Today’s edition of The Potomac Pest Control Executive is a personal story. It recounts the experience my father and I had as we shopped for termite and pest control services for his home.
As executives and owners, it’s often very difficult to view our sales and marketing process through the eyes of an uninformed prospect. A few years ago I had the opportunity to view my industry – the pest control industry – through the eyes of a baby-boomer, residential customer and what I learned was enlightening, to say the least. Today we’ll discuss that experience in detail and what I learned from it. As well, we’ll learn what happened when I showed up at the office of a $5 million in sales pest control company and told the owners why they had just lost my father’s business to Orkin and what they could do to stop it from happening again.
My Old Man Has a Problem
Some years ago, around the time I had become very active in the pest control industry, I received a call one evening from my father – one of those rare occasions in which he was actually seeking my advice and not the other way around.
“Paul, we’ve got a pest problem at the house and I need to get someone out here right away. Since you deal with all of these pest control companies, what do I need to know?” he asked.
My parents live a few thousand miles away from me, and as fate would have it, I would be back there in a few days for a wedding. I responded, “Dad, why don’t you wait a few days and when I get home I will help you choose a pest control company.”
“Well, don’t you have any clients around here you could call, I really want to get someone out here right away.” While we did have some clients in the area, I wasn’t about to make a call. This would be the first time in my life that I would have the opportunity to shop for pest control services (never had a pest problem in my cold, northern cities) and I wasn’t going to let this opportunity slip through my fingers. “Dad, hang tight for a few days and when I get back we’ll get this problem straightened out.”
Upon arriving at my parents’ house, my father, who, by the way, was born before the television, had bypassed the money-mailers, coupons and Yellow Book and went right to the Internet like a sixteen-year-old girl on the hunt for Justin Bieber tickets. He printed out about a dozen pest control website homepages on his vintage ink jet printer, ranging from Orkin to the likes of Joe’s Screen Door Repair and Extermination. “Paul, I printed out the websites for you so you don’t have to stare at the small print on the monitor.” Being thirty years older than me, I was pretty sure that the issue of reading small type on a monitor had more to do with him than me, but I went with it anyway.
As we ate dinner my father kept paging through the printouts. About ten minutes into dinner he blurted out, “Well this is dumb.”
“What dad?” I asked.
To the uninformed customer, you’re all the same
“All of these websites say the same exact thing. Every one of these companies say ‘our technicians are well-trained and licensed, we have an expert entomologist on staff, we only use the safest and most effective treatment methods.’”
The absurdity of these statements was not lost on my father, a former airline employee of almost a half a century, who lamented, “That’s like American Airlines saying, ‘Fly with us, our pilots are licensed and our airplanes are flight-worthy, and if things get messy, we have someone on staff who knows what he’s doing.’ You tell me, isn’t the definition of an exterminator someone who is trained and licensed in using pesticides to kill bugs?” This is going to be fun, I thought to myself.
It’s important to note that my parents pride themselves in having the most meticulously maintained landscape in the neighborhood. Furthermore, my father has always done all home and vehicle maintenance himself – from mowing, digging, rototilling and trimming to changing the oil and overhauling engines, there is basically nothing he didn’t do himself. In fact, I am certain that if he had watched a few more episodes of M*A*S*H or Trapper John, MD, my sister and I would have received our vaccinations and physicals at home as well. However, since his retirement, he has been outsourcing all but the most basic maintenance to outside service providers. Like every one of his neighbors, he is a baby-boomer with disposable income and he is not afraid to pay for high quality service. In other words, he is the prime demographic of a residential pest control customer and one each and every one of you should listen to. Keep in mind, my parents live in a brick and cedar home in a damp, heavily-wooded area – in other words, a 24-hour all-you-can-eat buffet for termites.
I asked my father what was important to him in a service provider and he said, “I can kill ants, but I don’t know the first thing about termites and all of the neighbors have them — which worries me. I don’t want jars of chemicals sitting in the garage when your nieces come over, so I want someone who will come out here periodically and make sure I don’t have all sorts of creatures crawling around. Also, I want a company that’s going to be around, not one of these fly-by-night outfits.”
“OK dad, that’s why you want to hire a pest control firm instead of trying to do this on your own. But what do you really want in a service provider?” I asked.
