Seth Garber: If you want to grow your business, why are we focused on things that take tons of time and hours in order to develop something for just-in-case, maybe, sort of, and kind of you might grow in the future?
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Seth Garber: Fat Pat, how are you?
Patrick Baldwin: I'm great. Thanks for having me in Tampa again.
Seth Garber: It's pretty awesome. I don't usually get to do this with you in the same room as me so it's pretty exciting to be hanging out with you.
Patrick Baldwin: It's interesting when I get off the airplane and walk back into the Tampa airport, I was like, “I've been here before,” because I'm here a lot, Seth Garber.
Seth Garber: It's a very easy airport to get through. I can make it from my house to my flight in twelve minutes, which is always exciting.
Patrick Baldwin: What happened? There's something happened where I happen to have a black t-shirt, Kelly shows up in a black shirt, and, of course, you have your one black shirt. We took that picture and posted it in Growth Group by Pest Daily on Facebook. You got people like Jeff Gorman that do their own creative license. All of a sudden, I have hair. Thank you, Jeff.
Seth Garber: Jeff, I want to let you know that we did invite you to come to dinner with us. At the exact same time that you told me you were not going to make it to dinner with us is we get this incredibly well-done Photoshop of Patrick with hair. You should have just made dinner. It would have made it a lot easier. However, the group over there probably wouldn't have gotten near the enjoyment.
Patrick Baldwin: Thanks, Jeff, for my new profile picture. Seth, we're going to Orlando. WorkWave has got their conference. You've got a meeting there. I'll be hanging out with Paul and the Mexican. Dylan is coming to town. Paul is speaking there. It would be great. You're going to leave me in Orlando. Thanks for the free ride.
Seth Garber: No problem.
Patrick Baldwin: We've got a few questions here. Before I get to the questions though, Energy is three weeks away. Are you counting?
Seth Garber: Energy is on the February 1st and 2nd 2024 down here in Tampa. It's sold out. We're excited about it. I'm definitely counting down.
Patrick Baldwin: I have one question for you. Are you ready?
Seth Garber: I'm always ready.
Patrick Baldwin: It's going to be phenomenal. We've been talking through it and I know you and your team are getting everything ready and I'm super excited. Great speakers and great panels. It's going to be awesome.
Seth Garber: I'm excited about it.
Patrick Baldwin: Seth, you were on a couple of episodes ago. This question is going to make sense. If you haven't heard of episode 155, go back to one 155. A follow-up to that, we're talking about subscription services and Gary asks, “When selling services, do you think the number should be communicated, the actual number of treatments that are part of the plan for a subscription type billing?” I thought it was interesting. In the podcast 155, they were discussing separation between number of services and billing. We create that problem when we tell them the number of services we're going to provide.
Seth Garber: This is a great question and I'll tell you why I think it's so good. Let's start at the very beginning. If we think about subscription, the real benefit of a subscription is that we're pushing forward the fact that we're covering that property for the year or whatever the case may be and we're making it easier to pay or we're making it easier to sell whatever the case may be. Communicating the number of services is part of the sales process and that's a choice from each company.
What I do see a lot is the fact that if we say, “We're coming out every quarter but we bill you monthly,” or, “We're coming out every other month and we're billing you monthly,” whatever that looks like depending on the program or service. What I see a lot is that the customer will give you that phone call when their credit card gets hit the following month. When that credit card gets hit, what they're doing is they're saying, “You never showed up.” That's the problem that Gary is thinking about.
There are a lot of ways to prevent that and we can walk through those in a second. If you'd asked me this question a couple of years ago, subscription originally got hyped up. We ran a subscription to my company years ago. What I would say is that it was important. What I'm seeing a lot, even at my own home now, is that the proposals that we receive from the fertilization companies or the pest control companies is giving us a range of number of services, which I found interesting. It says, “We will come out and treat your lawn. We'll do your fertilization and shrubs between 8 to 10 times a year.” I had never seen a company communicate that way.
However, being that I'm from the industry, I looked at it and I go, “Cool. That makes sense.” It threw me off a little bit. If it threw me off a little bit to see it being an industry guy, it possibly could throw a consumer off. With that said, I would love that to be the case. At the end of the day, any subscription service is probably guaranteed in between services. If we can get good at giving a range or saying you're covered, we could hit a home run from an economic standpoint because it would give us the ability to increase or decrease services at our leisure.
If we look at the models, if we can get the right monthly rate or the same monthly rate and some markets move to a triannual and know what our risk tolerance is for a callback, we can make a ton of money that way and we do that in a lot of markets today. To answer his initial question, for a good portion of consumers, it's a yes and for some no.
If I take a step back, the thing that we have to recognize is that the more that we're communicating, “It's X amount number of services. It's this.” Are we making our service so important that the customer has to think about it when we're coming out or do we get better at talking about the fact that they're covered? I would love to talk about the fact that we're covered in all honesty.
Do I want pest control or what we do so important that the consumer is always thinking about us? No, I don't. I want them to swipe their credit card and I want them to never call us. I want them to love us and love us for not knowing when we're there and not there and know that we're doing a good job, that's what I would prefer. I hope that answers his question pretty thoroughly.
Patrick Baldwin: That was thorough. I had not thought about the range and the number of services. I could see that helping. In some cases, they're on a bimonthly service and then thinking about going quarterly and maybe dip their toe in the water. When I talked to them, it's like, “What are the large national players in your market doing or the large regional players in your market doing?” From a technical perspective and reduced retreats and callbacks, look and see what they could do. The materials continue to advance. Maybe they're missing some part of the protocol to keep those retreats down if they decrease the number of services.
