A maid service business owner called me today, in a bit of a panic over the recession and the fact that she has lost 18 clients so far this month. She’s working with a business coach who suggested she implement a recession back up plan for her business. Knowing that my cleaning business had gone through a very serious recession right after the events of September 11, she called me to get some ideas and general tips about what to do and what not to do.
Don’t panic, look at your numbers
Since becoming a maid service business coach myself, I’ve learned to ask questions before I start answering any. The first thing I asked her was, “What is your attrition rate?”
She wasn’t sure, but she uses a maid service software and quickly retrieved that data from her database. She noted that last year her customer loss rate was 3.8 customers a week. We multiplied that by 4.33 (the number of weeks in a month) and came up with an average of 16.45 customers lost each month last year. Given the fact that she had fewer clients last year, than she does now, I pointed out that her customer loss rate has not gone up at all. She lost just 1.5 customers more in August than last year’s average. This could be attributed to growth—if you have more, you’ll lose more.
Next, I asked if she has around 360 customers. She said that I estimated correctly—she had started the month with 378 and now only had 360. We divided 18 lost customers by 378 customers to get a loss rate of 4.76%. A 4-5% customer loss rate is typical of a quality focused, non-franchised maid service and by no means represents high customer turnover. It represents reasonable customer attrition. My maid service is about 5% and I’m satisfied with that number.
What is attrition?
So what is attrition? Attrition is the number of clients you can expect to lose on an average, every single month. It has very little to do with quality or service. It’s customer churn. What causes attrition?
- Clients moving away,
- Clients losing their job,
- Clients cutting back their work hours,
- Clients whose kids are grown and out of the house,
- Clients who retired and can now clean the home themselves,
- And, of course, bad service.
It’s all these things rolled into one. If you track this information carefully you will see a pattern emerge. You should always watch the patterns.
Watch for spikes and variations. It helps you react quickly when something is wrong and calms your nerves when you think something is wrong and it isn’t. Attrition is one of those things few maid service owners pay attention to, but that number is extremely important and tied to to your growth, shrinkage, and the pulse of your business! As a business coach, I help people understand what numbers to track and pay attention to, how profitability can be improved, and how quality and service can be maintained even when you have 30 employees and a million dollars a year in sales.