People don’t like paying cancellation fees even if they are aware of them when they book their appointment, to the extent that charging a fee often results in the client going elsewhere.
No easy remedies
Apart from asking for a non-refundable deposit, there are no easy remedies.
Charging a cancellation fee to their credit card leaves you open to the client disputing the charge and claiming a refund, the excuse being: they did not receive your service, they were not aware of your cancellation policy (even if you did tell them), and they did not authorize the charge.
Avoid cancellations in the first place
So, by far the best way of reducing lost revenue is to avoid the cancellations in the first place.
- Send the client a reminder 24 hours before the appointment either by SMS, email or phone and get a confirmation of the appointment;
- Ensure your staff are well trained to handle objections and secure the appointment;
- Survey the clients to find out why they cancel and address the issues; and
- If a client repeatedly cancels insist on payment up-front. If they don’t like that then don’t make the booking. Let them become the competition’s problem!
Finally, if you can afford it, you could offer a discount for up-front payment. At least then you would have the cash even if your profit is reduced.
Posted by Peter Johnson, Business Advisor with SGBA. If you would like a free initial consultation to discuss your business, call Peter on 07714 093406 or email him at firstname.lastname@example.org.
We’d like to thank Arnold Toynbee of SolutionWise, Australia, www.solutionwise.com.au for permission to publish this material.