That being said, from a sales perspective, I like the range idea. The range could help convert people in frequency. There are two things they're selling. Number one, it’s how they perform the service, “We're going to dust weep holes, we're going to knock down cobwebs or knock down wasp nests, and we're going to do this many feet up and this many feet out. We're going to put bait around the outside of that.”
I'm thinking about how they're all posturing and selling what they're doing, what we're doing, or what I've done, and then the peace of mind or whatever the non-specific thing. “If you have any problems, we're going to cover you for these pests. We're your bug guy. You let us know if you need anything. You're warrantied year-round.” Are you saying it's one or instead of selling the first, you're selling the latter? Is it a combination of both?
Seth Garber: My opinion is, on the financial side, how do we maximize our average value per stop? That's where my mind's at. If I was going to build a sales protocol for this, my sales protocol, after we got through the whole consumer-based buying methodologies and all the things that we talk about, if we described our service, the choice would simply be, “This is the way we do things. We come out on an X, Y, and Z basis. I'm sure that you understand how that's going to solve your problem.” The consumer says, “Yes, I would love to test.” What if we say, “It's X amount of dollars per month.”
We eliminate the concept of how many times we're going to come out and see if our close ratios are the same if they are great. For example, you have a residential pest control company. A residential pest control company has a thousand clients. They have a thousand clients and they do quarterly service so that means that they're responsible for 4,000 quarterly visits per year. Let's say monthly billing, if we could take that same company and the monthly fee stayed exactly the same and we moved that company to a tri-annual service and let's say our current re-service rate is 10% and our re-service rate went to 20%.
Let's think about the math here. If our current re-service rate is 10% at 4,000 stops, that means that we have 400 re-services per year. If our re-service rate goes to 20% on the same amount of customers but we go to tri-annual service, now we're only doing 600 re-services per year. Would I take dropping 1,000 extra services to triannual to take on an additional 200 extra services? Every single day of the week.
Patrick Baldwin: I can pick up with your math. I was impressed.
Seth Garber: Wouldn't you?
Patrick Baldwin: Yeah.
Seth Garber: If our churn goes up 2% or 3%, who freaking cares? Honestly, who cares? Our churn goes up 2% or 3% potentially, maybe it doesn't fit the perfect model for our industry and maybe it doesn't fit the absolute gold standard but I can tell you that you're going to see it in your bank account.
Patrick Baldwin: 100%. I'm not 100%. That makes great sense. I've always leaned towards what's happening in the market and what's going on with the environment. At the end of the day, you want to have less services as little as you can. I think about Mike Rogers’ Killingsworth once a year. That's the model I wouldn't follow. It makes things probably too difficult. It's stretched that way. Listening to Paul, it makes it hard at the end when you're thinking about an exit. I'm not saying once-a-year service. In Central Texas, 4 times a year to 3 times a year, it could happen. There's enough humidity there to protect the materials and all that.
Seth Garber: As an operator, because the majority of operators grow up, they start in the service function, they move into the management function, and then they decide they want to go on their own. That's the majority of people. There are a lot of companies that aren't that way. With my background in sales and finance, they come down to the finance background and then they build different kinds of businesses.
If I'm a normal operator, $1 million to $2 million, I've probably come up to the service side of this business. Historically, consumers push us to more equals better. The more equals better. The fact is that these products work really well and we're the subject matter experts from a technical standpoint. As a subject matter expert and as an owner who's come up the service side, more isn't better and using the products right is better. All we're talking about is what's the risk tolerance of the business on their application method versus their financial method? That's all we're talking about here.
I love this question, it's great. I don't think this is something that a company should just go, “We heard this. This sounds awesome. Go do it.” Conceptually, you have to think about your business, and to your point, your market. There are environmental conditions that can cause different things. I love this question. I'm glad Gary asked it.
Patrick Baldwin: I do love your easy disclaimer there, Seth, that everything that is said on The Buzz does not necessarily mean that, tomorrow, you need to go start executing on it. Even at dinner, when you and I were talking, it was like, “I'm going to give some thoughts, some high-level make-you-think, and then you've got to figure out how to execute on it.” I’m talking about Energy specifically. Gary, thank you for that question. We had some other questions come in. Are you ready for this?
Seth Garber: I don't know what's coming. I know that people sent them over and I know that I was supposed to look at some of these questions but I chose to go the other direction. I figured we'd just get better and maybe more polarizing answers this way.
Patrick Baldwin: Let's see what controversy you have for me. Mr. Garber, I want to know what is the easiest way to build 2,500 clients in a season? This came in from Eric.
Seth Garber: The easiest way to build 2,500 customers in a season. I'm going to answer this in a couple of different ways. The first part of this question that I struggle with is the concept of season. If I'm building a business today, I don't think in things of season. Season is something that was brought to us as door-to-door got a lot larger. If I'm building a fundamental pest control company outside of the door-to-door world, I'm not thinking in terms of season, I'm thinking in terms of annual cycle. What I mean by that is that the cycle changes.
People buy pest control in a lot of markets all year round. We were challenged with this years ago and it's been solved. Years ago, people would come back and go, “We're freezing cold weather markets. No one will ever buy our services in the winter time.” This was this big talk. We took that challenge on. Outside of one market or two markets in the country, they were incorrect. When I start to think about building 2,500 customers in a season, I think about, “How would I go to market today and build 2,500 customers over a year?” It's probably the better question for me.
