We also see opportunities around things like shortages, that are making sure that we have a process to verify that the truck has been loaded accurately and that all of the product that needs to go to our customer is, in fact, being delivered to our customer. So those are opportunities around the perfect truck and loading processes, and we’ve got folks out in the field now working through programs to address those things. So we feel very confident that we’ve isolated these challenges and opportunities, and we have very clear, deliberate actions around specific things like on-time delivery and stopping shortages and delivering full loads to customers. The great news is that our culture is in a great place as it relates to wanting to do a great job for the customer and our teammates are serving our customers really well as it relates to the relationship and the experience.
But we just need to — we get tighter and do a better job on being on time, being complete, being fully loaded and putting metrics around that, so that we can ensure that we’re delivering consistently the expectations that our customers have for us.
Shlomo Rosenbaum: Can I just squeeze in one more? Just what does it mean, you’re not executing as expected on new wins? Does that mean that you’re not getting the volume of new wins? They’re not starting up in the way you expected? I’m just trying to understand what that means in terms of the volume?
Kimberly Scott: Yes, absolutely. So it is volume related, and it really comes back to the way that we’re measuring our sales performance is revenue dollars per sales teammates. And so we had expectations that the revenue dollars per sale teammate would continue to ramp and increase throughout the year. We are not seeing that ramp to the degree that we needed and expected. And so this is really about improving the close rate and also improving the amount of revenue per deal closed.
Shlomo Rosenbaum: Thank you.
Kimberly Scott: Thank you.
Operator: Thank you. Our next question comes from Andrew Steinerman with JPMorgan.
Andrew Steinerman: Hi, Kim. I wanted to ask about the price elasticity of investors [ph] is client based. As you articulated, your plan had been just a couple of months ago for a targeted in-year price increase and then you pivoted to a price decrease. I surely caught that you’re saying the clients are claiming it’s about service. My question is, might it also be about price and I’m talking about price versus other uniform services providers?
Ricky Dillon: Thanks, Andrew. I would take this one and I would say, as Kim discussed, our service efficacy and price sensitivity go hand-in-hand. And as we’ve spent the time analyzing the reason for quits and the magnitude of the carryover losses, we made the determination that we would deliberately moderate the pricing to focus on retention and customer efficacy. So when you — so from the back half of your question of is this about price sensitivity or price elasticity or is it about service, we view those as tied closely together. And as Kim described, if we improve the customer efficacy we have much more, less sensitivity to pricing, and we can get back to a more normal pricing environment. I would add that we do continue to take our normalized annual pricing, some of that’s surgical, more specific that as we’ve described earlier, value-added activity and specific product categories, et cetera. We will get back to that as we work on customer efficacy.
Andrew Steinerman: Thanks Rick.
Operator: Our next question comes from Andy Wittmann with Baird.
Andrew Wittmann: Great, good morning. Thank you for taking my question. I guess I wanted to understand a little bit more about the revenue outlook here. I understand the comments that you made here about the sales not ramping as much as you previously forecasted. But some of these 23 lost customers that were significant in nature are actually a tailwind to your second half growth. Obviously, you still have the direct sale headwind. I guess, are you factoring in more risk from some of these national accounts that you had to reprice lower as a factor into that second half or are there known losses that are coming that haven’t been disinstalled yet? Maybe you could just talk about some of the moving pieces to get you to that flat to down revenue outlook, I guess, in a little bit more detail.
Ricky Dillon: Thanks Andy. When you think about first half to back half, we do have, as we exit customers, we do have that final billing. And most of that is behind us and it impacts the Q1 and Q2, as I noted. When you move forward to the back half, you get the full impact of those losses, including the full impact of the couple of national account losses that we described. So that’s part of the increased back half impact of lost business. I would say we are not expecting losses or incremental losses to impact our back half guidance. And so as we’ve said, our retention is in line with expectations. And that improvement we showed at about 93% from a recurring revenue retention is really driving our confidence that this is not about lost business, and we’re kind of meeting the lost business numbers that we kind of entered the year expecting.
We did talk about the large direct sale national account, and that’s excluded from our retention calculations. And so that does also impact kind of the front half, back half revenue along with the step down from a seasonality perspective in the front half, back half. And so while we certainly are focused on lost business, we think our efforts are driving the improved retention in here and the known losses coming into 2023, we get the full impact of those losses. As you can see from the retention chart that we’ve included as well, a lot of those losses came or the losses accelerated in Q4. So unfortunately, we will live with them through the end of the year as well as moving past the exit costs in the back half of the year.
Andrew Wittmann: Kim, just as it relates to the service quality, you mentioned things like the perfect load and you’re not there today. How much are operational things like this or how much can they be attributed to things like doing very complicated reroutings of those trucks and loading them differently today than maybe they’ve been done in the past or have these service shortfalls been there the whole time, and you’re just starting to realize them more as you’ve rolled up your sleeves? I guess I’d just like to understand kind of the source and the genesis of some of the service issues that you’re talking about today.
