What’s a Good Cancellation Policy for Float Centers? – DSP 246

There are few things more frustrating than having customers schedule early and then having them cancel, or worse, just fail to show. So how does Float On handle it?

Well, Graham and Ashkahn share their thoughts on this as well as commiserate with every float center our there that has a problem with cancellations. They share some tips, tricks, and advice on how to properly lie to customers for the best result.

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Transcription of this episode… (in case you prefer reading)

Graham: All right

Ashkahn: Okay.

Graham: Hello everybody.

Ashkahn: Hey, there. Welcome. This is Ashkahn.

Graham: And I am Graham.

Ashkahn: Today is another episode.

Graham: Whew!

Ashkahn: Yep, yep.

Graham: That means another question, which today is kind of a long one, so I’ll try to read it especially fast.

Ashkahn: All right, I’m just going to take a seat.

Graham: Yeah. “Love the podcast, guys. Now that the long summer days and nights are upon us, we are staying busy, however, getting so many last-minute cancellations. We have a cancellation policy. However, I hate to charge members at times, or there’s always an extravagant excuse why someone can’t make it. Help! I’m tired of showing up to work at 8:00 a.m. to set up, and then have no one show up. Sincerely, Sleepless in Louisville.”

Ashkahn: Oh, nice. It should be Lazily Lounging in Louisville or something, you know?

Graham: Angry in Louisville.

Ashkahn: It’s got to be alliterative. That’s the whole, that’s the shtick, you know?

Graham: Oh, I didn’t even put that together until just now.

Ashkahn: Well, that’s the implication from Sleepless in Seattle. Let’s pull the movie up. Let’s get a clip from that. We’ll play it for you guys here.

Graham: That was not a weed whacker. That was the sound of movie reel running. Okay, so let’s answer this poor person’s question.

Ashkahn: Yeah, so cancellations-

Graham: Yeah.

Ashkahn: How do you deal?

Graham: They suck.

Ashkahn: They do suck.

Graham: It’s hard not to get upset at cancellations, too, because it’s a little bit-

Ashkahn: It’s an emotional-

Graham: Yeah, exactly.

Ashkahn: Yeah. It feels like someone’s canceling on you. You’re like, “Well, I’ll cancel on you, too,” you know?

Graham: It’s like you’re being stood up for a date, but if you scheduled four dates every two hours or something like that. It still sucks, though. It’s hard.

Ashkahn: Yeah, no it is. It’s hard to-

Graham: It’s also just literally money not walking through the door, when you’re expecting it, if you’re not charging them.

Ashkahn: Yeah, so there’s a lot of different ways Float Centers approach cancellations.

Graham: Yep, intelligently and stupidly.

Ashkahn: Yeah, so we’ll tell you the intelligent way here-

Graham: And you can draw your conclusion about the stupid ones.

Ashkahn: In my mind, it’s like there’s a sliding scale of cancellation policy.

Graham: Sort of like a giant gray area. Is this what you’re trying to say?

Ashkahn: Yeah, but with black on one side and white on the other. To me, it’s like you can just basically have progressively more and more hardcore cancellation policies, and hopefully the thought is that those will lead to less cancellations. At some point, I think everyone gets to the place where they’re like, “Hmm, that’s a little too hardcore of a policy. I would rather have the cancellations I’m saving than have to have that policy for people.” That’s always the trade-off that I usually see. People have a different place where they put their marker on that, and where they set their flag, in terms of that balance.

Graham: Yep, yeah, for sure, wrong places sometimes. No, we have a pretty lax cancellation policy at Float On. I personally think, with floating, that it’s just the way to go. I mean, obviously we think that. Otherwise, we wouldn’t have implemented it that way, but we trick people into thinking that we have a more extreme cancellation policy than we actually have.

Ashkahn: Yeah, there’s a lot of lies.

Graham: Yeah, just like all aspects of our life, I guess, personal and professional. We say that we’re going to charge people for their appointment if they don’t cancel within 24 hours. We have this 24-hour cancellation policy. Before we had a 24-hour cancellation policy, we got even more last-minute cancellations, so putting something in effect just to scare people into being responsible seemed to really do good by us, yeah.

Ashkahn: Because we don’t really enforce it.

Graham: Yeah.

Ashkahn: It’s never enforced.

Graham: That’s the lying part.

Ashkahn: Yeah, that’s the part that’s a lie.

Graham: We just let it hang out, and if they cancel within 24 hours, then we don’t charge them for the first time, but then if they cancel a second time within 24 hours, we still don’t charge them. Then, if they cancel a third time, sometimes, depending on the circumstances, we start making them prepay and charge them, and things like that.

