[2005 State of the Industry Report] Pest Trends 2005

It’s an old saying that still has merit: “Don’t put all your eggs in one basket.” Those may be words to live by for successful pest control firms these days.
Pest control operators may be finding themselves caught between several unique situations: A decent pest control season along with a disappointing termite season. Weather patterns that show anything but a pattern. And conflicting economic factors that affect sales and profits in unpredictable ways. Add these up and what you have is essentially a mixed bag of business for most PCOs.
Weather conditions undoubtedly play a role in how PCOs are faring this year, but there are other factors too.
The cost of doing business continues to increase for PCOs. Besides chemical costs and insurance prices being on the rise, gas prices are at all-time highs (see story on page 17 of this State of the Industry report). That’s bad news for an industry that depends so heavily on its service vehicles to reach customers across a wide geographic area.
The flip side, however, is that consumers are spending money for professional pest control. Prices for the service can accommodate increases. And while some sectors of the business may be slow, others often make up the difference in spades.
PCT once again has analyzed many of these factors with its annual survey of the pest control industry. This independent survey, conducted in April 2005, brings together statistics from close to 500 industry professionals located in 46 states. The results highlight many of the business issues PCOs are dealing with.

SPOTLIGHT ON SERVICE. On the whole, the pest control industry continues to provide a wide variety of services. According to PCT’s survey, more than half of all companies control numerous pest types, including ants, termites, flying insects and bedbugs. In addition to these bread-and-butter pests, there are a number of other add-on pest services offered that often serve as high-profit business areas with good growth potential.
One example is mosquito control. Today about one-third of all PCOs offer this service, compared to 28 percent last year and 23 percent in 2003. Other services offered by the industry include wildlife management, moisture control, lawn care and fumigation.
Richard Weisman, managing partner, Advanced Pest Control, Stafford, Texas, has been in the mosquito control business since 2000, installing and maintaining misting systems. “Our mosquito work has steadily increased,” Weisman said. “I think customers are becoming more aware that there are systems out there.” Currently the company’s mosquito business is up 10 percent over last year.
The services that represented the largest growth market for PCOs in 2004 were termite control, selected as the top growth area by 30 percent of respondents, and ant control, named by 28 percent as their largest growth market. It was the first time since 2001 that termite control edged out ant control as the top growth market for the industry.
Tyler Bennett, manager, Key Termite & Pest Control, Atascadero, Calif., says termites have been his company’s biggest growth market in 2005. He attributes a large part of this sector’s success to healthy housing activity in the area and the resulting inspection business his company has garnered. “I’ve had a 25 percent increase over last year in termite business,” he said. Warm, wet weather in the West has also helped termite business, Bennett said.
Today more than three-fourths of all companies, about 76 percent, are involved in the termite control market. This is a significant increase over 2001, when about 62 percent reported being involved in this market. (For more specific information about the termite market, see the story on page 8 of this State of the Industry report.)
Other top 2004 growth markets named by PCOs were perimeter pest control (named by 13 percent), Integrated Pest Management (8 percent) and rodent control (4 percent). Rodent control has been the biggest growth market for Alex Altizer, vice president, Eastside Exterminators, Kenmore, Wash. “They’ve actually gone way past what I thought they should be,” he said. He attributes the area’s mild winters, booming construction and healthy housing market as key factors in this pest’s resurgence.
Close to 40 percent of companies experienced an increase, compared to three years ago, in their revenue from public health-related pest control, i.e. mosquitoes, ticks and fire ants. This is up from the previous survey, when about 36 percent indicated such an increase.
Amtech Pest Control, Danbury, Conn., has offered tick control for two seasons. “Our revenue from ticks has increased dramatically,” says President Richard Monastero. “Lyme disease is very prevalent in this area. I’ve had it twice,” he notes. “It’s not something to take lightly.”
Monastero says the tick control market is up in his area simply because there are more cases of Lyme disease in recent years. “People are more educated, they know the signs,” he said. Furthermore, he adds, “They definitely perceive more of a need once they’ve had the disease.”
Currently four out of five PCOs surveyed use either monthly or quarterly service as their primary treatment regimen, with about 41 percent preferring quarterly and 38 percent preferring monthly service. The popularity of quarterly service appears to have increased slightly in recent years; in the previous two surveys, monthly service was preferred slightly over quarterly service. The number of those using some other regimen (besides monthly, quarterly or annual), at about 13 percent, has also increased slightly.
Leland Morris, president, Bizzy Bees Pest Control, Carrollton, Texas, has used a quarterly regimen for more than 10 years because, he says, customers seem to like it better. “Quarterly service seems to be more customer friendly than monthly,” Morris said. “It doesn’t inconvenience them very much.”

