SUPPLEMENT: Orkin's 100th Anniversary

ORKIN TURNS 100

The “Big O” turned the big 1-0-0 this year. Is Orkin prepared to handle the next 100 years as successfully as it handled the last?

One of today’s pest control industry powerhouses began as a modest door-to-door rodenticide sales venture in 1901, courtesy of entrepreneur Otto Orkin. The Latvian immigrant concentrated on rodent control for his first 20 years, then added pest and termite control to his repertoire. By 1919, Orkin’s business had grown into the precursor of the model that is practiced daily by pest management professionals across the country.

Orkin was a master salesman and his strategy of collecting customer recommendations and giving them to prospective clients — and his establishment of the icon “Otto the Rat Man” — gave indications that the company was destined for marketing greatness.

While the company’s growth was slow and steady for its first couple of decades, a global conflict served as an unexpected launching pad that propelled the company on its path to industry leadership.

When the War Manpower Commission declared pest control a “needed service” during World War II, Orkin provided pest control to 150 military establishments. Innovations made during the wartime boom and an influx of technical experts helped position Orkin for strategic post-war growth. The business took off after the war and Orkin expanded into the South, Midwest and West in the 1950s.

ACQUIRING GREATNESS. In 1964, Wayne Rollins, then head of Rollins Broadcasting, made the move that Business Week compared to “Jonah swallowing the whale” when he purchased Orkin Exterminating Co. for seven times Rollins’ $9.1 million annual revenues. The transaction was the first documented leveraged buyout in U.S. business history. The move was so innovative that Harvard Business School would later make the buyout a case study.

Within 12 months of that exchange, in what Orkin Executive Vice President Glen Rollins calls “one of Orkin’s most important purchases,” the Rollins’ bought Arwell Inc., a Waukegan, Ill.-based termite and pest control company. The company, owned by Wellington W. Scott, served primarily commercial customers in the Midwest and boasted 30,000 monthly customers and telephone answering centers in nine Midwest states: Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, Ohio, South Dakota and Wisconsin. The 1965 acquisition gave Orkin Exterminating Co. the real estate it needed to become the nation’s first national pest control company, and served as the first of many acquisitions the company would make to grow its pest control business.

In the years following Orkin’s purchase in 1964, parent company Rollins Inc. diversified into everything from wall coverings, home and business security, lawn care, plantscaping and maid services (car dealerships, television, radio and outdoor advertising were already a Rollins Inc. staple). But encroaching competitors, an influx of post-chlordane termite claims and flattening revenues prompted the 1997 sell-off of Rollins’ other businesses. Now, the company could concentrate on what Orkin’s Gary Rollins called “the nucleus of Rollins Inc.”

The late 1990s, in an understated way, seemed to put the icing on a paradigm shift at Orkin that had been brewing since chlordane’s exodus from the industry in 1988.

For example, in 1997, Orkin changed acquisition strategies. The company went from “Orkinizing” (the process of buying a pest control company and changing that company to mirror Orkin’s style) to “buffet-style” acquisition (letting the acquired company adopt Orkin characteristics only if it is best for business).

When asked about that strategic change, Glen Rollins said, “It has been successful. I believe our track record of successful acquisitions has improved. And most importantly, we’ve been successful in adopting the specialties and strengths of the companies we’ve purchased. We’ve been more successful at preserving their specialness — and in many cases, the lessons Orkin has learned from acquired companies have revolutionized our business practices.”

For instance, the acquisition of PCO Services in the fall 1999 changed Orkin’s commercial business — and not just because it allowed major access to Canada. “PCO taught us to be more proactive (with our commercial customers),” Glen Rollins said. “In general, we’ve learned we can access our service technicians to increase our commercial sales. Monthly, we can add several customers per route simply by asking technicians to do it — and then showing them how. The best part is, it enhances everyone’s income.”

Besides the PCO deal, Rollins said Orkin’s purchase of Prism and Redd Pest Control were key to Orkin’s growth. “What we have found is that the more solid the team, the easier the transition is, regardless of the size,” he explained. “There is a lot of communication that needs to take place. It takes a lot of work, and you have to be careful not to disturb what makes them terrific.

