Creating Policies for No-Shows and Cancellations
No-shows. Last-minute cancellations. Blow-offs.
Whether you’re an electrical contractor, a roofer, a handyman, or an HVAC specialist, everyone’s been there and it hurts. That’s time you’re not getting back. Not to mention the hard work of winning the sale potentially gone.
That’s why you need a killer no-show strategy, solid contractor or electrical software to manage your customer-base, and a strong contract to back up your business.
Write an Iron-Clad Cancellation Policy
On jobs more than $25, the Federal Trade Commission requires a three-day “cooling off” period for your customer where they can back out of the deal.
This is called a “Right to Rescind.” It’s standard, so you have to plan for the possibility.
Beyond those three days (which should still be outlined in your contract), you have to decide what a cancellation means to you.
You have a right to be paid for all work currently completed as well as to have all your materials returned in the same condition. But you establish the time-frame.
Beyond that, you can also include a cancellation fee. Say 20 percent of the quoted cost or a charge of the expected profit on the job. It’s up to you.
Finally, talk to a lawyer to review and codify the language in your contract so it’s enforceable. This is worth every penny.
Communicate Your Policy Clearly
A legally sound contract is one thing, but for the good health of your business and reputation, the next step is to communicate it to your customer.
There’s a lot to read in a contract, and legal language isn’t always friendly. Your job is to clearly bullet out the parameters of the contract, which includes the cancellation policy.
Be friendly but firm letting them know the expected time-frames and penalties for cancellations or no-shows.
This goes for your employees too. Make sure that they fully understand your cancellation and no-show policies so that they can communicate them clearly to the customers on-site. Everyone should be on the same page.
Follow Up with Top-Notch Scheduling
Tell them when to expect you.
Check and double-check between your schedule and theirs that there are no conflicts. This is a key way to prevent no-shows in the first place!
It helps to give as well-defined a service window as possible. No one likes waiting half a day like you’re the cable company. Be better than the cable company.
Reminders Are Key
Many times, no-shows have no malice behind them. Work that requires a person to be on-site means making room in a homeowner or business owner’s schedule. Things falls through the cracks.
But even an unintentional no-show still takes a bite out of your time and efficiency – and therefore profits. That’s why reminders are key.
Text. E-mail. Phone calls. Make sure you have the processes and software to make reminding your clients and customers easy.
It can have a profound impact. Text and email reminders reduced no-shows at doctor’s offices by 35 percent, one Mayo Clinic study found. If it works for doctors, it can work for your business.
Consider Charging a Service Call or No-Show Fee
Now, let’s consider when the inevitable no-show or cancellation happens. Even with all the perfect practices in place, it’s still bound to happen. One way to mitigate this is to charge a service call fee or a no-show fee.
This is a fee that can be charged either every time as part of a normal service fee package or can be a fee that’s waived when the call happens. The former is a service call fee, while the latter is really a no-show fee.
Both practices help protect your business from the negative effects of cancellations. It’s not as good as getting to follow through on the job, but it lessens the pain.
Ask for a Deposit Up Front
Another route you can go is to ask for a significant deposit up front. This is standard on bigger contractor jobs, but can work no matter your field.
The benefit of a deposit is that there’s no question between customer and worker that they’ve paid this money. They’ve already got “skin in the game,” so to speak. This lessens the likelihood of a cancellation or no-show.
It’s not unusual to ask for the deposit to be fulfilled before work of any kind gets started. It builds mutual confidence.
And if they cancel anyway – well, you’ve got that deposit.
Don’t Be Afraid to Enforce the Terms
You spent all that money and time working on a contract. Don’t be afraid to enforce it.
That said, the reason we talk about different penalty structures is that it’s questionable that you’d want to follow through with a job that your client canceled.
Legally, you could probably enforce the contract to make the client or customer allow you to do the work. But you’ll have to weigh the temporary benefit of profit on the job with the challenges of working with a hostile client and the bad reviews that might follow.
No-shows are different. They can be honest mistakes. But a straight-up cancellation is usually a sign that the job wasn’t meant to be.
…But You Probably Won’t Have To
With the right communication, scheduling, follow-up, and processes, your customers should have a very low rate of cancellations.
Use these processes as a guide and starting point. Then, track your cancellations and no-shows so you can tweak and refine these practices over time.
Well-strategized no-show and cancellations policies are like insurance. They’re there when you need them, but if you need them too often, you might be the problem, not the customer.
Some contractors say they don’t even bother with penalties. Since their other processes are so sharp they rarely ever have cancellations or no-shows. This is the place every business wants to be in!