The Recession and Your Cleaning Business

A maid service business owner called me today, a little bit in a panic over “the recession” and 18 lost clients for the month of August. She’s working with a business coach who suggested she implement a “recession back up plan” for her business. Knowing my cleaning business, Buckets & Bows Maid Service (Lewisville, TX) had gone through a very serious recession right after the events of September 11, she called me to get some ideas and general “what not to do’s”.
Since becoming a maid service business coach myself over two years ago, I’ve learned to ask questions before I start answering any. The first thing I asked her is, “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 lossage 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 lossage 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 loose more.
Next, I asked if she has around 360 customers, she said I was right on, because she started the month with 378 and now only has 360! We divided 18 lost customers by 378 customers to get a lossage rate of .0476. A 4 to 5% customer lossage 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 company is about 5% and I’m satisfied with that number.
So what is attrition? Attrition is the number of clients you can expect to loose on an average, every single month. It has very little to do with quality or service. It’s “customer churn”. It’s clients moving away, loosing their job, cutting back their work hours, kids are grown and out of the house, their retired and can now clean it themselves, and of course, bad service. It’s all of 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 of course how quality and service can be maintained even when you have 30 employees and a million dollars a year in sales! Visit me at: http://themaidcoach.com

Comments

  1. Great blog, Debbie!

    It helps put losses of customers into perspective and help direct us to what we should be looking at. I had higher losses last month and just shrugged my shoulders, mostly reasons I couldn’t control just as you gave examples of.

    But, didn’t think to know what my monthly historical average is… attrition.

    I learn something new from you EVERY SINGLE TIME: blog, video, phone, conference…. WOW!

    Thanks for sharing your wisdom again!
    đŸ™‚
    Rhonda
    Dynamic Maids

  2. Wow, the food for thought that you shared is excellent.

    Thus far, my company has not lost any clients due to the recession, but the phone is ringing less than usual.

    Thanks for how you broke this down for us.