The way that I would do it in a conventional sense is straightforward. It depends on scope, scale of the business, financial aptitude, and different things like that. If I was to do it today, I would go fundamental. If I was a company that has less than 2,500 customers and wanted to add 2,500 customers and had economic constraints on doing it, I would follow the way it's been done forever. I would take 7% to 10% of my money. I would go conventional advertising. I would learn how to measure my metrics incredibly well and not just trust in these yoyo marketers out there in our industry that have no idea what they're doing. I wouldn't look for a silver bullet and I would understand my metrics. I would start at the top.
What's my close ratio? If my inbound close ratio is less than 60% or 70%, I would start by looking at my inbound sales process. From there, I would work on that. Once that's good, I would take a look at my advertising spends. Once I took a look at my advertising spends, I would be crystal clear on how much money it would take me to generate 2,500 customers only through advertising means. That's going to let me know exactly how much money at the most expensive way to build the customers it would be.
From there, once I knew how much money at the most expensive way, because advertising is always the most expensive, after I knew that, I would take that number and I would determine, “How do I do it with less money?” The way that we've seen this happen in the most effective ways is what we would do is put some type of a sales organization in place, maybe a small door-to-door, or maybe some type of a list-based sales team where it's outbound into a targeted list.
I do like, in a lot of markets, direct mail, which is crazy but it works well, and that's what I would do. I would take the entire year and I would take a look month by month how many customers do we think we can sell? From there, I would determine how to market to these customers and sell it. That's what I would do.
One of the things that I found, and this data is available, is that one of the simple drivers of looking at the market over a year is that you can take a look at the home inspection data. The home inspection, data based on how people are buying homes, is pretty accurate into the times of year when you can grow your pest control business. You can look up average number of home inspections per market by year and it'll tell you, by month, how many are happening within a market.
From there, how many people are moving in? From there, you can figure out not necessarily just new homeowners but you can figure out roughly what your buying cycles are for pest control. We have to also remember that the pressure that gets put on advertising tends to happen within season. The big companies come in and spend tons of money during season.
As a small company or somebody trying to put 2,500 customers on, it's hard to compete against those guys. If you're a $1 million dollar company or $2 million company and you're trying to advertise and compete against Terminix or any of the large companies, you simply just can't. The marketers will tell you you can but you just simply can't. One of the other tactical things that I like that can grow business is that when the big companies aren't marketing, you increase your advertising spend and that works well in some markets. That's how I would do it.
That's probably a little bit more complicated. The easiest way is just go buy an undervalued company, which we do a lot in our world. A lot of our clients buy undervalued companies or companies that need to be fixed. We just fix them and grab 2,500 customers. It's the way I would think about it. I know who asked that question and I know that by listening to it, he's probably written seventeen pages of notes and rethought his entire CRM sales process at this point. What do you think about that?
Patrick Baldwin: I thought you'd come out of the gate and say, “Acquire them, that would be the easiest way.”
Seth Garber: I forgot that we were talking about the easiest. I got on my whole soapbox there for a second.
Patrick Baldwin: A little tangent. You did also say that you would spend a traditional 7% to 10% advertising and get the return there but that's the most expensive form of acquiring customers. I don't know if you meant that because it's unproven and you're testing different advertising methods and you're going to hone in on which ones get you the best return. Advertising spend is a lot cheaper than acquiring customers on the doors or a lot cheaper than acquiring customers through acquisition. What do you mean when you're saying advertising is the most expensive?
Seth Garber: Let me clarify that. Let's leave door-to-door out. Here's the thing with door-to-door, a lot of companies attempt door-to-door or the higher third-party door-to-door company sends their guys in and that's okay. If I'm a small business and I get a door-to-door guy or two, I'm at a big risk because what if that guy fails during “season”? What if they're not good or what if they sell bad business? I don't want to say that's we typically see but we see that a lot or we see their sales numbers skyrocket. They'll sell 700 or 800 accounts but then the following year, we lose 60% or 70% of them.
The way they're incentivized doesn't make rational sense if you're a small business. We've all heard the stories and we talked to lots of people who go spend hundreds of thousands of dollars on these teams or get into a hundred of thousands of dollars contract and then the following year, they lose all their customers. We've seen that a lot. I'm not beating up door-to-door. I like door-to-door. What I'm saying is that if you want to start to get a basis for the most expensive conventional way to build your business is that you have to understand how much it would cost to build it through conventional advertising first.
We gave this presentation and we've given a couple of different ones but let's say we have 1,000 customers. Based on 1,000 customers, our close ratio is 50% and that means that we have to generate 2,000 leads. Let's just keep it stupid simple. If it costs us $100 to generate 2,000 leads, that's $200,000, fair enough. that's expensive to generate those customers. If I'm going to look at less expensive and faster ways, can I spend less than $200,000 to generate the same amount of customers? That's what I'm saying. Does that make sense?
Patrick Baldwin: Yeah.
Seth Garber: In some markets, if you're going to go open Orlando, Florida, it might be more difficult. If you're going to go open a tertiary market, you can probably do it for tremendously less money. Some of these large companies have incredible strategies around how to do this effectively and how to create efficiency. We were in a meeting with a top twenty CEOs, you and I, and the strategy that he discussed with us were incredible. They were super simple but they were incredible. There's a reason why these companies are scaling the way they are and do what they're doing. That's their secret sauce to the things that they do but there's some unique ways to look at these businesses.
Patrick Baldwin: Are you ready for more?
