Introducing Direct Debit for Customer Convenience

by David Griffiths, Finance Director, GreenThumb

GreenThumb was the very first lawn care company to operate in the UK, and now with almost 25 years’ experience, and almost 500,000 customers, it continues to be the pioneer of lawn treatment across the British Isles. GreenThumb has over 200 franchises nationwide, carrying out over two million lawn treatments each year. Typically the company has provided lawn treatments to customers every 10 weeks, and also delivers winter treatment services, extending its value proposition and enhancing customer satisfaction.

Convenience in collections

With many customers now requesting our services every 10 weeks year-round, we wanted to find a way of spreading the costs throughout the course of a year.

Our customers have traditionally paid for their services using cash or cheques, which is inconvenient and many customers are understandably uncomfortable about leaving cash or cheques for our franchisees where they could be lost or stolen. Furthermore, with many customers now requesting our services every 10 weeks year-round, we wanted to find a way of spreading the costs throughout the course of a year. Consequently, we sought to introduce a more convenient means of payment that also better supports our own collection and working capital objectives, including making prompt and transparent payments to franchisees.

Introducing Direct Debit Limited

In the past, we tried to introduce a direct debit scheme, but this was unsuccessful as we lacked the technical infrastructure and an appropriate partner. However, in early 2010, we revisited this decision and piloted a new direct debit scheme with the support of Direct Debit Limited. We chose Direct Debit Limited based on the recommendation of our cash management bank, who had received positive feedback about the company from other customers. Furthermore, as a family-owned business whose success has been based on recommendations and sound customer relationships, we were attracted to Direct Debit Limited’s business culture promoting long-term business relationships.

The first step in the project was to understand what the direct debit scheme entailed, which involved going through a large amount of documentation from BACS, and employing new personnel to administer the scheme. We implemented Direct Debit Limited’s payments management platform, PayCentre®, to manage the direct debit processes. One challenge was how to integrate this system with our existing customer relationship management system, which is a central part of our business, managing over half a million customers’ details. However, with Direct Debit Limited’s help, this is now largely complete and processes and interaction between the systems are mostly automated. We put in place two direct debit processes each month, so customers pay us directly on a centralised basis. We then use the faster payments scheme to make payments to franchisees on the same day.

We first implemented the scheme with ten wholly-owned franchises as a pilot project. We sent information to customers, explaining the benefits and enclosing a direct debit mandate form. Immediately we saw an 11% take-up rate, reflecting a considerable demand for a more convenient and secure payment method than using cash or cheques, a number that we expect to see grow rapidly in the coming months. In addition to the advantages for customers, we have more efficient collection and allocation to franchisees, and we are in a better position to sell ancillary services. For example, a customer paying a monthly amount is more willing to take on additional services for a small monthly increase rather than paying a larger quarterly amount on delivery of the service. So far, we are witnessing a 56% increase in cross-selling since introducing direct debits.[[[PAGE]]]

Roll-out and response

We now have three dedicated employees managing direct debits, and we are rolling out the scheme across our franchisee network. When we first introduced the scheme to franchisees at our national conference in November 2010, around 60% were in favour. However, having received more information, and seen the disruption to revenue streams that is caused by bad weather, when people may choose to cancel or postpone services, franchisees are now overwhelmingly in favour of the scheme. 

Service quality and competitive advantage

Implementing direct debits, working with Direct Debit Limited, is having a remarkable effect on our business, not only from a financial perspective. While customers may have cancelled services during bad weather, for example, which had a negative effect on the treatment programme as a whole, we now simply reschedule services that are paid by direct debit so that the treatment programme is unaffected and customer satisfaction is higher. Customers appreciate the convenience and professionalism that we can provide using direct debits, which is also a competitive advantage when seeking to source new customers.