Study says attrition is on the decline

Monday, December 1, 2008

OLD SAYBROOK, Conn.--A recently released study from TRG Associates and the Central Station Alarm Association, shows that, for the third year in a row, gross attrition figures are declining. The 2007 study, the seventh annual attrition report compiled by TRG, surveyed more than 100 companies, representing more than $80 million in RMR, across the United States, Canada and Europe, according to John Brady, president of TRG.

The number of participating companies is up more than 33 percent.

The study shows results across the marketplace as to the level of customer losses (gross attrition) and the offsets to those losses through re-signs of like customers/locations and other increases in RMR related to the same base of customers (net attrition). In 2007, the average residential/commercial gross attrition figure was lowered to 10.83 percent from 11.56 percent in 2006. However, the average net attrition figure increased slightly from 8.06 percent the previous year to 8.15 percent in 2007.

Brady said that he was surprised to find that one prevalent reason for attrition in 2007 had less to do with the U.S. economic downturn and more to do with customer satisfaction. “It was interesting to see that we had an increase in customers going to a competitor,” he said. “Management teams don’t usually want to hear it’s them, but more times than not, it’s them. I mean, it can be something as simple as, ‘Go turn off your automated attendant.’ People hate not getting a human being. All the way down to, ‘What’s your response time for service?’ ‘Well, it’s whenever I can get there.’ Most customers have some idea of what they think is a reasonable response time for service.”

The Southeast continued to improve as it recovered from the hurricanes of 2005, and the Midwest and the West were the only U.S. regions to experience a slight increase in net attrition over 2006 numbers.

Gary Greenblott, vice president of Las Vegas-based Alarmco, Inc., said that Alarmco did not participate in the study but that they do keep track of their attrition and growth in-house. He said that Alarmco has indeed seen a slight increase in attrition from 2006.

“We had 8.8 percent attrition up from 8.5 last year. Our growth was 1.2 percent compared to 2.3 percent last year. The difference is that in the past year our sales have been down, so our growth is down, but last month was our best month in a year and a half,” he said.

“We’re still growing. We’re at half the growth we were at last year. The economy is directly reflecting it with the real estate market. But over the past 58 years that we’ve been in business, we’ve traditionally been a slow growth company.”