Seth Garber: Bring it.
Patrick Baldwin: Cheapest way to build out SOPs.
Seth Garber: What a good question that is. As a quick asterisk to this discussion, our organizations do this. Pest Daily is the only development partner out there as well. We do this a lot. If we start with the cheapest way, we're not thinking about SOPs correctly. The first thing I would always ask somebody is that if we're going to develop SOPs, why are we doing it? SOP is this catchphrase that, for whatever reason is, has went through our industry in the past couple of years.
As you start to develop SOPs, you have to be at the right phase of your business to think about this. To me, if you're a sub-million-dollar company and you're thinking about all your SOPs that you're looking to build, you're thinking about the wrong thing. Go build your business up a little bit bigger and then slowly start to develop basic playbooks, basic SOPs. To me, developing big, extensive, and complex SOPs as a sub-million-dollar company is a huge time waste and, honestly, it's a lot easier than growing your business. That's my perspective on it. A little polarizing.
If I was going to think about the cheapest way, I would think about, “Am I building an SOP for the right reason?” An SOP isn't something that should be highly cost-driven. An SOP should be something that's driven by what your business needs and creating consistency within your organization. I probably wouldn't package up cheap SOP or inexpensive SOP. What I would say is build the right SOPs for the gaps that you have in your company to create QA measures within the organization.
If you want to build a cheap SOP, go download ChatGPT, type in, “Build me an SOP for this,” hit enter, and you have the cheapest SOP in the world. If you want to have a world-class SOP, you call a top-tier consulting firm, they work with you, they design it for you, they identify the gap in your company, they build it out perfectly, they handle the implementation, and they make it part of your ongoing playbook. You could spend tens of thousands of dollars on that. Whoever asked that question, sorry, I don't know if that's a good answer for you or not.
Patrick Baldwin: One that I hear you saying is it can be a distraction, “You need to go grow your business of your sub million dollars.” Sometimes you're just looking for something to do, you don't know what to do, and you're like, “I'll go build an SOP,” because you have the time, you're distracted, or you don't have your blinders on growth, let's say. I'm hearing you say it's reactionary. When there's a gap in a process or something's happening inconsistent, the reaction is to go build something either in video form or in writing to put your team on the same page. Is that right?
Seth Garber: At the highest level, yes.
Patrick Baldwin: When you think about rules, sometimes you see rules out in public and you're like, “There's a reason that they wrote that.” Because something happened, they had to go and create a rule, like, “Don't go in the swimming pool if you've had diarrhea in the last 48 hours.” Someone must've caused a problem in that swimming pool. Are you saying that with SOPs, it’s because there's a problem and that's where it's driven from?
Seth Garber: For the SMB, I would tell you that that's what we see the most, “We have these problems in our company and we need to write these.” When you get into the larger companies, if you get into companies that are $5 million-plus, this is a whole different ballgame. For the growing company, if you really want to grow your business, why are you focused on things that take tons of time and hours in order to develop something for just-in-case, maybe, sort of, and kind of you might grow in the future? Go build your business.
Everyone knows what we do. We build crazy different models. We have all these KPIs. We build all these playbooks. That’s what our companies do and we do it in a pretty unique way. I have companies that will send us messages and go, “Here are 75 KPIs I want to measure for my business.” “How come?” “I saw on a Facebook post that this is what I should do.” “Great. No big deal. Send us the information about your business. We'll take a look at it and see.” “How many technicians do you have?” “One, me and my son.”
I'm making this a little bit of extreme examples so people understand. “You want to go track 75 KPIs for you and your son's business.” The reality is that what are you even tracking? What you're tracking is how does your checking account look right now? Do you have enough money to pay your bills and to take care of your family through it? However, companies will go chase that for days and days versus focusing on going to get new customers. Do you see what I mean?
What I'm saying here is that there's a time and a place. If a company comes to me and says, “How do we grow our business?” Let's call it a $1 million company. We're not writing SOPs. Maybe we're going to write a sales playbook for them but we're not writing SOPs. We're not writing technical service protocols because why do they need it? It's a little of a soapbox there but there's a time and a place. If you want to start building gold-standard SOPs, you have to have the right resources, the right assets, and the right people in place. You have to be the right size and it has to be a core competency within your organization or you need to spend the money and get it done right and get it implemented correctly.
Patrick Baldwin: I'm curious on the flip side of that. For someone that has that as a core competency and then develops out the standard operating procedures to a tee and brought throughout the organization, service, office sales, and they go all out, what effect does that have once those are done? If there are the right size, they have all their stuff together, and then they go back and document it, do you see some exponential return on investment for what they've done?
Seth Garber: That's a broad question. What it comes down to is that they can go build the most beautiful managed everything. The only question is that are they implementing it and are they following it? I have a good friend in the industry who built a 700-page technical manual for his team. He was a $1.7 million company and he sent me a 700-page manual for his team. It might've been a little less than that but it was a huge manual. He spent an entire year on it.
The first question I asked was, “Why?” “Now we have the best training in the world.” Arguably, they probably do. The question is, “How are you going to implement that? How are you going to use it?” Are you going to go to your team and call back against it when something happens? Some companies do that well. One of the clients that we work with, who you know, is they do it well. They're roughly a $9 million company and they do it incredibly well.