“PCO was dominant in Canada. We basically melded into its team and plan,” he said. “Prism was the reverse. We were bigger, stronger, and they converted to our pay plan and benefit packages. But their quality assurance department was more respected than ours, and that prevailed Orkin-wide.”

In the case of the purchase of California-based R&S Exterminators, Orkin got a boost by being able to look at R&S’s termite control playbook. The purchase allowed Orkin to learn R&S’s specialized strategies for the oft-perilous California termite marketplace.

“Standardization can be a handicap — in this case, taking a more innovative approach to treatment can often be the difference between success and failure,” he said. “In addition, California’s laws and regulations are so demanding, we had to change our pay plans and the role of inspectors in our typical branch. We had a typical range of  pay plans, etc., that were well suited for other parts of the country. Not California.”

Is Orkin still concentrating on new acquisitions? “We continue to be opportunistic and that will be true forever,” Rollins said. “There are a couple of dozen pest control companies that are particularly attractive to us. The qualities we value most, in any company, including our own, are the three major assets: reputation (brand), employees/management team and the how customers feel about the service they’re getting. We want companies that are strong in all three. In addition, it is important to us that companies know an Orkin merger means that their businesses and employees will be in good hands.”

Glen Rollins says that recent acquirees are proud to be part of Orkin. “They know we respect them and always try to do what’s best for their customers, not what’s good for Orkin corporate,” he said. “No longer is Orkin inclined to visit wholesale or systematic changes on acquired companies.”

COMMERCIAL SUCCESS. Also, in the mid- to late-1990s, Orkin took a long, hard look at its commercial business and made some strategic changes. Even before its purchase of PCO Services in 1999, Glen Rollins helped Orkin redefine its commercial strategy.

“It wasn’t until the summer of 1996 that Orkin actually had a commercial division,” he said. Until then, dedicated commercial offices were a means to an end rather than a cohesively planned strategy. Commercial sales and service personnel reported only to Orkin’s residential division heads.

“In June of that summer, we decided we were going to be the best pest control operator for commercial customers,” Rollins said. “We needed to form a fairly large team of people dedicated to the needs of business customers. We took the top 40 U.S. markets and developed commercial teams for each.” From 10 dedicated commercial branches in 1996, Orkin now has nearly 50 commercial branches in those 40 markets, not including 25 more in Canada, thanks to the PCO Services purchase.

When asked if Orkin has found that dedicated commercial branches are more successful in generating commercial business and servicing customers than residential/commercial branches, Rollins said that it “depends on the market. In a large market, it makes sense to specialize and have teams that can focus on one type of customer. In a rural area, there aren’t as many customers or competition, so you can excel at both. It costs more to be specialized.”

The strategy immediately increased sales and profitability. Orkin took that success further as it re-branded Orkin Commercial as Acurid, Commercial Services by Orkin. “We’re extremely pleased with our progress,” Rollins said. “We have a few more years to go before Acurid catches up with Orkin’s brand recognizability and reputation.” In fact, Rollins incorporated the Orkin brand in the Acu-rid logo. “It helps a lot with our credibility. Like Northstar by Cadillac. We feel the Orkin brand is still important for business owners.”

How important is commercial business to Orkin?
“It’s as important as anything we do — it’s now over one-third of Orkin’s revenue base, up from one-fifth 10 years ago,” Rollins said. “We are now the largest commercial provider in North America. We’d like to be as successful in the U.S. as PCO was in Canada (35 percent of market share). We see them growing and thriving — we’d like to see that happen in the U.S. as well.”

BETTER PROFITABILITY THROUGH RETENTION. Many pest control firms must deal daily with employee turnover. And because Orkin is such a large organization, it is even more prone to mass exodus. At least it used to be. Now, through new employee retention programs, Orkin has taken drastic steps in stemming the tide of exiting employees. Orkin has had double-digit turnover reduction rates each year for five years, and working toward a goal of 75 percent retention rates.

Orkin continues to improve customer retention as well. In 2000, the company had 10 percent fewer customer cancellations. And the company has even more aggressive goals.

