[Annual Termite Control Issue] Market Opportunities: How Will You Cash In?

Termite momentum is building slowly but surely in all the familiar places as the rebounding housing market creates new opportunities for inspections and pretreatments. While progress seems to be taking its time in parts of the Northeast, many PMPs in the South report notable increases in termite revenues, in part due to housing and in part due to the warm, wet weather conditions much of the South experienced in 2013.

“We’re seeing a dramatic resurgence in termite swarms here in Atlanta — the best in 15 years — thanks to the record rains of 2013,” says Future Services’ Darrell Lee, who also acknowledges the positive influence of the recovering economy. Weather is playing a role in the rate of termite propagation in other areas too, as Alan Farmer of FarmerGuard Pest Control looks for an above average swarm in Birmingham, Ala., this spring. And ProBest Pest Management’s Keith Birkemeyer is already profiting from the warm, wet monsoon season in Phoenix. In Atlanta, Brian Lunsford found Inspect-All Services’ termite business to be virtually recession-proof during the economic downturn; now he’s anticipating even more dramatic growth. “No matter what state the economy is in, most people will not sit idle while their home gets destroyed by termites,” he said. “The upswing in new construction will undoubtedly bring us new pretreatment work this year, and once customers have more disposable income, we expect calls for preventative termite treatments to continue to increase as well.”

Lee Tubbs attributes EnviroGuard’s hefty 18 percent year-over-year rise in termite business to the rallying economies of Southeastern Tennessee and Northwestern Georgia, coupled with customer referrals and his team’s commitment to “relentless networking.”

The termite story takes a different turn in parts of the Northeast, however. “We are still waiting for the housing market to rebound here in Boston, bringing new opportunities for inspections and termite discoveries,” says Dennis Mastrolia of Dennis the Mennis Pest Experts. “The financial environment continues to be unstable here, and many homeowners are hesitant to invest in termite management, even when the services are clearly needed.”

The situation looks brighter for Sam Soto’s First Rate Solutions, which serves the metro New York market. Soto saw a remarkable 20 percent uptick in termite business in 2013, mostly from established customers who opted to add on termite services.

In the Midwest, Rick Steinau, Ace Exterminating Company, has seen revenues inch up a few percentage points in Cincinnati, while Scott Steckel of Varment Guard in Columbus, Ohio, says sales have been flat for five years and actually have decreased over the past decade. But Steckel doesn’t blame the economy or the weather. He attributes the downward trend to the successful efforts of manufacturers. “Remember when fleas all but disappeared because the products became so effective?” he asks. “That’s where termites are now, at least north of the Mason-Dixon Line. Ultimately, they will build up resistance and we’ll see a resurgence, but for now, populations here are waning.”
 

Opportunity Is Knocking.

Whether termites are plentiful or relatively sparse in your region, it helps to have a plan to make inspection and treatment services more appealing to your customers (and potential customers). Most companies offering termite services give customers the option of purchasing this protection as a standalone service or as part of a bundled package with a general pest management contract (offering customers whole-house peace of mind).

Kevin Pass says that bundling has triggered an increase in Action Pest Control’s recurring-revenue accounts. “We basically do an exterior termiticide wrap and/or place monitoring stations, depending on whether or not active infestation is found,” he said. “Service then becomes every other month pest control with monitoring of termite stations. This has fueled our business because customers like having one company and one bill, along with an integrated warranty.”

Bundling is just the start. If you’re willing to invest the time and resources, you can get even more creative with marketing efforts, pricing incentives and new service features.

For example, Lunsford markets termite management through online deals. “We’ve been hugely successful with these offers,” he says. “We offer a lower-than-market price to convince potential customers to purchase the deal. Once they experience our service, they typically sign on with us for a longer-term relationship. We train our team to cross-sell these customers to other recurring services as well. We lose some margin in the beginning by offering our service at a discounted rate, but in the end we gain a loyal customer. I liken our running these deals to how companies would offer dirt-cheap pretreatments years ago to capture the eventual renewals: You sacrifice up front but win in the long run.”

Inspect-All Services also focuses a significant amount of effort on incorporating new technologies into its customer service program. “As an example,” Lunsford said, “we take photographs during our termite inspections and produce a digital report for customers before we even leave their driveways. Customers no longer have to take our word for it: They can see crystal-clear digital photos of questionable areas in the crawlspace, attic or other area of the house. Our report also contains property-specific descriptions of the inspection, links to our website and contact information for (plus a photo of) our inspector. This technology gives us a sales edge over a competitor who uses only handwritten documents and verbal descriptions. These digital reports have really changed the game for us, helping us build outstanding credibility with not only new leads but also established customers.”
 

Low-Cost Mentality.

Across all markets, pest management companies are facing pricing pressure. “The economy continues to drive companies to lower pricing,” says Birkemeyer. “When I moved from Florida to Arizona back in 1999, $1,500 was considered a reasonable fee; now you’re lucky to get $800. People are still leery of the economy and they’re getting companies involved in bidding wars. I’ve had folks say, ‘If you can’t beat $350, you might as well leave now.’”

Steinau agrees. “There are always consumers who will seek the lowest prices,” he says. “That downward spiral affects everyone.”

Jay Corprew, Albemarle Termite & Pest in North Carolina, responds to pricing pressure in several ways: by offering qualified former customers the opportunity to reinstate their termite coverage without paying the standard up-front fee, by reducing the full treatment cost for homeowners who have purchased services within a specified time period and by making it possible for homeowners to switch to Albemarle from another company without full treatment cost.

Many companies have restructured their payment terms, hoping that flexible payment arrangements will be enough to keep customers satisfied. “We’ve started offering customers the option of splitting their annual renewal fee into three payments. At their request, we will auto-bill their credit card in installments rather than one lump sum,” says Lee. “We’re hoping our flexibility will translate into higher renewal retention.”

Mastrolia believes in payment flexibility and then some. “We offer payment plans, price adjustments — whatever makes the closing convenient for the customer. When you’re committed to winning the business, you go the extra mile.”

The author is a frequent contributor to PCT.