4 Reasons To Rethink Booking Deposits In Your Business.

No-shows are the bane of a service business. Because you have limited time and resources to give to clients (and make money) it becomes essential that you don't leave slots go unfilled. So if you think you've filled the slot and no-one shows up it costs you time, money and resources.

But being told the slot or table is going to be free, even late in the day, allows you to potentially rebook or at least manage resources.

And that's why so many businesses have started to introduce Booking Deposits in response to increasing no-shows.

And that may be a valid response in some circumstances. But it should be a last resort.

1. It's assumes the worst of your customers.

The introduction of booking deposits changes the relationship with your customers  It assumes that each and every one of them is somehow going to stiff you or cause some problem This can be a subtle thing but it can creep into other interactions as well.

2. It adds friction to the booking process

When you add a deposits you need to increase the steps that a person has to take to make that booking. In particular you need to take credit card details and that adds friction to the process. That friction not only is in the extra steps and time but also in cognitive load. It causes the person to second-guess their decision. Now you might say that's the aim but this also applies to customers who would otherwise turn up. And that will reduce the number of bookings you receive.

3. It masks underlying problems

Introducing a deposit might seem like a simple way to fix a problem. And to some extent it is. But it's only addressing the symptoms, not the actual problem. 

For instance it could be that you make the cancellation process too difficult. Or you don't answer the phone fast enough when the customer is trying to cancel. Or ignore your Facebook messages?

Maybe all the no-shows are coming in from one advertising channel, in which case you would be better served by cutting that channel out. This would reduce the no-shows and save you money.

Perhaps you simply don't make it clear how the person should cancel.

These are just some simple examples off potential issues that you will never fully understand if you simply introduce a booking deposit.

4. It reduces further booking opportunities from the no-shows themselves.

Life happens. Even with the best will in the world sometimes people just can't cancel in time. If you take money from someone who's child had to be rushed to hospital do you think they are likely to book with you again? What will they tell their friends?

I believe most people are inherently good. They don't want to damage your business and they will cancel the booking if they know the difficulty it causes. If I'm right then high no-shows are a problem that can be mostly fixed without introducing booking deposits. 

That's not to say deposits don't have a place. They can be helpful if you're extremely busy all the time or they may be needed if nothing else works. But introducing them as the first response to a no-show problem can prevent you seeing real ways to improve your business.