reductions. We had a lot of rate reductions to keep the customer in 2008 and '09 and '10 because it made good business sense. We saw a lot of attrition being driven by rate reductions to keep the customer. We saw less of that in 2012, which is good news. FIND IT ON THE WEB For much more from our conversation, visit securitysales.com/hotseat.