Ashkahn: Yeah, our policy’s a little loosey-goosey. We keep trying to set these very concrete rules for it, because we’ll put notes on people’s accounts, so that’s how we track all this stuff. If someone late-cancels on us or doesn’t show up, we’ll put that note on people’s accounts.

Graham: We’ll give them hilarious nicknames, as well, sort of derogatory, you know?

Ashkahn: Latey McLateFace, like that.

Graham: Yeah, exactly.

Ashkahn: Here’s where it gets weird is let’s say someone does this. Maybe they do it two times, right, or three times even, and-

Graham: It’s 50% more. It’s outrageous.

Ashkahn: They float every twice a month or whatever. They want to be regular floaters, and then three years go by, and they’ve been good, and then they have another late cancel or something. There’s just these edge cases like that, where it feels weird to enforce this policy you have. You’re like, “Well, it’s your fourth one. That means this is going to happen.”

They’re like, “But I’ve showed up for 90 appointments in the last two years.”

Similarly, it feels weird being really mean to your members, even though sometimes they may end up with more cancellations in total, because they just have a ton of floats booked. I mean, we had a guy who was floating every day with us, and he ended up racking up some cancellations, but he was still coming in to float pretty much every day for a huge period of time.

It’s just very hard to come up with one simple set of rules that actually feels right in these situations like that. We’ve struggled with that and eventually given up on it and just been like, “Hey, here’s the general guideline of what we try to do, and then use your judgment from there. Don’t follow these if it doesn’t feel right.”

Graham: You’re one of those. The only concrete policy you can truly have on cancellations is there can’t actually be a concrete policy.

Ashkahn: You can have a concrete policy. I mean, I feel like everyone, I think, is going to make some exceptions at some point.

Graham: They have to.

Ashkahn: I’d imagine.

Graham: Yeah.

Ashkahn: Right.

Graham: Just to be a reasonable human being.

Ashkahn: I feel like, let’s go up the scale here of what I’ve seen. There’s nothing. No cancellation policy at all.

Graham: No pre-charging. I would put that on there, too.

Ashkahn: No pre-charging, yeah. Let’s talk about that for a second actually.

Graham: No, that was good. I was just waiting to drop that bomb, so, yeah, so when you collect payment is another, and under what circumstances you collect payment before someone’s appointment is another one. One of the notes that will go on people’s accounts for us after the third time is “Collect prepayment,” which, if someone’s paying online, by default, we take payments. If all they’re doing is interacting with us through a website, at Float On, we’re like, “Okay, if that’s the only contact we have, you have to put in your credit card and order and pay for your service in advance.”

If they just call our shop over the phone, and they were talking to an actual human being, then we don’t require prepayment. The more extreme version in lackadaisicalness, from where we are, would be not accepting prepayment, even if they book online, and then also not-

Ashkahn: Yeah, which I’ve heard of a couple centers doing, and they say they get a lot of cancellations. Then they switch on the payment, and they say it reduces it significantly. Online, some sort of gateway online you can do. A lot of software systems allow you to either actually have people pay, or just take people’s credit card information, but not charge them until they come in, so there’s some flexibility in what you want to do there, too.

Graham: Yeah, and either way, the goal is just to have some way to charge them if they just totally bail and don’t show up.

Ashkahn: Yeah, they’re just more likely to show up if they put their credit card information in, too.

Graham: Yeah, little commitment barrier to entry there. Yeah, you could not charge upfront in any situation, and if people cancel, either cancel or they just flat out don’t show up and never contact you, you never charge them. That would be the most loosey-goosey kind of thing there.

Ashkahn: Yeah, I guess not even scheduling appointments in would be the “People, just come float whenever, and we’ll see what happens.”

Graham: Yeah, but then you get problems on the other side of overbooking. This is assuming that you’re running a business.

Ashkahn: Okay, all right.

Graham: Yeah, or something. Even if it’s not a business. People can’t just show up to your house and hop in your float tank.

Ashkahn: Whatever, you know? Just hop in there. That’s going to be my float center, when I open one.

Graham: Just Hop in There, LLC, well, we’re not actually a business, but-

Ashkahn: We didn’t really get around to that part.

Graham: We don’t even have float tanks.

Ashkahn: Yeah, there’s various ranges of combinations of charging people. I’ve heard of people taking people’s credit card information over the phone. I’d say that’s like notching up one notch now. I’ve always personally found that to be a lot of just unexpected friction in the process. People I don’t think-

Graham: It’s time consuming. I’d almost rather have my workers cleaning during that time, rather than writing down all these numbers.

Ashkahn: Yeah, so it’s just not what people are really used to putting the credit card stuff online. That’s totally normal nowadays, but calling to make an appointment and giving credit card over the phone is not as common.