EMPLOYEE ISSUES. Fewer PCOs are offering major employee benefits than in previous years. Today 53 percent offer medical benefits, compared to 59 percent last year and 62 percent in 2003. Paid vacations are also down, offered by 66 percent now, compared to 73 percent last year. Fifty-five percent of companies require service personnel to pay for part or all of their benefit costs.
Jerry Batzner, president, Batzner Pest Management, New Berlin, Wis., may be one PCO on the leading edge in the area of employee benefits. Batzner describes his company’s benefits package as “120 percent competitive.” “We’re offering a full line of benefits that’s comparable to the marketplace on the whole and we’re able to remain price competitive in any premium sharing by employees,” he said. Batzner offers a 401(k) with matching funds, disability insurance, and he pays for the majority of health insurance for employees and their families. He also is in the minority being one of the few companies to offer dental and vision coverage. Needless to say, turnover at Batzner is low. “We’re running about 87 percent retention,” Batzner said. “For our industry, that’s probably unheard of.”
About 54 percent of survey respondents said they increased pest control technicians’ wages in the past 12 months, which was down from the 61 percent who raised wages in the prior year. The amount of the pay increase, at an average of 8 percent, also appears to be lower than previous wage increases. In 2001, the average increase was 11 percent, and has declined by about a percentage point in each successive survey since then.
Compared to 12 months ago, about 40 percent find it more difficult to recruit employees today. Meanwhile, about 55 percent say recruiting is about the same, and 6 percent say it’s even easier. (For further details, see related story on page 11 of this State of the Industry.) By far the most common type of training used to educate technicians is on-the-job training, used by just less than 90 percent of those surveyed. Other common training methods include on-site training sessions, traditional schoolroom training and distributor training.
About 85 percent of companies now require their employees to wear uniforms. Those that don’t require uniforms often say they have too few employees to justify the cost, or that their staff dresses professionally on their own.
BUSINESS STATISTICS. Today’s pest management professionals serve an average of 4,055 accounts each year, with about three-fourths of all companies serving fewer than 3,000 accounts annually. In the previous survey, about 63 percent said they served fewer than 3,000 accounts each year. On average, 68 percent of accounts are residential and 32 percent are commercial.
The vast majority (88 percent) consider themselves to be independent, privately held businesses. The remainder characterize themselves as either independent publicly held, franchise or a chain operation.
Companies operate an average of 10 offices, however three-fourths of those surveyed said they had only one office. About 80 percent of companies in the industry have been founded after 1969.
Gross pest control company sales in 2004 averaged $650,211, with four-fifths having average sales below $1,000,000. The average level of gross sales expected for 2005 was at $703,881. Just over three-fourths of those surveyed said they expect an increase in sales in 2005, and the average increase expected was about 17 percent.
Companies spend an average of close to 12 percent of total service revenues for termiticides and about 11 percent for general pest control chemicals. Termiticide prices have increased since 2001, when PCOs reported they spent about 8 percent of service revenues for termiticides.
Advertising practices among PCOs have remained largely consistent, with Yellow Pages advertising remaining the most popular advertising medium, used by about 78 percent in the past year. About 32 percent have used newspaper advertising, while 29 percent have used direct mail. (See related story on page 20 of this report.)
Compared to the past two years, more PCOs are using newspaper, direct mail, internet advertising, and home/mall shows, with these types of advertising posting small gains this year. Richard Monastero, Amtech Pest Control, says he has recently adjusted his advertising strategy. “We are starting to mix it up,” he said. “We’ve always done a lot of direct mail and we’re doing more of that.” Monastero says he’s also trying to reduce the amount he spends on Yellow Pages advertising. “With phone books there used to be just one in this area. Now there are four or five phone books,” he said. “You can go crazy trying to figure out which one consumers are going to keep.”
Overall, about 10 percent of PCOs said they did not advertise in the past 12 months, while 90 percent said they used one or more forms.
Internet advertising is also becoming more commonplace, with about 45 percent of companies now featuring Web sites. That’s up from 42 percent last year and about one-third in 2003. Currently about 27 percent of those with Web sites offer customers the capability of scheduling a service visit online, while 20 percent allow customers to pay for services online. More than four out of five companies, meanwhile, have Internet access, with the majority using a high-speed connection for that access. soi

The author is former managing editor of PCT magazine and a frequent contributor. She can be reached at lmckenna@giemedia.com.