Are Cancellation Fees Worth It?

Average cancellation rates are between 10-20%, which directly affects a business's profits. Although cancellation fees deter clients from canceling appointments or no-showing, they can also anger clients and deter them from using your services in the future. 

Last Minute Cancellations and No Shows

Unforeseeable reasons
Some last-minute cancellations are unforeseeable and therefore can only be canceled at the last minute. Some examples include car trouble, positive covid test the morning of the appointment, and a last-minute family emergency.  

Foreseeable reasons
However, in most cases, clients know in advance that they need to cancel. These reasons could include jury duty, a cold that started days before, scheduled car maintenance, and financial concerns. Though many people forget about their upcoming appointments, so they don’t always think to cancel several days in advance.

Would more notice of a cancellation have helped you?
For most businesses, advance notice of a cancellation is a huge help. Advance notice usually allows a company the ability to fill the vacant appointment or prevent their staff from making an on-site visit when no one is home.  In these cases having a cancellation policy and fee may be very helpful.

Establishing a Cancellation Policy

Short and direct

Cancellation policies only need to include the number of days in advance that you require people to cancel before you charge a late fee, and how much you charge for late cancellations.  For services typically covered by insurance, you may want to emphasize that insurance does not cover these fees.

‍

Example policy: “Appointments canceled less than 24 hours in advance will be charged a late cancellation fee of $50. This fee is not covered by insurance.”

‍

Communicated directly

It is best to communicate this policy directly to customers. We have seen our customers communicate it verbally during the appointment booking or on a separate intake form.  Most of our customers also include it in their appointment reminders, so that their clients are reminded of it around the time of the cancellation deadline.

‍

Collecting a form of payment or appointment deposit

If you have a strictly enforced cancellation policy, you may want to collect a form of payment at the time of booking. That way if a new client is a no-show, you can simply charge their credit card.  Because this requires an extra administrative step, many of our customers choose to not do this, and they recognize that this prevents them from collecting all of the no-show fees.

Two Main Benefits of Cancellation Fees

One: Creates patient accountability
If an appointment is important and poses a financial penalty if canceled, most customers are more likely to take it seriously and prioritize attending it or canceling in a timely fashion. It also sets clear expectations as to when an appointment needs to be canceled. Some businesses require 48 hours, some require 24 hours, and some don’t mind last minute cancellations.  This causes confusion for people, so having a clear policy and cancellation fee clears up any ambiguity.  

Two: Allows some recouping of revenue
These fees also allow businesses to recoup some of their lost revenue.  Though in most cases, these fees are significantly less than the business would have made if the client had shown for their appointment.  This is especially true when factoring in the additional administrative burden of collecting these fees.

Why Cancellation Fees May Not Be the Right Fit for Your Business

Financially burdensome to clients
Some clients might find that the cancellation fees may be too burdensome for them.  Depending on your clientele, this may be a reason to attempt non-financial incentives such as regular appointment reminders.

Creates a negative customer experience:
If a customer or client incurs a last minute cancellation fee or a no-show fee, they may be unlikely to return in the future. Some clients or customers are more likely to repeatedly cancel appointments or habitually no show. While you likely do not want to commit time and money to these clients in the first place, it may fully deter a client who is simply going through a rough time. 

How Appointment Reminders Can Reduce Late Cancellations

Reminds clients of their upcoming appointments
To begin with, appointment reminders reduce cancellations and no shows because they keep the appointments on the mind of the clients. Frequently, multiple appointment reminders can be successful when used appropriately. Some appointments may warrant multiple reminders, while a totally different type of appointment may only necessitate one reminder. The number of reminders that you want to send will be based on your specific client population. Though as a general rule, we recommend sending 1-2 reminders per appointment.

Easily communicates your cancellation policy
Appointment reminders are an excellent way to remind the client of your cancellation policy. While email reminders are an excellent fit for slightly longer messages, text messages with a character limit of 160 can also benefit from this usage. You can easily embed a link to your cancellation policy in a text message or email. This can be denoted by an asterisk at the end of the reminder message, for example "For details on our cancellation policy, visit our site." This way, you remind clients of their appointment, their financial commitment, and that your priority is their attendance, not collecting cancellation fees.

Keeping Clients Up to Date on Your Cancellation Policy

Your cancellation policy may need to change over time. Sending a quick one-time sms message or email can inform clients of the new change.  We also recommend updating your appointment reminders to include the new policy.  For example: "We now ask that clients arrive 15 minutes early and cancel with at least 48 hours notice." This simple message reduces any ambiguity about what has changed. 

How Reminderly can help

With Reminderly, You Can Easily Reaffirm Your Cancellation Policy

As we have touched on in this post, communication of a cancellation policy or cancellation fees is integral to getting clients to their appointments and keeping everyone accountable. Getting this message to clients or customers, however, poses a different challenge. With Reminderly, you can fully customize text message reminders, email reminders, and voice reminders. When reminding a client of an appointment, you can easily add details about the cancellation policy. Similarly, if your policy has changed, you can indicate that in a one-time message or in your appointment reminders – Reminderly can help you in both scenarios. 

With Reminderly, Customers Can Easily Reschedule

All of our communications are two-way.  Clients can text you back, email you back, or press “0” during an automated voice call.  In all of these situations we send the client information immediately back to your staff so that they can follow up.  Making it easy for clients to reschedule ensures that you get plenty of notice so that you can fill the vacant appointment.

‍

Communication is everything, and with Reminderly, we facilitate simple and effective communication between you and your clients.