Graham: Okay, where are we going to say the upper end of the spectrum or where are we going with this?

Ashkahn: Yeah, we’re moving there. We’re moving there.

Graham: Okay.

Ashkahn: Then there’s, I would say, policies where you actually charge people some sort of cancellation fee, which is less than actually taking a full float off people’s account or just charging a full price.

Graham: Yeah, so like 20 bucks, I’d say, $20 cancellation fee.

Ashkahn: Yep, and then their charging people full price.

Graham: Yep, for canceling. Then there’s charging people double price. You pay single if you do show up, but you have to pay double the appointment if you don’t show up.

Ashkahn: Pay even more if you don’t.

Graham: Yeah, exactly.

Ashkahn: Then there’s just blackballing people from your business, after you charge them, so they can never come back.

Graham: Yep, and then fleeing the country with the money. That would be under the far-

Ashkahn: That’s the far end.

Graham: Yeah, I’d say that’s the When we’re saying right and wrong, I’d say that’s more on the right side to run things, yeah.

Ashkahn: I mean, I don’t know. One thing that’s, to me, when I think about this spectrum and where I fit on it, It’s just, we run a relaxation business, and I try to keep that in mind. I like to have our policies match the vibe of our place, and our whole place is about relaxing and stuff like that. To me, having these really strict policies about cancellations almost feels in contrast to the rest of the way we run our shop.

Graham: Yeah, and I guess, especially with floats, as opposed to massage or something like that, where the biggest thing I guess you’re giving up is opportunity cost. If you would have a paying person in there, and someone else doesn’t come in, then you just lost the value of a float that you could’ve filled anyway, you know?

Ashkahn: Yeah, and I guess the question made it sound like they were showing up to open their shop and maybe there was one person booked in the morning, and that person didn’t show up, and now you’re like, “Ugh, I just got here two hours early.”

Graham: I do know how much you hate missing out on sleep personally, so that probably resonated deeply.

Ashkahn: It did. That’s all I’ve been able to think about this whole episode.

Graham: Okay, but what I was going to say, though, is especially in our business, and because of the nature of it, it feels somehow weird to just immediately hop to the most strict policy that you could.

Ashkahn: Yeah.

Graham: We’re also, if you’ve been listening to this podcast for a while, or seen any of our conference talks, we’re also big fans of starting from a point of more relaxation and a point of non-control, and then putting controls in place slowly, as you recognize that there’s a problem. We started without even having that 24-hour cancellation policy, and we put it in place, because people were canceling way too much.

Ashkahn: We weren’t putting notes on people’s accounts. We weren’t doing anything.

Graham: I’d say, so, as far as tactical things, though, assuming you’re trying to avoid putting in a cancellation policy, which is sounds, from the question, like you probably have a relaxed one right now, and you’re trying not to be all uptight about this whole thing. The thing that we decided to escalate instead was how much we remind people that they have appointments. Right now, we give them a call a couple days ahead of time, and they get a text message one to two days ahead of time, as well, and they get an email reminder a few days ahead of time. Between those, it almost feels like someone really has to be pretty irresponsible to just not show up.

Ashkahn: Here’s what happens. I call this shaking cancellations loose from the tree. It’s like, you call someone, and you’re talking to them two days beforehand. You’re like, “Hey, I’m just calling to remind you of this appointment.”

They’ll say something like, “Oh, I’ve totally been meaning to cancel that. This thing came up.” They already know they can’t make it, but it hasn’t gotten to the point where they’re calling or doing anything like that.

Graham: I think they probably forgot, initially, to put the appointment in their calendar. Someone said, “Hey, you want to come to the river?”

They’re like, “Yeah,” and never checked their calendar, right? Anyway, shaking them loose. Go on. Yeah, I agree, that’s totally one of the useful things that-

Ashkahn: I really feel like those are the people who would be canceling a couple hours before or not showing up at all. It’s almost like saving them the labor of having to take that extra step of having to give you a call. You catch those people, who weren’t even able to pick up the phone and deal with that. That’s really nice. I think that’s cut down on our cancellations.

Graham: Yeah, for sure. I mean, I think like you said, in a few different ways, too.

Ashkahn: Yeah, and just a reminder in general.

Graham: Catching the ones who would’ve canceled, just reminding people you exist, and they made an appointment at some time, you know?

Ashkahn: Yeah, yeah.

Graham: Then, it also hopefully catches those people, who would give you some horrible, crazy excuse, because they’d feel so guilty. They’re like, “Oh, my third grandma died this time. I’m really sorry.” You know, it’s nice to be able to find them early. Then, when people do give you a crazy, like “Oh, my wife went into labor,” kind of excuse, you can hopefully believe them a little more, because you’ve done your best to follow through.