He thought for a second, and said, “Well, I am not exactly sure what I want because I have never had experience with a pest control company. However, I know what I don’t.”
“OK,” I said, “so what it is that you don’t want?”
He thought for a second and said, “Jim across the street hired a fellow who drove up in some old, broken down Ford Ranger. Now Jim said he was a great guy and really knew what he was doing – at least to Jim – but he looked like he had just escaped from a mental institution, very unkempt. What I didn’t really like was that he parked his beater in Jim’s driveway and it leaked transmission fluid, which is hard to get off the concrete.”
“Sounds good dad. So you want a company that is safe, with clean and modern vehicles, that guarantees its work, and whose technicians are clean and professionally-dressed, to service your meticulously maintained house,” I asked.
“That’s exactly what I want,” he replied.
In Search of an Expert
I suggested that he should choose a few service providers and have them send someone out, which he agreed to do the next morning.
Later that evening, my father and I took a look around the basement and discovered a dead termite. Unfortunately, we now had another topic to discuss with the pest control technicians the next day.
An actual cassette tape answering machine?
The next morning, he began calling. The first company that he called set the tone for the whole morning. He dialed D&R Pest & Termite and was greeted by an answering machine, yes an answering machine, not a digital voicemail, but a circa 1985 answering machine.
“It’s 9 o’clock in the morning, where are these guys?” he muttered as he hung up the phone. “If they don’t want to take my phone call, then they don’t want my business.”
He dialed the next company and began having a conversation. A few seconds later I heard, “You’re at a customer’s home now? Didn’t I call your office? Fine, my phone number is….”
He hung up the phone and as he looked up at me he said, “Why don’t any of these guys have someone answering their phones? This guy is out on the job and he took my call from his cell phone. If this guy comes out to treat our house, is he going to be using my basement as his office?”
His next call was with a live, friendly person from Excellent Pest Services who set up an appointment to have a technician come out that day around noon.
Finally, the old man was getting somewhere. He had two more calls to make, a large regional player and Orkin.
When he called the large regional company, a live person answered his call, but he was abruptly asked to hold. After sitting on hold for about thirty seconds, he had had enough and hung up the phone. “What, if I were calling 911 emergency, I would have held for the operator…,” he said innocently as he adjusted his reading glasses.
After a few seconds navigating the number prompts, an Orkin representative answered his call promptly and scheduled a technician to come out the next morning. Finally, he received a call back from Ralph, the one-man, traveling pest control operator who takes calls from his customers’ living rooms. He told my father he would be over around 5PM that afternoon to assess the situation.
After his calling efforts, my father had three appointments, one from Excellent Pest, a local firm, at noon, one from Ralph, the one-man traveling band at “around 5PM” and the other one from the Orkin Man the next morning at 8:45. Two of the firms that he called didn’t even get the opportunity to win his business due to: 1) an answering machine, and 2) abruptly putting him on hold and not getting back to him before he hung up.
The Implicit Guarantee of a Brand Name
As we finished our morning coffee my dad paged through the website printouts. Then, without warning, he abruptly ran to the phone and canceled two of the appointments. “I’m going with Orkin, that’s it. Why should I hire either of these other two, neither of them offers anything special. Orkin will customize a solution for this house and they have a money-back guarantee… the others don’t. Plus, I’ve seen their trucks in the neighborhood, they look new and clean and they never park in the driveway”
I was speechless. No, really… I. Was. Without. Speech. Orkin will customize a solution for this house whereas the others won’t. Huh? What was he talking about?
What just happened?
Let’s take a closer look at this situation. Ralph, the one-man operation, never really had a chance with my father. One phone call on the mobile while at my father’s house and that would have been it — so he did Ralph a favor by cancelling.
However, the other company, Excellent Pest Services, would have been a fantastic choice for my father. I happened to know the owner and his family and I think they are great people. The company is a small, multi-branch operation doing about $5 million per year in revenue and has been in operation for a period greater than twice my age.
“So dad, what happened? How do you know that Orkin “customizes solutions” whereas the other companies do not?” I asked.
“It’s right here, take a look,” he replied as he handed me the website printouts.
