[Commercial Pest Control] Building your commercial business?

Author's note: At $2.1 billion, the commercial pest market is a vast and growing opportunity for pest management companies of every size. Scan the Yellow Pages and you will see that most of your competitors offer commercial service. The opportunity is real but not a free ride. This article details the 10 most common problems residential service companies make when they decide to “go commercial.”

WHAT’S YOUR COMMERCIAL STRATEGY? Every pest control company has one, even if it is to avoid commercial work all together. Many companies treat commercial service on a “it happens when it happens” basis, picking up the low-hanging fruit presented by Vinnie’s Pizza, the local convenience store and Stella’s Hair ’n Nails (who called when Stella had to re-do a manicure after a mouse streaked across her salon). To get beyond the local, opportunistic level of commercial pest control and make it a steadily increasing percentage of your business offers a lot of benefits to a pest management firm. Here are the most endearing attributes of commercial business:

It’s year-round: Commercial accounts need your service throughout the year because their customers have no more tolerance for pests in January than they do in July.

It’s huge: Pest control industry research firm Specialty Products Consultants estimates that over $2.1 billion was spent on commercial pest management in 2007. The market is dominated by Ecolab, Terminix, Orkin, Steritech and Copesan, but even after they’ve taken their share, there is the better part of $1 billion to split among all of the other companies.

It’s growing: Specialty Products Consultants says there was an 8.5 percent increase in commercial pest control during 2007, compared to a slight decrease in residential pest control in 2007.

It’s multi-faceted: The variety of commercial pest control opportunities is staggering. You will be in the bird control business one day and fly control the next. Mosquito control is a growing segment and the booming bed bug control market continues to amaze industry professionals.

These benefits add up to a powerful argument to make commercial pest control a key component of your growth objectives, but many residential companies set out to get more commercial business, gain a foothold in the market and then fail to retain the clients they have won. They are in the business, they are out of the business. What follows are some reasons why. All of these mistakes reflect, in one way or another, failure to understand the difference between residential and commercial pest control.

You have no business plan. Business planning doesn’t come naturally to many pest management professionals who have typically grown a successful residential business with no plan at all. While the resources required to service a residence are similar regardless of the demographics of the neighborhood, commercial market segments require very different resources, different investments and different training. Thinking through these requirements forces an evaluation of your ability — and your willingness — to make a sustained investment in commercial growth. Your commercial plan doesn’t have to be elaborate, but it should answer two questions:

1.) What are my objectives? What segments offer the best opportunity in your area? How much of your business do you want to devote to commercial? What dollar volume targets do you think are attainable?

2.) What resources are required to attain those objectives? This exercise imposes a discipline of thinking through the inherent differences between residential and commercial markets — and forces a candid evaluation of your level of commitment to commercial business development.

You will need to refine and perhaps dramatically alter your business plan as you gain experience.

Attempting to sell commercial customers with a residential sales force. Consider the difference between selling an SUV to a young family and selling a fleet of vehicles to Terminix and you can appreciate the difference between selling residential and commercial pest control. Your very best residential salesperson may well be the worst person to sell commercial pest control. He or she may appeal effectively to the emotional side of the prospect, pointing out the importance of pest control to the health and welfare of the family and the importance of protecting their home. Put that same prospect in a commercial setting and the rules of the game change dramatically. Instead of a homemaker protecting her family, you are dealing with a professional who analyzes every quantitative fact. The commercial representative must structure a presentation that addresses that business-to-business environment. Sales leads represent another striking difference between residential and commercial sales. Commercial representatives must be lead generators, not lead runners, and lead generation comes from cold calls. A lot of cold calls.

Servicing commercial accounts with residential technicians. It doesn’t take long to appreciate the different service required to succeed in commercial pest control. Your technician will be held to a higher standard of service and will be required to adhere to strict compliance with the client’s business needs. Technicians used to showing up at a home within a two-hour framework often have difficulty contending with a 30-minute early morning (or late night) window to service a restaurant. As noted in Reason #10, the technician now has responsibility for checking and updating pest sighting logs and completing application reports that he or she never saw in a residential position. This doesn’t mean that a diligent and energetic residential technician cannot handle commercial work, but the investment required to train and monitor that technician should be carefully considered.

Allowing the client to let you fail. Even with your technician’s best efforts, you can still lose an account because your customer maintains a low standard of hygiene. Pest control in a busy commercial kitchen, public housing or neighborhood grocery depends more on the sanitation practices of the staff than the service provided by a technician.

The individuals responsible for cleaning must be trained to maintain a level of hygiene that makes pest management possible. Their management must agree to the need for that standard and held accountable for failure. Detailed documentation of inadequate cleanliness must be noted on service tickets and brought to the attention of the client for correction. There are, naturally, situations in which holding the client accountable will only lead to termination; however, in those cases, the result is inevitable.

Pricing that wins business but loses money. The commercial pest control market may be highly competitive but offering a low-ball price inevitably leads to disaster. As it is in residential pest control, labor is the largest cost output for commercial pest control and your service technician cannot perform a 30-minute service in the 10 minutes that would make that service profitable.

Make every effort to take advantage of efficiencies when they exist — factor in reduced travel time when a prospective account is near existing accounts for example — but do not allow your desire for business overwhelm your need for profit. Also, keep in mind the value of superior service to the client. A restaurant faced with closure by the department of health cannot afford to experiment with cut-rate service providers. The executive in charge of pest control procurement was not asked about the savings on pest control when the infamous video clips of rats scurrying in New York City Taco Bells appeared on the city’s local TV news stations.

