Management July 29, 2020 Last updated July 29th, 2020 91 Reads share

Why You Need a Cancellation Policy and How to Create One

Image Credit: DepositPhotos

Sometimes people cancel their appointments or simply don’t show up. This is something you cannot avoid.  When people have nothing to lose, they can skip appointments freely. Maybe there is a serious reason or they just are not in the mood to go out. Or maybe they booked multiple appointments with different providers hoping to choose among them sometimes later. Regardless, it is a loss of a customer or sale.

All of that can lead to significant losses for your company. 

For example, missed appointments cost the US healthcare system more than $150 billion per year! And this is not the only industry where no-shows cost a pretty penny.   

One way to protect your company from such losses is a well-designed cancellation policy. Here are the compelling reasons to develop one for your company and tips on how to enact it enhancing, not harming the customer experience.   

Reasons for Having a Cancellation Policy

The first thing you need to understand is that the goal of cancellation policy is not to punish clients but to demonstrate that you approach your services with all the due responsibility and expect the same on clients’ part too. Providing a clear cancellation policy has the following benefits for your business and its clients: 

Reduces No-Shows

Cancellation policy may become an excellent tool for coping with no-shows and last-minute cancellations. When the cancellation policy is appropriately organized and agreed upon by the clients, the chances that a person will miss an appointment are incredibly low.

And yes, this has benefits for clients too: minimizing the losses, you free up more funds to invest in your business and improvement of the services. What is more, you will probably have to increase service prices to absorb such losses, thus making responsible customers pay for those who book and never show up.    

Demonstrates Professionalism

Some entrepreneurs mistakenly think that cancellation policy will make clients turn to their competitors. Instead, precise details demonstrate your professionalism and a good organization of business processes.

Enhances Workload Management 

Since a cancellation policy presupposes a penalty or non-remunerable service fee, it acts as a protection for businesses from losing revenue. However, such a policy often also presupposes the notifications about the time when the appointment can still be canceled or rescheduled without any losses. This way, you make the workload of your employees better planned and more predictable. 

Reduces Misunderstanding 

When the cancellation policy is stated well, a person knows what will happen if he/she decides to skip the meeting. It frees you from the responsibility to note to the client that last-minute cancelation is not a good practice. The policy is not personal and does not harm personal feelings. It is just the rule that applies to all, like traffic rules or   

How to Create a Cancellation Policy?

The clear cancellation policy will diminish the total number of no-shows and allow you to open up an appointment opportunity for other clients. Here, you need to care both about the revenue of your company and the satisfaction of people. It is necessary to work out transparent rules to avoid customer’s disappointment and negative reviews. 

These simple hints will help you create an effective policy:

  • Set a definite time frame. For instance, a person can cancel the appointment only two days before the scheduled date.
  • Mention a consequence. For example, the client will have to pay a $30 fee if he/she misses the meeting.
  • Be straightforward. Do not use complicated phrases or long explanations. Instead, formulate easy-to-understand sentences that do not require much time to read and catch the idea.
  • Be clear. State your cancellation rules clearly and points to key rules directly in the booking form – do not make it an unpleasant surprise or a small font notice no one ever reads. 

Ideas for Informing Customers

Once you’ve decided to have a cancellation policy, you should create a visible notice and place it on the website or directly in the booking form. Make sure the sign includes a time frame for canceling the appointment and the consequence. Communication is the key to have an effective cancellation policy that diminishes no-shows. You should let the clients know about your cancellation policy no matter whether they are booking an appointment via phone, email, or online.

Some of the best WP booking plugins will also help you notify the clients when their time to reschedule the appointment without any losses is about to end. This notice may be sent as an email or an SMS notification. Such kind of business automation will boost customer satisfaction, and hence improve business results and brand loyalty.  

The Bottom Line

Cancellation policy is one of the things that some companies recognize as unnecessary until they notice a decrease in revenue. Each gap in schedule means your business is losing money. The clients may miss the meeting without notifying you beforehand. Unfortunately, other clients lose the ability to book the service for the reserved time too. 

Do not think that having a cancellation policy is a sign of bad customer service or greed; this is the sign of responsibility and the opportunity to protect your business. Running an easy-to-understand cancellation policy will make the customers feel their responsibility too, and will allow you to work in comfortable conditions without losing money.

DepositPhotos – cancellation policy

Sophie Zoria

Sophie Zoria

Sophie Zoria is a content marketing specialist providing services for mobile app development, virtual reality, and design companies. As a marketer and writer Sophie shares her thoughts and insights with readers. You can follow Sophie on Twitter via @SophieZoria.

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