Front and center on Excellent Pest Services’ website:
As my father handed me the Orkin website printout he said, “This company Excellent Pest Services is no different than the others. At least with Orkin, if they don’t solve my problem they’ll give me my money back. Who knows what you’re going to get when you hire some local firm who feels the need to advertise the fact that its Agent Orange spraying people have passed some licensing exam. I know what that means… everyone I worked with had an FAA license… those aren’t worth the paper they’re printed on. Further, every company boasts that they are the best and provides the highest quality service. That can’t be true. Orkin, on the other hand, backs up their claims with the best training in the industry and a solid guarantee”
Now compare that to Orkin’s website:
Why Choose Orkin?
Our pest control experts are just that, experts. Providing customized, science-based solutions — not just for any home, for your home.
- Orkin. Pest control down to a science.
- Our Continuous Protection Plans use scientifically proven treatments customized to your home’s construction type, and every one is backed by a money-back guarantee. With Orkin, you receive the most dependable termite control service you can buy. We’ve been around for over 100 years, so you can be confident we’ll be around when you need us.
A Missed Opportunity
So Excellent Pest Services, along with every other private, family-owned pest control business had the same opportunity to sell my old man a $2,400 termite job and a $400 per year quarterly service contract, not to mention the termite renewal, and blew it. Customers like my father stick around ten years, on average, if treated right – a total customer lifetime value of over $8,000 right down the toilet.
The real shame is that each of these companies was somehow able to reach my father, a prospective customer in need. He had each firm’s websites printed out and in his hands, and that’s half the battle right there.
Was it a Google search, Yellow Pages online listing, pay-per-click ad, or just good old-fashioned search engine optimization that got him there? How he landed there, we will never know, the important point is that he was there.
A Little Background on Excellent Pest
Excellent Pest Services has been around for the better part of the century and is currently being managed by the third generation. The Company provides arguably more customizable solutions than Orkin, chances are, had my father hired Excellent, he would have been serviced by the same technician in year five as on the first day of service – a technician who would have known that the grandchildren come over on Friday and that my dad does work in the yard on Tuesdays and Thursdays. [To be fair, as it turned out, the old man’s technician had been with Orkin for seventeen years].
Does Orkin guarantee anything that Excellent does not? Nope. In fact, I know that if my dad were to run into any serious problems with any of the Excellent technicians, the second-generation owner himself, now in his late 70s, would have gotten in his car and drove over to speak with my father face-to-face — something that Gary and Randall Rollins are unlikely to do.
While it might sound like I am attacking Rollins, I’m not. Love them or hate them, the Rollins organization has done more for the pest control industry than any other company on the planet. Orkin is responsible for pest control as a recurring service business and many of the giants of the industry got their start at Rollins: Harvey Massey (Massey Services), Joe Wilson, Orkin’s youngest VP in the 1970s (PermaTreat), John Wilson (Orkin) and Chuck Steinmetz (All American & Middleton) to name just a few.
My Visit at Excellent Pest Services
On the last day of the trip, on my way to the airport, I stopped by the main office of Excellent Pest Services. Less than a minute after announcing myself to reception, John, the second-generation owner in his seventies came out to greet me. After catching up, I told him that the reason that I had stopped by was to let him know what had happened.
“John, I stopped by today to tell you that you lost my father, a nice residential termite and general pest control account, to Orkin. Obviously, I have a special interest in the pest control industry so I thought I would stop by and pay you the courtesy and respect of telling you why my father chose Orkin over you. While you can learn a lot by talking to your customers, you can often learn a lot more by talking to those who have specifically chosen to not be your customers.”
John listened intently and after thinking for a second he responded, “Paul, I truly appreciate you coming by to tell me this. Why don’t Tom (John’s son, who was in his forties and current GM of Excellent) and I take you out for a quick bite on your way to the airport so we can chat?”
So we walked across the street for an early lunch.
Over lunch Tom said, “I am really surprised to hear that your father chose Orkin. Not only have we covered this community for over 50 years, we just spent north of $20,000 on that website, it’s beautiful. It took us a long time to design it, and we spent a lot of time on branding. I can’t imagine that Orkin’s website was much better, if at all. Further, we’ve brought on some marketing consultants who work exclusively in the pest control industry and they are driving leads to our website – which ain’t cheap.”