An issue happens at the company, they pull up their SOP, and they call them out if they skipped one step. Honestly, they're in a niche business and they're crushing it right now. On the other side, they may have a 700-page SOP that they never use. Do I see exponential scale? I do if it's used and if it becomes part of their standard operating procedures of how they do their one-on-ones, how they manage their staff, how they hold people accountable, how their QA reporting is in the field, and how their service manager manages their guys. I definitely do. If not, we've got a bunch of paperwork that sits in a file somewhere and honestly, nobody does shit with it.
Patrick Baldwin: Both those instances both came to mind as I was asking that question.
Seth Garber: If I'm reading this right now, what I'm thinking about based on this is that let’s say I'm a $5 million company and my SOPs are okay. It's probably time to start tightening them up a little bit if you want to go from $5 million to $10 million. You can get there by luck and you can get there by hard work, tenacity, and making it happen but you probably need to start putting things in place. The other part we have to remember about SOPs is not only are they the guiding document to the business but they also create a deep level of accountability and give you some protections.
One of my favorite things to do with SOPs is that once we define them, I like them to be introduced into a meeting. I also like to have the staff sign off that they clearly understand it and that the staff has the ability to explain it back step-by-step to the supervisors. The supervisors stay focused to be sure. Now, we're getting somewhere. That's what I would recommend. If you're a company and you got your SOPs sitting on a shelf, go do something with them. If you're an SMB or a company that's under a $1 million or $2 million and you're thinking about writing SOPs, go grow your business, get a little bit bigger, and maybe keep them basic for now.
Patrick Baldwin: Do you see some in video format?
Seth Garber: Yeah, of course, 100%. We build them. Pest Daily’s SOPs are in video format, quite a bit of them is in there.
Patrick Baldwin: The cheapest way to build a SOPs is subscribe to Pest Daily. I didn't see that coming.
Seth Garber: Do you want some good guiding ways to build a business? It's simple for free or cheap. Subscribe to this if you're reading this. You're learning about some of the best leaders in the entire industry here. That's one way to start thinking about your SOPs. If you want to use our product, go to Pest Daily. You have hundreds of courses that you can go take and start to develop your own SOPs.
Patrick Baldwin: Free plug, way to go.
Seth Garber: I'm sorry. I don't usually plug our products but it is what it is, I didn't mean to.
Patrick Baldwin: We have time for some more questions here. Eric also asked, “How long should it take to train a new pest tech?”
Seth Garber: I love this question. I wish we had one of the technical experts on right now. We should have Joe Jonovich on or Cassie because I'd love to get their opinion on here too from a super technical standpoint. We have clients that can actively put a highly trained technician in the field in 30 days. We have others that say, “We want to train them for 90 days.” If I was running a scaling business, I would probably lean towards putting a trained technician.
There's some state regulation around this but I would probably say, within 30 days, a technician should be able to go out and service 95% of your customers and what they need. Let's carve out the technical commercial accounts. If we think about it, what do the majority of our stops entail? Get out of the truck, be super nice, understand how to mix a product, walk around the house, take down spider webs, put down some type of preventative product, and smile for the customer.
If you're working with our clients, pull a trash can up, fill out a service ticket correctly, put your notes in, send your follow up, and be sure that customer has the greatest experience for 15 to 20 minutes and that they'd never have to think about us again until our next service. If we think about what it takes to train that, there's a lot there. If we hire well, that should not take you more than a month to do. If you want to go all the way to say, “How do we do a technical German roach clean out? How do I identify different kinds of insects? How do we handle a complex mice situations and things like that?” That takes longer.
We have to be cognizant that, as an operator, I would prefer to be able to use a technician to bill to put a technician on site at a job they might not necessarily know how to do to where they can call a resource and learn on the job versus saying they can't go out there and do it. That's the way that I always lean. If I'm hiring newer people, I would tend to hire for the right person and train them what 95% of our customers need. If you said, “Seth, here's a technician, get them trained, make them proficient, have them good at communication, and have them good at these things.” I would tell you 30 days.
Patrick Baldwin: How much of that getting to 30 days is driven by finance in the bottom line?
Seth Garber: That's a great question. Where we make mistakes is in the hiring process and not so much in the training process if we have a good training. From my perspective, I would tend to want to hire a little bit sooner than some companies might even though it's going to create an inefficiency and it might hurt us a little bit financially in order to ensure that we're able to drive that culture into that technician and that they're the right guy or right person. For me, it isn't driven financially. For me, it's driven on efficiency to build the company more than financially and on how to build the company at a faster pace.
The longer that technician is in training, it becomes more and more of a burden. We'd spoken about this before. If you've got two technicians in a truck and you, on average, have to do twelve stops in order to keep your margins, you've got to do 24 stops, which is unreasonable for a lot of companies. What are your thoughts around that?
Patrick Baldwin: I don't answer difficult questions, I just ask them. Thank you.
Seth Garber: That's a hard one.
Patrick Baldwin: It is hard. Licensing does come into effect here. How long do they need supervision, on-the-job training hours, classroom hours, and all this stuff? We were comfortable with 60 days. Over time, we went the other direction and we pushed it more than 90. An apprentice was out autonomous, doing their own, and not necessarily still seeing the certified applicator so many days a week and all that but being on their own, doing jobs, taking work orders, and producing the service.
We went the other direction because there were less exceptions. They could stand on their own, still have the phone call, and take pictures. We're putting iPhones in all their hands. It's like, “Use them. Document, ask questions, take pictures, and all this stuff.” I think about what I do differently now. It's a driven financially now. Can you scale quicker? Of course. If you get to 30 days, get down. Let me turn it back to what you and I were talking about differently.