Poorly prepared proposals. Closely linked to pricing problems are hurriedly developed proposals that fail to comprehensively describe the pest problem and your service solution. Here again, proposal writing is not a skill developed in the residential pest control market but critical to success in commercial pest control.

The consequences of submitting a poorly thought-through proposal can be a long-term nightmare. For example, if you sign a three-year contract on the basis of a low-cost bid, you may have to live with a loss for the entire contract period. Clients tend to be unforgiving when told that you underestimated the time required to service their property.

Lack of patience. A commercial sales representative based in the Washington, D.C., market spent an entire year calling on a large property management company. Every call resulted in an emphatic “no.”

That same sales professional now handles hundreds of thousands of dollars in commercial pest control contracts for the very same property management company that denied him any hope of success. Tenacity may be helpful in residential pest control, but in commercial sales, it is the very most fundamental requirement of the trade.

It is equally essential for company managers to understand that instant gratification and commercial sales are incompatible and unrealistic. You will need to develop a reputation, build on that reputation and leverage referrals to grow commercial pest control and that is a long-term process. The business plan recommended in Reason #1 on page 138 should reflect the time required to build a commercial business practice.

Inadequate account management. Advertising agencies often have a high-glamour team of new business specialists who then turn over the day-to-day account management to more stalwart staffers once the account has been won.
The analogy applies to commercial pest control. Your sales force succeeds because they win accounts. Your commercial business can succeed only if you can keep those accounts. The traits required for both needs are very different. Account managers build effective, long-term relationships and at the same time gain insight into the real needs of the firm. Their compensation should depend primarily upon account retention. This is the contact person in your firm who coordinates service calls and callbacks, resolves any outstanding issues and avoids the most common source of difficulty between service firms and clients: invoicing problems. A property manager with dozens of facilities requires one, detailed invoice. Most systems supporting residential pest control cannot handle this requirement and “off line” manual preparation represents a cost usually not considered when the proposal is developed.

Inability to service client facilities outside of your geography. Call it geographical crunch time. You have built your commercial reputation to the point that large, regional or even national companies would consider you as a prospective vendor but you cannot service all of their branches or outlets. No wonder Ecolab, Terminix and Orkin dominate commercial pest control. The solution? Form an alliance with similar companies in other geographies or solicit membership in a consortium of companies such as Copesan. Other companies, such as Truly Nolen, have effectively formed their own service networks to suit the individual needs of the prospect.

Failure to comply with client record-keeping needs. Three letters — AIB — represent the American Institute of Baking Consolidated Standards for Retail Food Establishments. The requirements for pest control standards can be found at www.aibonline.org. These standards specify the kind of control required for general pests, rodents, flies and birds and the record keeping required to document performance. Large clients generally demand this record keeping online and for it to be constantly accessible. Since a poor AIB audit can mean someone’s job, the consequences of failure are high.

FINAL THOUGHTS. Commercial pest control opportunities expand every year and should grow more rapidly in the future than residential pest control. As previously noted, you always have the option of serving the most accessible tier simply by extending residential service to local businesses. If you want to move up to the next step and build a sustainable, growing business in commercial pest control, then study these mistakes carefully. When you have done that, return to Reason #1 and begin your plan.

The author has been a sales and marketing executive in the pest control industry for 20 years.

Dealing with Buying Groups

Property management firms have traditionally acted as consolidated service providers for their client properties.

They contract with a variety of service firms, from landscaping to snow removal to pest control, and act as a single-source provider to the homeowner’s association or condominium board of directors.

According to Wayne Golden, vice president of commercial operations, Orkin, the trend is growing and adds a complicating factor to commercial pest control at the national level. “Increasingly, we are dealing with buying groups for every kind of customer from hotel chains to retail operations to biotech firms,” he said. “Since we are kept at an arm’s length from the actual customer, our ability to build relationships with the customer is impaired and we have to find ways to overcome that.”

This complication can be made worse if the buying group delays in communicating a service issue. “We may have a two-hour response commitment to the client, but if the buying group staff delays notifying Orkin of an issue for three hours, we’re already late by the time we learn of the problem,” he said.

Golden coaches his team to get as close as possible to the buying group contacts who are responsible for acting as liaison with the customer and to take advantage of every opportunity to build a relationship with customer representatives at the local level while he and his national accounts team do the same thing at the national level.

The Cost of Bed Bugs at Luxury Hotels

Protecting luxury hotel guest from pests can be highly lucrative but equally demanding. Orkin Vice President of Commercial Operations Wayne Golden has had a long and rewarding career seeing that the country’s most pampered hotel guests encounter no unwanted intruders during their stay. 

“Zero tolerance for pests.  That’s the minimal acceptable level,” he said. The high sanitation standards at high-end establishments has helped pest control firms maintain this standard but now, their world has changed because of bed bugs. 

“Whatever it takes, we have to fix the problem,” he said. “Bed bug elimination becomes our primary business.” 

The response of one luxury hotel to a bed bug problem shows the determination hotels at this level have to solve the problem. “They closed down the room,” he said. “(They) removed and discarded all furnishings, then replaced the wall coverings, window treatments and wall fixtures while we treated that room, the rooms on both sides and the rooms directly above and below. The problem was solved.”

An infested room can be closed for more than two weeks.  In addition to the costly remediation, a hotel absorbs thousands in lost room charges.