Getting Your Customers Back: One City's Story

William T. Black and Kelli Collins

For years, Mesa, Ariz., residents were a captive audience, forced to use the city's hauling and disposal services. That all changed in October 1988 when the state opened the doors to private competition in municipalities with more than 60,000 people.

Once the legislation took effect, Mesa discovered that they had not earned much customer loyalty. It seemed that when money talked, some customers walked, and the city's cash cow was drying up. Private haulers not only convinced city customers to leave, they also convinced them to sign three-year contracts with a one-year price guarantee.

This standard contract included a 90-day cancellation clause requiring a certified letter to the contractor. If the customer failed to do this, the contract automatically rolled over for another three-years.

This practice is not unusual. Private haulers traditionally require service agreements with 30-day to five-year terms, and an automatic renewal for the same length of time.

Mesa realized it had to compete for customers. Taking a cue from its private counterparts, it began securing accounts with one-year service agreements. However, when the city looked closer at the private sector agreements, it changed to a new, one page, three-year contract, written in simple language.

Customer service representatives also went into the field to speak with customers. The goal was to improve the city's image and to let the customers know their business was important to the city.

A new system also was developed to handle customers who called to cancel service. Now, a service representative asks the customer a few questions that help the city track its private competitors and gives it a chance to discuss contracts and service agreements.

For example, customers are encouraged not to sign a contract. If they insist on signing, the customer rep suggests that they sign for only one year with no automatic rollover. Or better yet, they are encouraged to write a "can cancel at any time" clause into their agreement.

Although the private contractors won customers, the loss was considered temporary. The key was for Mesa to ensure that a former customer could return to the city's or another private hauler's service at any time.

Birth of a Database The tracking service's roots began in 1994, when an internal audit revealed that the city's collection service was operating at a loss. In reaction, the staff modified the routes and established geographic zones, which lowered costs and created a profit for the division.

Mesa now needed a plan to keep current customers and earn new ones. A team, including members of the solid waste division, was formed to develop and maintain a tracking program.

The initial program, which began in April 1997, tracked customers based on hauler information, such as contract terms and service types and levels. Mesa had tried several methods of tracking accounts over the years, but none were maintained consistently. They were generally labor-intensive or were unable to automatically retrieve information by category.

The tracking program developed into a database which help establish geographic areas. A database management group was formed to develop a simple, Access-based program for initial data input. Jennifer Means, a tracking team member, was enlisted to develop this system in-house due to her computer expertise. After the initial set-up, Means trained the remainder of the team on the new program.

Two areas were targeted for a pilot program: one on the city's East side to hone in on new accounts and another on the West side to focus on an existing customer base.

A service representative contacted each business served by a competitor to begin the data gathering. This rep determined the service provider, the contract length, the service type and other pertinent information. Data also was compiled from the accounts serviced by the city.

Although this initial data gathering is time-consuming, it is essential that the information be gained quickly and accurately. Data was input and updated daily. New information is added by solid waste personnel during a follow-up call or when bidding on an account.

Barriers to continuous updating include the computer's limitations and the system's learning curve. For example, employee training slowed the process somewhat, and since there are only four computer terminals that can access the tracking program, employees must schedule a time to work on the computers.

A variety of reports can be generated by category with the database. The information also can be converted to geographical reports using ArcView software. The database is designed to generate five basic reports:

* date to contact list;

* individual business data;

* account information;

* service provider list; and

* individual haulers.

In addition, new reports can be designed based on requests for information from users. For example, one report illustrates the haulers' market shares. It includes number of customers, cubic yards and revenue. This report is particularly useful in market trend analysis.

The staff uses the database to track and solicit accounts based on the following opportunities:

* Contract expiration.

* Rate increases. The private companies dramatically raise rates and to avoid any problems with the customers, may release them from their contract.

* Sellout. If a private company sells out to another company, customers sometimes can be released from their contract.

* Poor service. If a customer can document problems with service, the customer may cancel.