“(Employee and customer retention) are definitely related. In the last five years, we’ve focused on maintaining our current customer base, rather than just adding new customers. We’ve also started thinking about it as relationships and changed the way we evaluate branches based on that thought process,” Rollins said. “We want a homeowner to stay with us four years or longer, and our commercial accounts to stay for eight years or longer for pest control.” Termite customers? “We want to keep them for 10 years or longer.”
One of the many ways Orkin is working on customer retention is by becoming more flexible to consumer preferences. For example, the company now offers a variety of service options other than the in-stone monthly service Orkin used to mandate.

In 1997, six of Orkin’s 35 regions offered every-other-month service, and Orkin was moving away from quarterly service. “All but one region (New England) emphasizes every-other-month service,” Rollins said. “More importantly, we’re trying to emphasize a feeling to customers that they are getting a year’s worth of pest control protection for their money — six times a year proactively. We’re trying to de-emphasize the number of visits and emphasize results and quick response.”

Because of the pest pressure, or lack thereof, in cooler climates, Orkin offers “Orkin Optimum” in New England. In Canada, it’s two or three proactive services each year.

When asked about the key to sustaining success, Rollins answered, “Our people, our reputation and the way our customers feel about us.” In fact, the accomplishment Glen Rollins is most proud of is Orkin’s progress in employee and customer retention.

THE ROLLINS CRYSTAL BALL. The company is “very, very committed to reaching (employee and customer) retention, profit and growth goals,” Rollins said. “We’re going to be working on that for a long time. We’re going to try to make it easier for customers to make Orkin a part of their lives for years to come: convenient, rewarding and easy. The way they pay, the way we communicate with them and the reporting of diagnostic information for businesses.”

What are the key challenges Orkin expects to face in the next several years? “We’re in the people business,” Rollins said. “Everything will revolve around that. I don’t know what industries are going to be thriving in the future, but they’ll all be trying to attract talent. That’s what we sell. People are our product. People have to show up on doorsteps and they need to be well trained and courteous. The labor market is challenging and we have to compete with everyone else trying to get good employees, even in other in-dustries. We will continue to try to make Orkin a great place to work.”
When discussing Orkin’s future many wonder when 35-year-old Glen Rollins will take the helm from his father, Gary. “I think my dad will be here for a while — and he enjoys me playing a larger role (in the company). We don’t have a formal (succession) plan in place. He’s been the architect of my career at Orkin and I think he enjoys working together and the freedom that affords him.”

BUILDING A BRAND

Here’s the story behind Orkin’s marketing muscle.

Even though the playing field has changed and many more pest control companies are in the market today, according to advertising agency J. Walter Thompson (JWT), the recognition of the “Orkin diamond” and “Orkin Man” icons seems as dynamic today as when Orkin was the only national player on the scene.

The brand is so recognizable, in fact, that research equates its recongizability to Ford and Motorola. On a regular basis, columnists across the country randomly refer to “the Orkin Man” in their daily papers and magazines. There is little doubt that the marketing miracles performed by Gary Rollins and his associates have helped make Orkin what it is today.

Orkin has innovated many bold marketing moves, from executing the most rudimentary form of grass-roots marketing (thanks to founder Otto Orkin’s door-to-door talents) to being the first pest control company to produce and run a television ad to cross-market its services between separate businesses.

MAKING TV HISTORY. One of the most notable of these is the television/advertising component. Orkin insiders make no bones about the fact that Orkin’s early entry into television advertising gave the company an edge that helped make Orkin what it is today.

When JWT landed the Orkin Exterminating Co. account in 1976, the ad agency had no idea it was about to embark upon one of the longest client/agency relationships in the contemporary history of advertising. While many companies change ad agencies with the frequency some executives go through cars, Orkin and JWT have spent 25 years together.

When Orkin Vice President of Marketing Steve Danuser started with the company in 1984, the relationship with J. Walter Thompson — and Orkin’s comfort with advertising in general — was already strong. “There was always a wealth of commitment to advertising,” he said. “And not just advertising that gets your attention. Senior management emphasized advertising that leaves you with something that lasts.

