Some pest management companies are morphing into professional service firms as they add on everything from plumbing to carpet cleaning.
by Anne Nagro, PCT Magazine
To meet revenue goals and overcome obstacles to growth, a growing number of PMPs are adding non-pest services to their client offerings.
Springer Professional Home Services, Des Moines, Iowa, struggled to maintain growth levels in recent years due to its market size, said President Jeff Springer. The company sustained $4 million in revenue and has good value per household, but with a population of only 380,000 to draw on, “We were just struggling growing.”
Bobby Jenkins, president of ABC Home & Commercial Services, faced a similar situation in mid-sized Austin, Texas.
The tightening economy influenced Craig Thomas, president of Craig Thomas Pest Control in Hyde Park, N.Y., to “do different things” three years ago.
And, A-Abel President Jay Moran in Dayton, Ohio, found that to gain incremental growth in pest control he’d have to expand into commercial services or other geographic markets, where these margins were less than ideal.
For these PMPs, diversifying offered far more potential.
Evolving Add-Ons. Jenkins first ventured into lawn care, offering fertilization, insect and weed control. Twelve years ago he entered the lawn maintenance market, which evolved to include irrigation, landscaping and tree trimming. Handyman service was added on in 2009, but when local regulations changed, requiring master plumbers and electricians to fix things like faucets and ceiling fans, Jenkins expanded into plumbing and electrical to keep these employees busy. Likewise, he found replacing ductwork and thermostats required an HVAC license, so he developed this trade as well. He plans to add on recurring pool service in the near future.
Thomas developed wildlife and home improvement divisions. Services like deck building, TAP insulation and exclusion systems delivered $450,000 in revenue in their first year. He expects these services to increase 20 percent in 2011.
Rodney Elmore, president of Commonwealth Exterminators in Lawrenceville, Va., started a concierge service for weekend homeowners, real estate agents and property managers around Lake Gaston. Among other things, his team buys groceries, changes linens, adjusts thermostats and leaves the porch light on for clients. He also expanded into well, septic and radon testing for real estate closings.
Luis Pabon, technical director of Catseye Pest Control in Castleton, N.Y., saw the potential for duct cleaning after an employee had the service performed at his home. “Our indoor air quality service took root at that point because we saw there was a great lead in to many of our residential customers.” The twice-yearly service includes a special HVAC filter that Catseye crew members inspect and clean during regular service visits.
Adding duct cleaning opened eyes to “a whole new world,” said Pabon, who expects the new service to become one of the company’s fastest-growing divisions.
Pest control accounts for only 20 percent of A-Abel revenue. Roofing, plumbing, heating and air, electrical, carpet care and fleet services make up the rest. In the Dayton market, each service has one or two national competitors and numerous small ones, said Moran. “We compete well in those environments,” he said.
Pest control was an add-on for Moyer Indoor Outdoor in 1994 and now contributes 15 percent of revenue, or $3.5 million. The Souderton, Pa.-based operation, which was founded 140 years ago as coal and feed company, also offers heating and air, pool and spa, plumbing, lawn care, tree and shrub, water quality and more.
Adding services isn’t the same as a typical start up, said Jenkins. ABC’s huge customer base is attractive to companies like HVAC supplier Lennox and UgMO, which makes wireless underground soil moisture monitoring devices for irrigation systems. “It’s worth them investing with us,” he said.
Companies also can hook up with good, regional tradesmen who want to expand their offerings, said Moran. Since 1997, A-Abel has added services by acquiring independent local businesses. Moyer Indoor Outdoor likewise has grown through acquisitions and mergers, said General Manager Bob Williamson.
But size does matter. Companies need to reach a “critical mass” to diversify. “We haven’t gone into these other services without losing money for a period,” Jenkins cautioned. “The pest control business has allowed us to expand into these other services” and attract quality people.
Recurring Revenue. The key is expanding into services “similar in competence to what we do already” and that provide recurring revenue, said Williamson.
