www.trgassociates.com attrition measurement update year end 2009 continuing to develop meaningful...

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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