My current gym training partner owns a sensational guitar teaching studio in my home town – so our 6am workout discussions often end up covering business systems and marketing.
However – I often wonder if he is only asking questions in a vain attempt to give himself more recovery time – I may need to watch out for this ploy.
Anyway – last week he posed this very common question – which relates specifically to appointment based businesses – including health care and guitar tuition.
“How much should I charge for my cancellation fee – for clients who cancel their appointments on short notice – or should I even charge anything?”.
I must say – I have not done a live seminar or webinar in the last 10 years without some discussion on the topic of cancellation policies – so I thought it was time for a refresher – especially as the new year has just rolled around and we are all looking to sharpen up our profits.
Upon further analysis my training partner has had a cancellation policy in the past – but it has not been well enforced.
He often starts the year with great intentions – but when the “difficult conversation” of asking for the cancellation charge fee – or informing the cancelling caller of the fee they will be paying next session – he goes soft and fails to enforce the fee.
I know it can be a sensitive issue – but only if you make it one and don’t set the rules of your relationship with each and every client.
His time is valuable.
He has a long waiting list of students trying to get a spot in his program.
Empty spots in his diary – caused by short notice cancellations – cannot be filled easily.
This “leak in his business bucket” is costing him thousands of dollars in lost revenue each month.
Now my preferred option (which solves all cancellation issues and means you never have to charge a cancellation fee ever again) is to sign each client up to an automated direct debit payment system.
The client comes on board knowing they are paying so much each week, month,year or school term to secure their spot in your diary.
If they choose to cancel or not attend the chosen session – this is not your concern – they are paying for your time ,you have made this time slot available for them and the client understands they will be charged regardless of them showing up or not.
This works well for class style therapies – such as Pilates, group programs and more structured health business treatment programs.
It also works well in the business of guitar tuition where appointments are consistent in nature.
One of my biggest ever business lessons – was to understand the concept of continuity.
Meaning – setting up programs that require a direct debit monthly membership contribution.
The fitness industry was revolutionized by this concept in the 1980’s – and every gym now has a monthly, fortnightly or weekly direct debit model – where you are charged whether you actually attend the gym or not.
The continuity model also stops you having to do a financial transaction (or another selling presentation) at the end of each consultation (or lesson).
This can be a huge pain point and seriously impact your bottom lines.
The direct debit payment model stops the client having to reach into the pocket each and every session and hand over their hard earned cash or credit card – which just makes the whole transaction more clunky – and prone to operator error.
Such as your admin team saying something like “are you re-booking“, or “yes it is expensive is’nt it“.
You also then only need to do another sales presentation at the start of each package period – eg each school term, month, or even year – unless you make the program a never ending deal.
Now I know some of you are thinking this continuity model does not apply to you because your business is different.
Your regulations do not allow pre-pay.
Or you don’t have a set booking plan that will work for this structure.
My tip for you is to start thinking about HOW you can apply this information in your business – rather than dismissing it as not applicable to you.
I know a number of health professionals who charge their clients a monthly fee just so they can actually make an appointment in the first place – a members only model.
Some clients are signed up to a “total care” membership package which entitles them (and their families) to a certain number of consults each month, special events, and even a dedicated members only VIP hotline to get fast answers to problems.
Think outside the box here – and look at ways to set up regular payment plans.
This protocol will totally remove the issue of cancellation policies, scripts,and cancellation fees.
I hope it stimulates some thought about how to put this system into your health business.