Would you hire two people and then run them through? Are you keeping both after 30 days or does that make it better? Does that make it easier? Does it make it quicker? Maybe you're keeping both after 30 days. In terms of a $5 million business, would you pull the trigger, hire two people at the same time, and put them through onboarding at the same time to get them up and running quicker?
Seth Garber: There are so many different companies and there are so many different ways these businesses operate. Hiring for some companies is culturally-driven. I don't know if I would take a stance on this. At a $5 million company, you might hire 2 or 3 at a time, you might have to. The biggest thing is that you have to understand at what rate are you acquiring customers to determine if that even makes logical sense. Because we're sitting here at a $5 million company, our growth rate might be 7%. If we're growing at 7%, it's going to be hard to talk me into hiring a whole bunch of technicians. If our growth rate is 45%, I've got a function around how to hire faster. I'm incredibly focused on cultural hiring.
We've got lots of clients and that's not the way they do it. They think, “You plug a widget in and they work. We need lots of widgets. If a widget breaks, we get rid of them.” That's an okay model too. You have everything in between. I've got these crazy beliefs that you guys have heard me talk about in the way we hire for our company today. You get to stay with us forever and we never fire you so we spend lots and lots of time there in the learning space. In the pest space, some people are only focused on the numbers and that's okay too. There are great companies that run that way. It's a tough question to answer.
Patrick Baldwin: I don't ask the easy questions. As we're talking through this and we just talked about SOPs, I'm thinking about, “Why would the first two SOPs or categories of SOPs not be safety and hiring?” I'm thinking about those before I even get to service. You can get away with not standardized service and still run a good, profitable, and consistent company just because. We quickly go to service and we want to spend all this money, research, time, and figure out exactly which chemicals and materials to use and how to spray, bait, and all that stuff. I'm thinking that there are so many more important things to cover first.
Seth Garber: Think about going back and listening to all the episodes of The Buzz, all the episodes you've done. If you think about all these episodes with CEOs that have scaled up tons of these companies, how often are these guys talking about the products they use on their truck? Only once. They had talked about filling up the B&G's ahead of time.
Patrick Baldwin: Mike Rogers.
Seth Garber: Mike Rogers was talking about how they manage all their chemicals. Outside of that, that was the only time any of these fast-growth company CEOs have ever talked about chemical. I agree with you on the SOPs. If I'm going to build the SOPs, it's going to be sales first because if without sales, you can't grow. After that, how am I going to look at my marketing efforts? I'm going to look at hiring and what our hiring process looks like.
Patrick Baldwin: I do have a question. Turning these widgets in and out as far as like hiring probably less weight on culture, “I need someone to put them in a truck and train them decently.” I'm not saying to skimp on certain things. Of your consulting clients, do you support any clients that have that methodology where it's like, “I need you to get a guy or a girl in a truck, train them up, get them out and running, and I don't care so much about culture.”
Seth Garber: 100%, in large companies. We can all have the nice, warm, and fuzzy feeling cultural discussion. We operate our company that way, in all honesty. If I look back at the way we built our pest control company, we looked at people as widgets, in all honesty. I hate to say it, they were very technical. We hired technical people but that's the way we looked at it. It was probably driven more by my partner than me because I'm who I am. Looking back, was it right? I don't know. It worked. We do have clients in the consulting practice that think about it that way and that's fine.
We have other ones that are obsessed with culture and everything in between. We have ones that are obsessed with culture. They speak obsessed with culture but they operate like widgets. I don't think there's a right or wrong there. It’s however that business wants to operate. The companies that tend to be finance-driven tend to be less culturally focused. The companies that are less finance-driven and more top-line focus tend to be a little bit more culturally focused. This is what I tend to see whether it's in the consulting practice or whether it's people that we're interacting with on a regular basis if I had to put people into categories.
If you think about what the big door-to-door companies do, you go out to some of the big door-to-door operations, these places are freaking fun. The guys are having a great time. They have crazy rewards. They're high-fiving each other. No one's talking about the bottom line. They're talking about, “How fast are we growing? How many deals are you getting?” That's what you're hearing in their offices. Their operators are talking about the bottom line. If you think about how crazy fun that sales cultures are, those cultures are a blast.
Seth Garber: Some of y'all are taking your cruises right now, I know you are. Good for y'all. High-growth companies that are out celebrating have great culture, building, recruiting, and continue to grow. One more question from Eric here, “How do you get technicians excited about cloverleafing or generating leads on their route and how to motivate them to do it?”
Seth Garber: Another great question. I will preface it with this. People who have listened to us talk over the years have heard me say this over and over again. Remember, we build sales organizations. That's one of the things that we do at a world-class level. We train salespeople. We train people to sell. The thing that's crazy is that we have to remember why we hired technicians to begin with. We hire technicians to provide quality service to our customer, that's why we hire technicians.
Technician’s personality profiles tend to take care of the customer, feel good culture, and, “We're here to help people.” It's the exact polar opposite of what a world-class salesperson looks like. There are all these anomalies out there and we hear it all the time. People disagree with me and tell me, “I've got these technicians that do this,” or, “Our technicians do that.” I totally get it. There's a lot of methodology out there.
From my perspective, the easiest way to get a technician to go out and work on cloverleaf is to tie back the value of the work they're doing to their personal goals and personal ambitions for what they want to do into the company, their growth, or how they want to live their life. If I'm going to get a technician to go out there in cloverleaf and if I'm talking about economic incentives to that technician and he is a not an economic-incentive person, he is never going to do a good job of it.
