www.trgassociates.com attrition measurement update year end 2009 continuing to develop meaningful...
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www.trgassociates.com
Attrition MeasurementUpdate Year End 2009
Continuing to Develop MeaningfulTrends
Prepared By: TRG Associates, Inc.ph: 860-395-0548fax: 860-388-5300
www.trgassociates.com
Defining Attrition
Gross Attrition• The loss of existing customers and their
associated recurring revenue for contracted services during a particular customer / calendar cycle
Net Attrition• Gross Attrition plus the add back of “like
customer” gains thru resigns of the existing locations – - The Home/Business location is your ultimate
customer- Price increases for inflation- Price increases for additional services or
technology
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Defining Attrition
The Short Version• The measurement of customer dissatisfaction
with or need for the system
Why Measure?• Attrition measures customer dissatisfaction
which, for the most part, is company caused.
• The Attrition Tracking Process should be managed to identify, focus on, and rectify those causes within each organization.
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Attrition MeasurementMethodology
Weighted Ending RMR Attrition Method
Step 1: Cancelled RMR for the Reporting Period = Monthly Attrition
Sum of Ending RMR for Each Month
Step 2: Monthly Attrition (from Step 1)* 12 = Annualized Attrition
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Pro’s & Con’s of Weighted Ending RMR MethodPro’s Con’s
Accounts for and weights RMR acquisitions
Not the easiest of the calculations
Accounts for timing of acquired RMR
Accounts for rapid internal growth
Accounts for timing of rapid internal growth
Similar to many lending/equity institution’s preferred calculation.
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Continuing to Refine the Database
Existing Geography NE/Mid Atlantic Southeast Midwest Southwest West International
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Annual TrendDollars of RMR
Region 2007 2008 2009
Northeast $ 20,104,889
$ 26,123,886 $ 29,312,561
Southeast $ 15,859,705
$ 27,431,022 $ 30,717,788
Midwest $ 13,866,967
$ 20,986,270 $ 22,194,576
Southwest $ 5,545,528 $ 12,796,693 $ 11,666,058
West $ 24,353,124
$ 34,401,075 $ 33,418,789
International $ 999,570
$ 1,433,570 $ 12,601,570
$ 80,729,783
$ 123,172,516
$ 139,911,342
Annual TrendDollars of RMR
Size 2007 2008 2009
3-50 $ 302,151 $ 307,553 $ 248,301
51-100 $ 689,884 $ 648,286 $ 684,232
101-200 $ 4,097,988 $ 3,609,618 $ 3,187,759
201-500 $13,031,38
8 $ 13,652,480 $14,846,63
1
501+ $62,608,37
2 $104,954,57
9 $120,944,4
19
Total $80,729,78
3 $123,172,51
6 $139,911,3
42
Annual TrendDollars of RMR
Customer Source
2007 2008 2009
Dealer $ 11,901,416
$ 28,435,828 $ 37,684,131
Traditional $ 49,548,497
$ 67,312,383 $ 79,688,494
Mass Market $ 19,279,87
1
$ 27,424,305 $ 22,538,717
Total $ 80,729,783
$ 123,172,516
$ 139,911,942
Annual TrendDollars of RMR
Customer Type 2007 2008 2009
Residential $42,026,72
4 $71,194,11
7 $69,568,71
7
Commercial $38,703,05
9 $51,978,39
9 $
70,342,62
5
Total $80,729,78
3 $123,172,5
16 $139,911,3
42
Attrition Updatethrough Year End 2009
2007 2008 2009
Region Gross Net Gross Net Gross Net
Northeast 9.41% 6.92% 9.82% 7.37%10.06
% 7.96%
Southeast11.48
% 8.29%11.71
% 9.26%11.92
% 9.81%
Midwest11.47
% 8.44%11.47
% 8.51%11.29
% 8.18%
Southwest12.33
% 9.13%12.89
% 9.96%13.70
%11.12
%
West10.90
% 8.63%11.62
% 8.74%12.34
% 9.26%
International
10.46% 9.05%
10.42% 8.21%
11.64% 9.00%
Attrition Updatethrough Year End 2009
2007 2008 2009
Co. Size Gross Net Gross Net Gross Net
3-5011.67
% 8.28% 11.78% 8.67% 9.69% 7.58%
51-100 9.64% 7.09% 11.57% 8.74% 10.13% 8.73%
101-20011.35
% 8.14% 11.12% 7.57% 10.89% 8.73%
201-50011.22
% 8.05% 11.65% 8.47% 11.22% 9.03%
501+10.73
% 8.18% 11.31% 8.71% 11.74% 9.09%
Attrition Updatethrough Year End 2009
2007 2008 2009
Source Gross Net Gross Net Gross Net
Dealer12.60
% 9.09%12.95
%10.20
%13.19
%11.07
%
Traditional10.42
% 8.00%10.77
% 8.25%11.16
% 8.31%
Mass Market10.82
% 7.92%11.12
% 8.01%10.85
% 8.40%
Attrition Updatethrough Year End 2009
2007 2008 2009
Customer Type Gross Net Gross Net Gross Net
Residential10.90
% 7.93%11.67
% 8.91%12.04
% 9.72%
Commercial10.76
% 8.38%10.91
% 8.28%11.27
% 8.43%
Impact on Attrition Measurement with Publicly Held Company Results
2009 Excluding PHC Including PHC
501+ RMR Companies $120.9 M $397.3M
Net Attrition
Company Size 9.09% 12.29%
Residential 9.72% 11.05%
Commercial 8.43% 12.20%
Sources: SDM May 2010 – SDM 100 SEC Filings 10K Public Quarterly Company Reviews
Reason Code Analysis
Cancellation Reason 2006 2007 2008 2009
Collection/Non Payment 13.3% 13.1% 14.7% 20.9%
Moved Within Market 17.0% 10.5% 13.5% 30.5%
Moved Outside Market 29.0% 28.6% 16.4% 7.9%
Poor Service 2.0% 3.8% 2.6% 1.9%
Lost to Competition 11.6% 12.3% 16.6% 9.1%
No Longer Using System 11.3% 10.8% 11.1% 14.1%
Sold/Out of Business 4.6% 4.8% 12.8% 7.3%
Financial Difficulties 6.3% 7.0% 4.9% 5.8%
Property Abandoned/Vacant 0.1% 1.2% 0.3% 0.0%
End of Contract Term 1.4% 3.4% 2.2% 0.3%
Deceased/Rest home 1.7% 1.5% 1.3% 0.4%
Price Increase Rescinded 1.3% 3.0% 3.4% 0.6%
Natural Disaster/Military 0.4% 0.1% 0.2% 1.2%
TRG Maintains Full Confidentiality of Participant’s Figures
Summary results as presented will be available on
CSAA Web-SiteTRG Web-Site (
www.trgassociates.com)
Next update for 2010 – April 2011Posted in June 2011