I’d just say, I mean, even for us, if we started having a big rash of cancellations just in the summertime or something like that, before considering really trying to charge people, I’d try to figure out how to get people to either let us know they want to cancel early or just remind them the appointment exists, so they’re more responsible with it, even calling a second time a day beforehand, or adding in a second email, or just something to try and stave off the problem that way, through preemptive measures, rather than punishing people after the fact. Anything we can do to not have to charge people for an appointment they never showed up for is, in my mind, the steps that should be taken, you know?

Ashkahn: Yeah, and we’ve taken floats off people’s accounts. We have charged them, really I guess charging people full price. It’s come to that before, but for very specific people, in very specific circumstances.

Graham: Yeah, yeah.

Ashkahn: That’s nice, because it feels justified in that circumstance, and you don’t have to make life difficult for everybody, because there’s going to be just a few people out there abusing your system.

Graham: It really is rare. Even though I just said we usually go up to three, before our internal policy is to start enforcing our external policy, in reality I think it’s usually more around five or six times, where it’s like we’re lenient, even with our internal policies, like, “Ah, well, we’ll let them slide for one more time,” from letting them slide for three times. It’s worked out, and the few times when we do charge, I think the people who are being charged recognize they’ve messed up enough times in the past.

Ashkahn: Yeah, we don’t get a lot of-

Graham: There’s never any hard feelings.

Ashkahn: Yeah, yeah.

Graham: They know it’s on them, you know?

Ashkahn: We get about one to two cancellations a day, late cancels or no-shows, out of our maybe like average of 50 appointments a day, so that’s like two to four percent, I guess. That’s where we’re at with our policies. That’s about where we’re hitting. I’m sure there are centers out there that have better stats than that, are having less than two to four percent, but at a certain point, you’re just scheduling tons of people into appointments, and people are going to have to cancel. Things are going to come up, and it’s just life, at a certain point, you know?

Graham: To me, giving them a chance to look fondly on your business, to feel like you waived this fee that they could be charged as, from their perspective, probably a special case, means, to me, they’re more likely to come in, in the future. Even though you’re losing out on that immediate money that they were bringing in for the appointment, if you were to charge them $20 or full price or something like that, I don’t have any stats on this or anything, but I just-

Ashkahn: That’s part of it.

Graham: I just trust that it’ll get paid up in the end, that both through word of mouth and through, hopefully, some of those people becoming returning customers, that it just, even financially, makes more sense. I guess that’s the hopeful part of this philosophy.

Ashkahn: Here’s the tricky thing is that if-

Graham: Oh, boy, we’re just getting to the tricky thing?

Ashkahn: The tricky thing about you just said-

Graham: Oh, I see.

Ashkahn: Is that that’s why we have these policies is because we believe being a little bit more relaxed, laid back, forgiving to people, it creates an interaction with us and our customers, that makes them like us more, and more willing to keep doing business with us, and ultimately is good for us in the long run. The tricky thing is there’s no easy way of quantifying that, right?

Graham: Yeah.

Ashkahn: But there is an incredibly palpable, easy way of quantifying how many people cancel on you. Every time someone cancels last minute or doesn’t show up, you see it there. The appointment’s just staring at your face. There’s just this one little blank square in your appointments, and you’re like, “Er, arrgh.” It’s very frustrating, and it’s very clear and evident when it happens, but how much your business is benefiting from you having nice, relaxed, easygoing policies, it’s hard to say. That is just a much more looser, general sort of thing you’re hoping. The hope is that that’s leading to more an increase of appointments faster than that you’re losing from, from these cancellations, but-

Graham: Yeah, the old absence of confirmation isn’t confirmation of absence problem.

Ashkahn: Yeah, it’s the availability bias. You have the available information on one end, but not on the other side, and so it’s a lot easier to lean towards that side where the information’s right in your face and be like, “Look, I can see these cancellations. I have to stop these.”

Graham: Which, by the way, is how, I think, most extreme policies get made, not just in the float world, but just responding to the things that are right in front of you, rather than all the things that are going well, that don’t shove themselves under your noses as heartily.

Ashkahn: Yeah, so, I don’t know. We may be wrong. Again, we don’t have any like stats on this-

Graham: We’re probably wrong, in fact. It’s not-

Ashkahn: But it’s just what feels good to us, so got to go with that.

Graham: Thanks for the question. Thanks for actually having a really legit sign-off there, as well. I enjoyed a lighthearted Louisville, or whatever it was.

Ashkahn: Very memorable. All right, if you guys have more questions for us, go to floattanksolutions.com/podcast. You can type them in right there.

Graham: All right, thanks everybody.

Ashkahn: Bye.

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