December 9, 2020
Editor’s Note: This month we are focused on topics that make things easier for you when it comes to your pest control business. We chose to reshare this particular blog on ways to improve your collections experience. Not only will they ease the process but the strain on your bottom line too.
Collections are critical to your pest control business.
Every year, pest control companies lose millions and millions of dollars in past-due account balances that they either collect late, fail to collect, or pay expensive commissions to agencies to recover. Failure to collect on these outstanding debts impacts your growth and your bottom line.
Collecting money from an old customer is 5-10 times more efficient than signing up a new customer. According to Harvard Business School, a 5% increase in customer retention rate results in a 25%-95% increase in profits.
When you sign up a new customer, you pay an acquisition cost as well as overhead, expenses, and labor costs. On the other hand, when you collect money from past-due customers, you’ve ALREADY paid all of the overhead, expenses, and labor to complete the service and whatever you collect goes 100% to your bottom line. The longer your business holds on to an unpaid invoice, the less likely you will collect on it.
Effective Collections Impact More than Just Your Bottom Line.
Growing your business can be a challenge when you are worried about paying bills or having a lack of cash to invest in sales, marketing, and scalable operations. The longer a client keeps an invoice without paying it, the less likely you are to see that revenue. As such, time is of the essence.
By implementing the right collection processes in the field and online, you can dramatically increase not only the amount of money you collect but the speed at which you collect it.
So, the obvious question is, "How do I improve my collections?" Three core principles will dramatically boost collections:
- Empower your employees. Prompt and enable your employees to collect money or enroll customers in autopay every time they interact with your customers.
- Automate reminders. Make sure your customers get consistent and timely notifications about their balances.
- Provide convenience. Give your customers multiple options and easy ways to pay you and enroll in autopay.
These three principles – empower your employees, automate reminders, and provide convenience – drastically improve your collections, profitability, and even retention, all three of which make your pest control business easier to run.