By Steve Michaels
As I’m sitting here writing my article for Connections Magazine, a redheaded woodpecker is not five feet from me on the windowsill, just peering in. Outside my office we used to have a pear tree where the woodpecker had its home. It was an old tree full of nooks and crannies. When it did not leaf out this year, we cut it down and replaced it with a nice gazebo. This has confused the woodpecker as it keeps trying to find the old pear tree. It circles the gazebo and lands on the roof, trying to figure out where its home went. It then flies back to the windowsill thinking that it must have gone to the wrong spot and looks at me for an answer while repeating the whole process again. This bird is a creature of habit. It took some time before it realized that its home was gone and not coming back. After a few days, the bird finally got the picture and I haven’t seen it since.
It’s interesting how we simulate nature and are creatures of habit like the woodpecker. We do not like change. It takes some time for us to adjust to a new way of thinking. For example, my chiropractor had moved his offices more than three months ago. I had been to the new facility at least twice for adjustments. I had an appointment the other day. Without thinking, went to his old office and realized he had moved months ago. Feeling like an idiot, I showed up late for my appointment and relayed my actions to the receptionist. She assured me that I was not the only one. It takes time for people to adjust to change and to get used to a new pattern.
This same principle holds true when purchasing an answering service and moving the accounts. I have seen many methods to move accounts with customer loss ranging from two to 60 percent. The basic premise is that people do not like change. That is a fact of life. The less change you can create in the acquisition, the lower the customer loss will be.
However, sometimes it is not practical to keep the customer accounts in place. The only way you can justify the acquisition is to roll the accounts into your present location. But how do you keep from losing the accounts? Make your transition as smooth and uneventful as possible. As I have stated before, the best way to keep customers is to leave them in place without making any changes. Your new customer base will not see any difference in service if their accounts are still being answered with the same equipment, by the same operators utilizing the same DID number and billing structure.
Some ideas to reduce customer loss would include hiring the operators from the old service. That way the customers hear a familiar voice and are reassured that they are still in good hands. Try to keep their same DID number. When they are given something new to remember, it makes them anxious. This could lead them to start inquiring about a competitor’s service or questioning whether they need your service at all.
Try to keep the same billing statement with no adjustments until you have let the dust settle. After some scrutiny and volume count, you can slowly adjust their rates to make them more profitable without scaring them off. Once they realize that you have been providing good service, they are more likely to stay on as customers. If it is not feasible to retain their office you may want to think about keeping a small storefront operation in that location while transferring all of the calls to your service. This would improve the retention capabilities with a local presence.
There are many other factors that have to be put into the formula before buying an account base. Are the customers flat rate customers, and would they be willing to pay more for your service, especially if there are many other competitors in the area? Are you going to offer them 800 DID numbers or a T1 line that would increase your telephone costs? Would the new accounts be willing to have their calls answered out of state, and if so, is there a regional accent involved? I am sure that someone with local service in the deep South would not want his or her calls answered by someone located in New York City.
There are many pieces of the puzzle that have to be studied before an account acquisition. The basic premise to be observed is that the least amount of change will produce the best results in account retention. Just like the woodpecker that took a while to figure out that its home was gone, it takes time for new accounts to adjust to your service. But in the end, it is far easier and a lot more profitable to acquire new accounts through acquisition than to solicit them one at a time.
Steve Michaels and TAS Marketing have been serving the TAS industry in the mergers and acquisitions arena for over 23 years with over 220 businesses sold. His years of experience have widened his scope and experience in buying and selling businesses nationwide. He may be contacted at 800-369-6126, firstname.lastname@example.org, or visit www.tasmarketing.com.
[From Connection Magazine – November 2002]