If a technician is incentivized by spending time with their family, they want to get out there and go fishing. They don't care about becoming a service manager or making a bunch more money. I am incentivizing that guy on days off. I'm going to say, “Let's do this well. You get some sales in. You get these thousand cloverleafs out and we can validate it. I'm giving you a day off.” That's what I'm doing for technicians across the country and it works great. This stuff works great but that takes a lot of commitment.
You've got to know your people and we're talking to our service leaders. We have to treat our service leaders the same way. It's a hard thing we do. I couldn't tell you how many times, over the years, I've gotten this phone call, “Seth, you won’t believe this.” “What's going on?” “We got a phone call because somebody found 500 of our flyers or our door hangers in a dumpster. I'm firing the guy.” I have gotten that phone call a dozen times over the years and it’s because we're trying to force somebody to do something that they're just not usually designed to do.
Patrick Baldwin: You and I did an episode not too long ago about trying to get technicians to sell. When I saw this question come across, I thought about that. Is cloverleafing the way to go for technicians? There are other ways to build route density. You've invested money, you've got to put them in a truck, they've got chemical, and they can go produce service for you 10 or 8 hours a day or whatever it is and go put money directly to your bottom line. Is their best-use of time going and cloverleafing?
Seth Garber: To me, it's not. Do we talk to people about it and do we have customers do it? Yeah. If you're a growing company and that's a resource you have and say they've got $700 or $800-day out there, we want them at $1,200 a day. Let's let them do some cloverleafing. It probably isn't an okay use of their time because you're not going to be busy enough. What I would prefer is a company that's a growing company to think about their cash and to stack those routes up a lot heavier. Maybe we get to the end of the month, they've got a couple of free days.
I would prefer to put them out there cloverleafing on a couple of free days versus having them cloverleaf on inefficient days. That's the way I would think about it. What I would say as it relates to technician selling is that when you shift over into the big commercial world, I do like a technician with goals. The way that I like to look at it is more of like an account-based marketing or account-based growth model to where they're incentivized to grow the value of the account over a period of time. I like that kind of a model a lot and that's a much easier way to help technicians sell than a residential cloverleafing model.
Patrick Baldwin: I think of it as empathy. They are associating themselves with those decision makers of the account knowing what their needs are and then saying, “Here's a problem and here's a solution.” That's a technician mindset, like, “I want to help you solve your problems.”
Seth Garber: 100%. The discussion from a leadership to that technician isn't, “You need to go sell more.” The discussion is, “Let's take a look at certain accounts and determine where we have the opportunity to upsell. Let's talk about that. Let's see if it's a real value versus pushing increased numbers.”
Patrick Baldwin: Do you have any random one-off questions for me? You've warned me and I'm just sitting here nervous this whole time.
Seth Garber: The big question that we talked about, Patrick, is the Elon Musk tattoo becoming permanent. This is the message I'm getting, you're a couple of weeks away from determining if you're going to get an Elon Musk tattoo because you said you would.
Patrick Baldwin: There are a lot of tattoo shops there in Ybor so we'll see. Maybe we'll do live tattoo at Energy.
Seth Garber: A few people followed through because the deal was if you got a Pest Daily tattoo, we would pay for it. Remember, that was the deal.
Patrick Baldwin: Not you, Patrick, Fat Pat.
Seth Garber: Everybody.
Patrick Baldwin: You said there were 5 or 6 people.
Seth Garber: Eight now.
Patrick Baldwin: You don't even have a Pest Daily tattoo.
Seth Garber: I'm not a tattoo guy.
Patrick Baldwin: We can change that at Energy.
Seth Garber: There are eight people out there in the world right now with Pest Daily tattoos. To me, it's hilarious and I've only paid for two of them.
Patrick Baldwin: You have a cigar roller there during happy hour. Why don't you also get a tattoo artist to come during happy hours? “Come get your Pest Daily tattoo.”
Seth Garber: I'll do it.
Patrick Baldwin: I know you would.
Seth Garber: We should have a little wager here. We should have a little fun here for a second, Patrick. Is the Mex coming? I can't remember.
Patrick Baldwin: Did you invite him? I don't have tickets to give out, you do.
Seth Garber: We had to go to Paul and be sure to get that approved. The Mex did get an invitation. The question is, do you think we should have an auction to see how much money we could raise for charity if the Mex gets a tattoo?
Patrick Baldwin: He'd get a Pest Daily tattoo. Does he have a heart enough to even care about charity?
Seth Garber: I don't know. Does he have a big enough heart to get one? What do you think?
Patrick Baldwin: Paul is charitable, he hired the Mex. We’ll see. I would love it. We could raise money.
Seth Garber: Should we do a charity and raise money for somebody to get a tattoo?
Patrick Baldwin: You did talk about Scarlet going to be there on the panel and how they're philanthropic. We could find a good charity.
Seth Garber: I think we could. Whoever's reading this episode, message Patrick back about your favorite charity and what you think this looks like and then we'll go from there.
Patrick Baldwin: Whoever gets the largest Pest Daily tattoo while at Energy decides the charity.
Seth Garber: What's the minimum size for the tattoo?
Patrick Baldwin: I don't think there's a minimum, it's the maximum.
Seth Garber: I'll one-up this. Whoever is willing to get a Pest Daily tattoo over six inches, I'll commit $2,000 to whatever chair they want. What do you think?
Patrick Baldwin: Do you have a cap? Is there a maximum?
Seth Garber: How big the tattoo can be?
Patrick Baldwin: No. You're ready to contribute.