Unfortunately, Tom had missed class the day they went over the marketing concept in Marketing 101. It’s not about who has a prettier website or the aggregate quantity of leads.
Although Excellent invested quite a bit of money in the website, it failed miserably in its fundamental purpose: demonstrating to my old man why Excellent was a better service provider for him, let alone different from Orkin.
“While the point of this conversation is not the website, per se, since that is where you lost my father as a customer let’s discuss it,” I responded.
Table stakes, at best
I brought both the Orkin and Excellent website printouts. “Look,” I said, “in valuable, front-and-center real estate, you give the following reasons for hiring Excellent:
- You’ve been around for a long time
- You use the most advanced pesticides
- Your technicians are licensed and trained
- You do high quality work and provide excellent service
- You’re family owned and operated”
I continued, “At least three of the five are table stakes — you’ve got to offer those just to play the game.
- Your technicians are trained and sanctioned by some bureaucrat to spray chemicals. Of course they are.
- You don’t use crap pesticides. Basic.
- You do high quality work and provide excellent service? I don’t see any of your competitors claiming to do lousy work.”
The Power of the Orkin Brand
Tom and John were both listening attentively so I continued, “Now, look what Orkin has done. The name Orkin, unquestionably the most recognizable name in pest control on the continent, with the powerful, implicit brand guarantee that goes along with it, didn’t show up to a gunfight with a knife. In fact, Orkin didn’t even show up to a gunfight with an ordinary gun, it showed up with a 50-caliber machine gun… and you don’t even have a butter knife.
Even though just about everyone in the Western hemisphere has heard of the Orkin Man by the age of ten, the company didn’t rest on its laurels and say, ‘Hey, hire us, we’re Orkin.’
No, Orkin’s website displays photographs of the Orkin Man looking like he’s getting ready to split the atom and promises ‘scientifically proven treatments customized to your home’s construction type, and every one is backed by a money-back guarantee… [and] most dependable termite control service you can buy.’
So while you are busy telling prospects that you train your techs and provide great service, Orkin is (1) reinforcing its brand image by explaining to customers why it is the best, (2) reminding us that it has been around over 100 years, (3) getting “Pest control down to a science,” (4) informing us that the rest of the “exterminators” out there are nothing but rank amateurs, and (5) wrapping it all up in a bow and the best guarantee in the industry.”
Tom interrupted, “but we guarantee our services as well.”
A guarantee reverses risk
“Then why don’t you mention that in your sales copy?” I asked.
Tom explained that while the company would never charge customers for something they weren’t 100% satisfied with, management doesn’t advertise a guarantee because they don’t want customers to take advantage. He went on to say, “once the service is completed, anyone can say it’s crummy and not pay…further, we don’t feel like offering a guarantee really has any impact on sales.”
I asked Tom and John how they knew that not offering a money-back guarantee does not have any impact on sales. Tom defended the claim by stating they have grown for many years and have never offered one. John interjected, “we’re doing $5.5 million in sales now, just a little over a decade ago we were doing slightly north of $4 million.”
I had three things to say about that.
- Management by “gut feel” is not a way to test marketing concepts.
- It’s one thing for a company to tell prospective customers how good they are, it’s quite another to show them with an unquestionable, ironclad guarantee.
- Growing 35% to 40% over a decade is not growth, it’s inflation. If you take into account the expansion of the money supply by reckless politicians and bankers at the Federal Reserve, Excellent is the exact same size company today as it was ten years ago.
While I have yet to come across a pest control firm that wouldn’t honor a money-back guarantee, it’s not at all common to find one that explicitly advertises a money-back guarantee. Which is unfortunate, because the firm needs to constantly provide customers with (1) a reversal of risk and (2) an incentive to complain, and one of the most effective strategies for reversing risk and eliciting complaints is the money-back guarantee.
Marketing expert and Harvard economist, Theodore Levitt once said, “One of the surest signs of a bad or declining relationship with a customer is the absence of complaints. Nobody is ever satisfied, especially not over an extended period of time. The customer is either not being candid or not being contacted.” An explicit guarantee induces prospects to take a risk on your firm (they can always get their money back and go to Orkin) and provides a feedback mechanism to the firm, by incenting the customer to contact the company.