* Pay liquid damages. Customers may pay liquid damages to be released from a contract. This can be cost-effective for a customer depending on the savings from lower fees.

With a report system in place, soliciting accounts citywide is easier. A geographic report identifies route densities for a particular hauler, which allows staff to concentrate on areas where that contractor doesn't have a strong presence.

Tracking is an efficient way to solicit potential customers. In many cases, customers don't bother to comparison shop. If a potential customer has a three-year contract, it is important to keep in touch throughout the three years, documenting its satisfaction and the rate billed. A contract expiring in December should not receive an aggressive sales call in February, but rather in July or August when the customer begins to think about changing.

Data auditing involves checking areas to see if the information is correct and complete. Random audits also help identify potential billing errors. The quality assurance inspector is responsible for sampling 25 accounts per month for auditing purposes.

The audit is completed using the following steps:

* Select random number of accounts.

* Phone verification to see if the information is correct.

* Check city's utility billing against accounts in the database to verify information.

* Reports are run to ensure all accounts are printing in same format.

Marketing Tactics Once a database and a report system are in place, the foundation is set for a more structured marketing program. Following are some marketing techniques to obtain new customers:

* Account leads are received from various public entities/reports.

* Information about refuse/recycling services is available on the Internet on the city's home page (www.cl.mesa. az.us/waste/).

* The Building Inspections Division approves building permits which are reviewed weekly.

* Liquor license applications are reviewed weekly.

* New Mesa Customer Account Activation List is reviewed monthly. The tracking database will enhance what is used currently for sales leads. An example would be tracking contract expirations to tag accounts for customer reps to call 90 days prior to expiration.

* Use promotion items. Calendars, pens and coffee mugs with the city's logo and telephone number are used to promote services.

* Increase staff involvement. Mesa's staff is rewarded with a free car wash pass when a sale results from one of their leads.

* Use Yellow Page Advertisement. During a survey by customer service reps, potential customers didn't report that they used the yellow pages when looking for service. Thus, the ad was reduced to one line.

* Educate customers. Most customers do not read the fine print in the private hauler contracts. Through random mailings, on-site visits and telephone calls to check on service, customers are educated on contracts and services available through the city.

This simple, yet effective, tracking program is a valuable tool for the city of Mesa's collections group. With commitment, determination, and desire to succeed, it can work elsewhere in other cities.

Refuse trucks: * 29 automated sideloaders, all Heil Rapid Rail: 5 Peterbilt (26-yard); 1 Mack (26-yard); 18 Volvo-White (30-yard); 5 Heil 37-yard star system (White-Volvo tractors)

* 7 rearloaders, 6 PAK MOR, 1 Heil; 5 Mack, a Volvo-White (all 25-yard)

* 14 frontloaders, all EZ PACK: 7 Mack; 7 Volvo-White

* 7 tilt frame (roll off) trucks: 4 C&O; 2 G&H; 1 K-PAK - 2 Mack; 5 White

* 2 six-yard Chevy manual sideloaders

Containers: * 60,000 black 90-gallon barrels - Snyder

* 25,000 black 90-gallon barrels - Toter

* 2,000 green 90-gallon barrels - Rehrig

* 75,000 blue 60-gallon barrels - Rehrig

* 2,000 black 60-gallon barrels - Rehrig

* 1,450 black 440-gallon barrels - Heil Roto Mold

* 400 black 300-gallon barrels - El Monte/RMI

Customers: * 78,000 residential, single-family customers

* 40,000 residential, apartment units customers

* 1,800 commercial customers

Employees: 115 Service area: City limits of Mesa; approximately 127 square miles

Services: Residential MSW and curbside recycling, appliance recycling, HHW collection, green waste collection, recycling drop-off convenience centers, apartment recycling, business and industry waste collection and recycling, office paper recycling, construction debris

Local Tipping Fees: $17.50/ton; $27/ton "at the door."