Seth Garber: If somebody is willing to get a tattoo over six inches.
Patrick Baldwin: What if there are 1,000 people?
Seth Garber: One person.
Patrick Baldwin: I know you got more than that.
Seth Garber: We'll contribute $2,000 to whatever charity they want.
Patrick Baldwin: He said 100 people. He will do it up to 200. I'm going back to the serious world and you didn't know this was coming but I've thought about this for a while. I know that in your culture at Pest Daily, we talked about a little bit, like, “They're not in it for life.” Effectively, you hire them and you go through the vetting process. They're a good culture fit and you're committing to keep them there.
I don't even know if you have any exceptions to that if they do something stupid or crazy or whatever but they’re there for you within your organization. Pest control organization, talking about management, do you only promote from within or only hire from outside of the organization for management and executives?
Seth Garber: What a tough question. This might be the hardest question. Can I give you two separate examples?
Patrick Baldwin: As long as they both end up in the same answer. This is A or B.
Seth Garber: If you'd asked this question to me a long time ago, because of the way that I grew up on the corporate side, years ago, I probably would have leaned towards bringing in talent from outside in. If you asked me today, if I was going to build a standard growth and 30% per year pest control company from the ground up, I would hire from within. I have the skillset to do that now and that's the hard part. That's why I was like, “This is a tough one.” If I inherited a $25 million company, in order to get to the next level, I just simply couldn't do that.
If I built it from the ground up, I would do it. I would be focused on that. When I started my corporate career, I came up the path of a Cintas model. Cintas hires from within for their leadership. I'm a classical study of the enterprise model, which you're an enterprise guy, it's only from within. These are long longevity-based businesses. If I was going to go build something now, I would build for absolute longevity and not for exit, which is part of the reason why our model exists today in our companies is that we're building for longevity. We're not going to sell our companies. That's the way I would think about it today. Patrick, if you had to make a decision, which direction do you go?
Patrick Baldwin: Enterprise guy here. I naturally lean towards promote from within. To me, it's promote from within. That's still my answer. An example of $25 million business, you inherit. All of a sudden, you're dropped in your CEO. It takes me to football. Jimbo Fisher is at a $76 million contract buyout and then you got Elko coming in and he's bringing in his whole team. The coaches are out and he's not promoting from within. He's bringing in his guys.
We see that in these larger businesses, a CEO has come in and out of the larger ones that they've got to make quick changes. It's driven because private equity behind them is saying, “I need change. I need return and I need it now.” Time is of the essence. They're on a fixed timeline. Going to what you're saying, is it based on an exit or is it based for longevity? In the case of where it's based for an exit, some fix a 5, 7, or 8-year timeframe.
They've got to make changes starting now, they've got to bring in their team, and they've got to get the right talent. On the predictability of that, they're probably looking outside of even pest control. Knowing that they need the top-tier people to do that versus long term, I can invest time in people, and get them promoted from within. Fair enough, you turned my own question back on me.
Seth Garber: I'm dealing with a situation right now on a client side right now. A company has several million dollars and if we went back years ago, we identified that the head of operations wasn't prepared to be head of operations. The CEO says, “What do we do?” I go, “From my perspective, on this business, because this business is being built to sell, we need to bring in the right person.” He goes, “Let's give it a shot. Let's let this guy develop. We'll give him a year to move into the role.” Honestly, he didn't do it.
He worked hard for six months, thought he wanted the job, keeps working hard, and now we're two years down the road and he's still in the leadership role. The CEO is incredibly hesitant to move him out but the person doesn't self-develop anymore. They're done self-developing. We're in a conundrum because the company is a higher within business and there's nobody in the company that's prepared to take over the role but the company is scaling quickly. It's a tough conundrum to get into when that happens.
Ultimately, what the decision that we're working on is we slowed down the operational growth of this company and we haven't slowed down the sales growth of this company. Do we do it again? Do we say, “This person has hit the Peterson principle or whatever it may be. He's as good as he can possibly be.” Now we have to develop the next person up and above them and take another year or two years or do we hire somebody? This is a real-life decision and it's incredibly difficult. In this scenario, the service operations are going to hinder if we don't bring somebody in from outside in.
Patrick Baldwin: Are you in the middle of this decision?
Seth Garber: I am in the middle of this decision. Unfortunately, I'm incredibly close with all the people involved, in all sides of this decision. I'm a pretty black and white guy, which you know. It's the first one in a long time when I'm having a little bit of an emotional, “This guy's family…” We're not going to let the guy go but he's going to be stuck probably in perpetuity in his role. It's the first one where I'm having a hard time supporting how to make the right decision here. It’s pretty interesting.
Patrick Baldwin: I'd like to talk about this maybe once you get further down. I know we've got to head out to Orlando. We got meetings there. I’m looking forward to that at the WorkWave conference. Seth, thank you for hosting. I know your wife and your son are more than generous to let me in the house. They're probably sick of me and you probably are too.
Seth Garber: There was one little comment from my lovely wife going, “How long does your office finished being built?”
Patrick Baldwin: That was directed to me. Thank you. It's good to see you here in person, Seth. It's always fun to hang out with you.
Seth Garber: Thanks. Catch up with you soon.
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Dylan Seals: Thank you so much as always for supporting us at The Boardroom Buzz. We know your time is valuable and the fact that you spend 45 minutes or an hour with us means the world. All the media that we put out from Potomac is meant to honor and celebrate you, the service industry owner. As Paul would say, “Yee who toil in the pest control vineyards.”
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