“Early on, TV advertising was the fastest way to reach consumers, and there weren’t many companies doing it,” he said. “‘Otto the Orkin Man’ was branding genius on Otto Orkin’s part. Even better than that was the personification of Otto the Spray Can’s metamorphoses into Orkin’s current icon ‘The Orkin Man.’”

Over the years, that association worked like a charm. “Consumers recognize him even more than the Orkin diamond logo,” said Danuser. “The personification of the Orkin Man was, in my opinion, one of the smartest marketing moves ever. Keeping him serious has always been key — very professional, very serious. And I think that’s helped the pest control industry as a whole.”

When asked to explain the strength of the Orkin brand icons, Mark Simonton, senior partner and management director at J. Walter Thompson, said, “Orkin was the first pest control company running ads on television. The ‘Big Number One’ campaign solidified that perception in the minds of the public. Back when that ad ran, the world was full of fly-by-night local PCOs. The standardization of Orkin was different and compelling for consumers. Being first on the scene with clean-looking diamonds, epaulets, advertising, clean uniforms and trucks allowed Orkin to set itself apart and build a reputation that continues to be unmatched.”

JWT created “Big Number One” in 1977. The next big breakout campaign was the “Orkin Army” in 1982. After a short lull, the “Exterminator” banged out of the gates, lasers blazing, destroying the competition (and bugs, of course) in 1989.

Although the “Orkin Exterminator” is by far Orkin’s most successful ad for lead generation, at least one other Orkin ad campaign enjoyed high-profile notoriety in the consumer media. “With ‘Fake Out’ in 2000, we got tremendous coverage because Orkin used public relations and online marketing to parlay a potential negative into positive national media coverage,” Simonton said.

It started when Orkin began receiving outlandish calls from consumers wanting Orkin to replace their TVs. The multiple television spots began with a bogus “product” (in the case of one, former child star Gary Coleman appears to be pitching a nonexistent new TV show) and is “interrupted” with what looks like cockroaches crawling across viewers’ television screen.

Because of the realistic appearance of the cockroaches, many viewers ended up being shocked into action, usually involving hurling shoes and other objects at the TV screen. In several cases, the objects were heavy enough to topple the television. Orkin took advantage of the frenzy and put together a contest that ran on its Web site — “Orkin Got Me.” Consumers, including those who actually broke their own TVs, logged on, typed in how they got fooled and what ended up happening as a result. Contest winners received TVs.

That’s not the first time Orkin’s marketing department has taken a gamble on an unusual tactic and turned a would-be negative into a positive. In the 1990s, after a Florida Panthers (NHL) player killed a rat with his stick in the Panthers’ locker room before a game and went on to have a great game, fans took to bringing rubber and plastic rats to games and lobbing them onto the ice after a Panthers goal. When the franchise approached various pest control companies to sponsor a rat clean-up crew, Orkin made a power play that paid off. The company sent Orkin men (in uniform) onto the ice with buckets. “The Orkin Rat Patrol” got major airtime as the young team made it to the post-season.

CHALLENGES FOR THE FUTURE. “[Marketing is] very important. That’s one of the challenges we all face. It’s getting tougher and tougher to reach customers through conventional media. It’s going to get more difficult. It’s on my mind a lot,” Orkin Executive Vice President Glen Rollins said. “I just think it’s getting harder to reach customers through TV and radio. There are a lot of reasons. But perhaps most importantly because today’s consumers are more skeptical about being sold to by a commercial.”

Rollins said that current marketing challenges will continue to put more emphasis on great service — and the selling of that idea. Of primary importance: “We need to use all customer communications at our disposal to emphasize our commitment to service and superior technology. We have to do a better job of defining ourselves.”

Rollins admits that during the early years, selling Orkin was fairly easy. But things have changed — not just for the pest control industry, but everywhere. “I think you have to sell to all people differently,” he said. “I believe there is a general shift going on. It used to be you lit the fuse on TV or radio and it worked. Customers are more sophisticated now and we all have to work a little harder to define what we stand for and execute well rather than just being on the TV all the time. It’s hard to grab people’s attention. And grabbing people isn’t enough anymore. You have to define yourself, too.”