While John and Tom both agreed that they really needed to rethink how they communicated the Company’s value proposition to prospects, John disagreed that they should use long copy like Orkin had. He said, “Paul, if you look at Orkin’s website and marketing collateral, they go on and on. But prospects are busy; they don’t have time to read all of that tooting your own horn business. Our marketing consultant said to keep it short and simple because people are busy and don’t have time to read.”
You never know what is going to convince the customer
While I understood John’s concerns, my response was simple, “The only customer I have ever watched shop for pest control services with my own eyes is my father, and he read every word that both you and Orkin had written… and it was Orkin’s sales copy that won him over. In fact, he didn’t cancel his appointment with your technician until he again read Orkin’s sales copy. So if I am ever in doubt as to the length and detail of sales copy, I remember the words of the late, great Gary Halbert, arguably the greatest copywriter who ever lived: ‘As businessmen, we never know what seemingly small, insignificant detail is going to win over a prospect. So as a copywriter, you shouldn’t be in the business of deciding what is important to your prospect.’ Both Gary Halbert and Gary Bencivenga, the best advertising men in the world made long copy famous and said over and over, if the prospect is truly interested in the product or service they will read everything. I would rely on their advice before I took the advice of a former pest control operator who sold his or her small, rubbish company and is now out destroying other people’s businesses with horrible advice.”
Tom understood exactly what I was saying and lamented, “Paul, my father is from the old school. In fact, he worked for Orkin some thirty years ago and times were different then. Although we are in a mundane, slow-moving business, it’s tough to run a business and worry about the minutia of what three words in a bullet point are going to cause someone to hire us versus someone else. I have to deal with routing, customer service issues, and costs. My father runs this P&L like Harvey Massey and he is focused on keeping costs in line.”
Before I knew it, it was time for me to get to the airport, so as we begun to get up from the table I responded to Tom’s last statement. “Tom and John,” I said, “the goal of any business is to create results outside of itself — the results that a pest control company creates is a pest-free environment, just as a landscaping company creates green and manicured landscapes, a restaurant satisfies hunger and a lawyer keeps her client out of the Big House.
The sole purpose of any business
Peter Drucker, one of the most influential management thinkers of the past century said, “there is only one valid definition of a business purpose: to create a customer.” Unless wealth is created first for the customer, it can never be created for the firm. Value is only created when the business creates a product or provides a service that a customer willingly and voluntarily pays for, allowing the firm to extract some of that value for itself. Therefore, the more effective the firm is in creating customers and extracting value from them, the greater the likelihood that the firm will be able to create value for itself.
Communicate value to your prospects and customers
Of course, communicating value to the customer is of paramount importance and managers must spend more time focusing on what is going on outside the business than inside. Success hinges on what goes on outside the company’s four walls, as all results are external. When my father was shopping for a pest control company, he could not have cared less what was going on inside those companies. He didn’t care if those businesses were run efficiently, if the routes were tight or if the businesses were using PestPac, ServicePro or the back of a napkin to schedule service.
As managers, your job is to understand what it is that customers value and communicate that to them, and then organize all of the resources and capabilities of the firm around creating that value.
Although all of the pest control companies that my father called had taken the time and effort to create websites, not one of them employed a strategy to differentiate themselves from their competitors. Instead, they wasted valuable resources communicating to my father what he already knew, that they were trained and licensed to provide pest control services. None of them communicated to him what was important to him, and one by one, they lost the opportunity to create value for him as a customer — an therefore, create value for themselves.”
As we walked out of the restaurant, John stayed back to speak with the restaurant owner who he had known for decades, and I said, “Tom, you are losing customers daily because you are failing to communicate value to them. Not what you value, but what they value. You’ve done what everyone else in the industry does, you’ve taken “table stakes” and tried to twist them into points of differentiation – something that is absolutely impossible to do.
While you may never become bigger or even better than Orkin, you are definitely different, and there are many customers who would prefer to do business with you…they just don’t know any better, and they won’t unless you begin telling them. So don’t worry about long copy versus short copy, just begin by telling your customers how you’re different.”
“How?” Tom asked.
“Well, for starters, your vehicles all look brand spanking new,” I replied.
“We take pride in our vehicles and the way we look,” Tom said.
“That’s great, so let’s build on this,” I continued, “what else do you do differently than some of your competitors?”