Springer agreed. He added handyman services and attic insulation, and although insulation brought in $1 million this past winter with help from local utility rebates, neither service delivered recurring revenue like pest control. So two years ago, he devised a quarterly carpet cleaning service that is “a unique business model for that industry.” Initially carpets in the entire house are cleaned. High-traffic areas are treated each quarter. Like pest control, the service is guaranteed — spills are spot-cleaned at no charge.
The program is growing near the same pace of the company’s early rise in pest service. “It seems to be a natural fit,” said Springer. Carpet cleaning, handyman and insulation services now account for 30 percent of revenue, while pest and termite make up the rest.
Jenkins developed a service agreement for his HVAC offering, a “new thought process” in that industry. It provides a twice yearly check-up and maintenance and a reduced rate for repairs. In pest control, “we innately understand the value of service agreements” and this has allowed his company to jump ahead of HVAC competitors. In fact, Jenkins sees HVAC as his company’s biggest growth opportunity.
“If you live in central Texas, and your air conditioner goes out, you’re going to fix it before you worry about even eating,” he said.
Master of None? Offering a wide range of services begs the question, are you good at any of them?
Convincing customers of expertise across service lines is a challenge, admitted Williamson. “We work to communicate this at every opportunity,” he said.
Jenkins thought “long and hard” about this issue. “We’re trying to brand the service person who shows up on the doorstep as a specialist.” The tagline, “Specialists for your environment,” is used everywhere. Service trucks feature similar signage, but are singled out for pest, lawn, plumbing and other trades. The goal is to let customers know they’re getting a credible specialist who meets the high personnel requirements of a long-standing community business. “I think that’s working well.”
Thomas doesn’t plan to expand far from his core business, but “why would I recommend another company that potentially could take over the pest control?”
Jenkins, who has five master plumbers on staff, said managing different businesses models can be difficult but said similarities exist. At the end of the day, “we are a service company.”
On the other side of the spectrum is Black Pest Prevention in Charlotte. It only offers three services: an annual termite renewal, combined termite and pest service, and pest service. “We don’t do bed bugs, we don’t clean gutters, we don’t do lawns, we don’t do moles, we don’t hang Christmas lights,” said COO Mike Davis.
This allows Black to “concentrate on what we do best.” Adding services adds layers of complexity, which can make it harder to be profitable, he explained. “We don’t care about being the biggest, all we care about is being the most profitable. We keep things simple.”
Relationships Rule. Customers want to do business with people they trust. “The relationship matters most,” said Williamson, who will resolve every issue to the customer’s advantage. “We want them to feel good about who they’re dealing with so they buy other stuff from us.”
Using one vendor for multiple services can make life easier. “If it simplifies things for the homeowner, we’ll benefit as a company,” said Moran.
But every service line has to deliver value, and that requires trusted employees, said Thomas.
Companies can’t be great at some services and pretty good at others, cautioned Jenkins. “We have to ring the bell and hit excellence in every single service we do,” he said.
The more services you provide a customer, the more valuable you become, he reminded. Likewise, the more services your customer buys, the more valuable she is to you. Jenkins strives for a relationship where “we can’t live without each other.”
The Industry’s Future? Diversification looks like it’s here to stay, whether it’s adding closer-to-core services like wildlife and mosquito control or wider-ranging ones like HVAC and home improvement.
“If you want to remain a viable source, you’ve got to be able to adapt to the current markets and see what folks are in need of and find that niche and fill it,” said Pabon.
PMPs are operating in a slow-growth, no-growth category, reminded Steve Good, senior vice president of business development at Terminix in Memphis.
“We all have to get very creative and very engaged with our customers in order to continue to meet our goals and objectives and satisfy the customer on all fronts.”
Good is a member of the National Pest Management Association’s business development committee, which found most PMPs have not deviated too far from core services.
“When done right and when done carefully, extending beyond our core is something we all have to take a look at doing.” As business development lead for Terminix, Good is “looking at opportunities left and right.”