That’s one of the reasons Rollins’ favorite marketing initiative is the Orkin Exterminator (robot) ad (circa 1998). “It not only grabbed you, but it said quickly, ‘We use technology and we’re the expert.’ It’s hard to accomplish both, and that ad did.”

THE O. ORKIN INSECT ZOO

Orkin Pest Control went where no corporation had gone before: the Smithsonian

In 1993, Orkin and the Smithsonian teamed up to create the O. Orkin Insect Zoo at the National Museum of Natural History at the Smithsonian. The move earned Orkin the honor of being the first corporate sponsor of a permanent exhibit at the Smithsonian. Simultaneously dubbed “the Smithsonian’s sellout to Otto the Orkin Man” and “a permanent crowd pleaser…a slick and scientifically solid celebration of the creepy-crawlies that actually dominate this planet,” (Washington Post, 9/10/93) the insect zoo commitment was not entered into lightly by Orkin.

“In the late 1980s, Orkin had produced an interactive insect kiosk for the National Museum of Natural History at the Smithsonian,” said Orkin’s vice president of marketing Steve Danuser. “Because of that relationship, we were the first approached with the idea of helping build a new insect zoo. Everyone liked the idea, but there were some important questions to consider.”

There was some concern regarding the “green” mindset usually associated with the Smithsonian. “We addressed that concern with the museum,” Danuser said. “We, as a member of the pest control industry, needed to make sure the Smith-sonian was not anti-pest control. They were in complete agreement with the need to control insects inside homes and businesses.”

Still, Orkin remained cautious. “Since perception is reality, we wanted to know if the general populace would negatively associate one icon with the other,” Danuser said. “As a result, Orkin commissioned a national phone survey, thinking that we’d have to take a hard look at the project if Americans thought the union less than wonderful. But the survey results came back unbelievably strong. The American public thought it was a great idea, too.”

With 2 million visitors yearly, the O. Orkin Insect Zoo is one of the most visited exhibits in the National Museum of Natural History.

SMITHSONIAN O. ORKIN INSECT SAFARI. This year Orkin rolled out a new commitment to consumer education: the O. Orkin Insect Safari. In 2001 alone, the exhibit traveled to more than 100 cities, educating students of all ages about insects.

“Sometimes, we get asked ‘Why does Orkin invest in insect education?’” Danuser said. “One of the less obvious reasons is that for years, parents and teachers have been calling us to talk about bugs at their children’s schools. That program, internally dubbed the Orkin Speaker’s Bureau, is one we’re very proud of. The O. Orkin Insect Zoo, and now the traveling Smithsonian O. Orkin Insect Safari, are extensions of that education outreach.” To Orkin, packaging the “insect road show” in this way formalized the outreach and made it an even richer experience for students.

“One benefit of insect education that speaks to Orkin’s bottom line — and the bottom line of the industry — is the more homeowners know about bugs, the more they realize professionals are the way to go,” Danuser said. “The Smith-sonian partnership allows Orkin to educate the public on a major scale.”
Also, when Orkin officials looked at their best customers, they discovered most of them frequented museums and cultural events. “So the O. Orkin Insect Zoo and the Smithsonian O. Orkin Insect Safari are a good fit for us,” Danuser said. “Partnerships like this are the next wave of advertising. It’s all about brand awareness. Revenue follows brand awareness.”

Orkin’s Glen Rollins added, “I think Orkin’s support of the O. Orkin Insect Zoo and the O. Orkin Insect Safari is important, both within the company and the community. It is a source of pride. It was groundbreaking for both of us. The aesthetic quality of both exhibits, as well as Orkin’s association with the name ‘Smithsonian,’ is unequaled from a visibility and credibility standpoint.”
Is the investment worth it? Given the high price tag ($2 million per year to operate the exhibit from March through November), how long will Orkin continue to support the traveling exhibit?

“We’ll reassess at the end of 2002,” Rollins said. “The Insect Safari has been very well received. Even though it was done to commemorate the centennial, we’ll continue it as long as it makes sense.”

Editor’s note: This Orkin supplement was written by Elana Mears, a Cleveland-based freelance writer. She can be reached via e-mail at emears@pctonline.com.