Attrition project organizers to wrap up 2002

CLINTON, Conn. - A company conducting a research project to measure attrition levels in the security industry is compiling information for a year-end update, but is still looking for participants. Connecticut-based firm TRG Associates and the Central Station Alarm Association is seeking additional input from alarm dealers to garner a more complete picture of the industry’s average attrition levels and the most common reasons that customer attrition occurs. Through the third quarter of 2002, nearly 40 companies had submitted information, providing a base of $16 million of recurring monthly revenue to measure. The group is shooting for information of a customer base of $100 million of RMR. Once TRG receives a company’s information, which is kept confidential, the numbers are entered into a database and then sorted according to geography, reason for canceling, company size, and other factors. For example, 27.8 percent of respondents so far said their number one reason for customer attrition was when customers moved within a market, followed by non-payment at 19.4 percent and a customer’s move outside of the dealer’s market, at 14.9 percent. “It’s also not just to have the data on the industry, it’s for each management team to truly know why they are losing customers,” said John Brady, president of TRG. While net attrition levels varied little between residential (7.71 percent) and commercial accounts (7.4 percent), accounts generated traditionally (where the customer paid in full for the system) had a 7.37 percent attrition rate, while a dealer acquired account posted attrition levels at 9.51 percent. Mass market accounts had a net attrition rate of 7.59 percent. Attrition levels were highest in the West, with an average net attrition of about 11.15 percent, compared with 10.5 percent in the Southwest and 6.21 percent in New England/Mid Atlantic region. These areas will be realigned in 2003 in order to match them to districts of the Federal Reserve Board, which publishes quarterly economic data specifically for each sector of the country. “It would be nice to match up attrition in those regions with what is going on economically in those regions,” Brady said. For example, the California energy crunch could have impacted attrition levels there, he said. TRG is also using the blind numbers to offer information about the industry to outside investments groups, banks and other lending institutions inquiring about the security industry.