Springer said numerous members of Associated Pest Control Services (www.associatedpest.com) are looking at new growth opportunities. “I think other folks in the industry are going to catch on to that.”
Marketing Insights: Adding Non-Pest Services
PMPs shared insights for setting their companies apart from competitors and getting the word out to customers about their add-on services.
Finding the Niche. When ABC Home & Commercial Services entered the plumbing business, “We didn’t want to be a regular plumbing contractor,” said President Bobby Jenkins.
Instead the company found a niche: tankless water heaters. Good products were on the market but the industry hadn’t embraced the new technology. ABC saw an opportunity to own that market segment and soon became the biggest installer of tankless systems in central Texas.
A Lennox dealer, ABC is differentiating itself further by aggressively marketing and installing the new solar-based SunSource Home Energy System, which uses solar energy to generate electricity for heating and cooling, and lights and appliances.
With all services, the company looks for a green, sustainable fit, said Jenkins. Cellulose insulation increases attic R-value, solar energy operates the HVAC system, tankless water heaters heat water only when needed. On the lawn care side, compost dressing feeds lawns organically, and underground moisture monitoring devices prevent irrigation systems from overwatering. “It’s a conservation approach.
Cross Selling Services. Selling multiple services to existing customers is “our biggest opportunity and our biggest challenge,” said Moyer Indoor Outdoor General Manager Bob Williamson. It’s a discipline the company tackles daily. It “doesn’t happen overnight.”
Cross selling requires competent service professionals who can solve customers’ core problems, recognize other issues that require service, and build trust by being professional and delivering beyond customer expectations, said A-Abel President Jay Moran.
Moran doesn’t expect employees to actively sell other services, but rather point out issues customers may want addressed and explain how the firm can help. “We expect them to be ready for it when those questions arise.”
At Springer Professional Home Services, 75 percent of non-pest sales come through technicians, said President Jeff Springer. All are trained and offered incentives to identify opportunities like broken ceiling fans, dirty carpets or attics in need of insulation.
Occasionally, Terminix service professionals leave behind flyers for ServiceMaster-owned TruGreen lawn care, said Terminix Business Development Senior Vice President Steve Good. Their main focus, however, is providing efficient, effective service and selling services within the Terminix family, such as moisture control, termite protection or attic insulation. Each business unit has its own goals and objectives and “we try to stick with what’s core.”
PMPs target existing customers with telemarketing, invoice stuffers, direct mail letters and social media. Williamson sends biweekly, trackable e-mails to 7,000 of the company’s 20,000 customers. Many give discounts to try new services.
To reach new customers, Jenkins uses TV and radio ads that follow a similar formula but focus on a specific service, like HVAC, handyman, tankless water heaters or rodent control. Testimonial ads featuring long-time customers who’ve tried other ABC services have been “very effective for us,” he said. So have ads that highlight all the services in one segment. A lawn ad, for example, features lawn care, mowing and irrigation services.
ServiceMaster does some direct marketing to customers of its company-owned business units. For example, a Terminix customer may receive an offer for an American Home Shield home warranty, or an American Home Shield customer may get an offer for a Termite Inspection & Protection Plan.
The opportunity to have customers use more than one service “is very attractive” and gets a “significant amount of attention within the ServiceMaster organization,” he said.
New Services, New Name. Adding on services caused some companies to change names. Moyer & Son became Moyer Indoor Outdoor in 2008 to better explain its service areas and update its image.
Two years ago Jenkins switched from ABC Pest and Lawn to ABC Home & Commercial Services. “Now we feel we’re not limited to things we may choose to do,” said Jenkins. People “may not be able to identify every service we provide, but they know ABC does a whole bunch of things.”
In 2009, Springer’s marketing firm recommended a change to Springer Professional Home Services. He worried taking “pest” out of the name was a mistake, but his fear has been unfounded. “In fact, our lead count was actually up this year.” – Anne Nagro
View full article at PCT Magazine online.