Tom thought for a second and then said, “Well, we’re very big on drug and alcohol testing. Heck, my father doesn’t even like to hire anyone who smokes. He hates when service technicians threw cigarette butts on the street in front of homes.”
“What about background testing?” I asked.
“Oh brother,” Tom responded, “we go crazy with that kind of stuff. We even go above and beyond the QualityPro requirements.”
“So this is the way you should begin this process, go back to your office and begin making a list today,” I said, “start with this:
- What do your target customers truly value? Really put some serious thought into this and perhaps go visit some of your customers face-to-face. It would make them feel great to get a visit from the owner and you’ll learn a lot.
- Communicate the value that you create to prospects and current customers alike. Get rid of that nonsense on your website and marketing material and then recommend your current marketing consultant to all of your competitors.
Once you really understand what it is that your customers value, begin communicating that to them immediately. By doing this, you will begin to differentiate yourself from the competition. You’ll always battle the implicit brand guarantee of Orkin and Terminix, but in your service footprint there must be 60 or 70 pest control companies and if you do this right, you’ll begin eating their lunch. And for guys like my father – and he lives in a whole neighborhood full of guys like him – if you communicate to him that you provide what he values, he’d choose you over Orkin any day. But he’s not going to take a risk on you unless do the hard work and earn it.
So instead of that nonsensical list of table stakes on your website, think about who your customers are. You’ve got a lot of baby-boomers around here who live in nice homes and have grandchildren coming over – just like my father.” I grabbed a piece of paper from my bag and began writing:
Our residential customers are proud of their homes and landscapes, and we are too. That’s why when you hire Excellent Pest Services, your technician comes to your home in a shiny, clean, late model service vehicle.
For over fifty years we’ve been protecting homes just like yours, and because we’ll be visiting your home quarterly for years to come, we want you to feel that your pest control professional is a part of your family — which means trust. For that reason, every member of the Excellent Pest Services family goes through an extensive state and federal criminal background and driving record check. Further, we take the use of drugs and alcohol seriously and perform random testing on every single employee throughout the year.
We don’t hire a single pest control expert who WE wouldn’t feel comfortable having over to our home to babysit our grandchildren for the afternoon, and you shouldn’t either. Why roll the dice on anyone else when you can hire a pest control expert who has more than twice the hours of state-of-the-art training per year than the average pest professional, and who has been vetted by our family — someone we’ve personally selected and trust to care for both our home and business, as well as yours.”
Tom read through what I had written and said, “Wow, a short conversation with me and my dad and you’ve explained our entire business on paper.”
Tell them why
Everyone says we’re the best or we provide the highest quality service. That means nothing. As I said before, no one says ‘We’re lousy and we know it’ even if they are. My old man read these empty claims and platitudes on the websites and didn’t believe any of it. He said they all say the same thing. He was right.
Why are your people providing the highest quality service? Just an hour ago you told me that your office has a dedicated training center and your people receive a full 40 hours a year more training than most of your competitors. Don’t you think it’s far better to communicate that to your prospects than the fact that your technicians are licensed?
If you start here, today, with the basics, I guarantee you’ll see a dramatic improvement in sales and profitability.”
As I was getting into the car, Tom said, “Paul, I am thrilled you came by the office today. Your advice has really opened my eyes and I am going to take action on it today. You know, I have been meaning to give you a call ever since we met at the PCT Magazine Mergers & Acquisitions seminar in Florida last year. I have a lot of things on my mind over here. First, we are not growing like we used to, and I have some real concerns that we are no longer an employer of choice. Second, I need to think about my future. I am in my mid-forties and own no equity in this business, not to mention, I have two sisters who aren’t involved in operations. Every time I bring it up to my father he says the same thing: ‘we’ll deal with it in due time.’ The problem is, his entire retirement is tied up in the value of this business and I don’t have any money to buy the business from him. Can you help me?”
I agreed to help Tom that day, and in future editions of The Potomac Pest Control Executive, we’ll explore the tremendous progress the company has made amidst the greatest global recession of our lifetime.
Note: Save for Orkin / Rollins, the names of people and companies have been changed to protect the innocent.
We look forward to hearing your thoughts and questions on strategy, valuation and M&A in the pest control industry.
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