growing your business for the long term
GROWING YOUR BUSINESS FOR THE LONG TERM BEING PROFITABLE IN PEST MANAGEMENT Mike Davis
Michael C. Davis Chief Operating Officer Black Pest Prevention, Inc.
Mike Davis is the Chief Operating Officer for Black Pest Prevention, Inc. headquartered in Charlotte, N.C. Black Pest has several Service Centers in the Charlotte metro region as well as a Service Center in Charleston, S.C. Black Pest is a residential service company offering pest prevention and termite protection. Mike began his working career with the CSX Railroad as a clerk working his way up to Chief Dispatcher when he left 15 years later. He then spent 14 years with Bug Out Service, Inc. in Jacksonville, Fl. working with Paul Felker pioneering the bundling of general pest and termite services, marketing them as one service and developing the monthly billing concept. Ten years ago Mike accepted his current position with Black Pest Prevention and was tasked with implementing the same business model there. Ten years later Black Pest has successfully made the transition from a new construction pre-treatment company to the leading residential service company in the Carolinas. Under his leadership Black Pest transitioned to all recurring residential service with monthly billing and credit card on file. Black Pest achieves negative net receivables every monthly billing cycle, an achievement no other pest company has ever attained.
Black Pest bought property and has expanded to four locations during his tenure. Additionally Mike oversees the management of almost a thousand acres of timberlands the company has acquired under his leadership and direction. Mike devotes a lot of time giving back to the industry freely sharing Black Pest’s knowledge and expertise with other pest co mpanies. He enjoys traveling with his wife and best friend Gracie. They are booked to China in the spring and Mike is going to South Africa on Safari next May.
WHY ARE YOU IN BUSINESS? Perhaps you were: Laid off from a job; grew up in and then took over the family business; married someone who had their own business; maybe you are just living your dream of owning a business; or was financial independence a key factor in your decision to take a huge financial risk to go into business. The truth is, it really doesn’t matter as most people get into business by default. And they think the profits will automatically follow simply because they are in business.
By virtue of owning and running an established, successful business, you know profits are not always what you anticipate or plan for. Profits just don’t happen. They require a great deal of work, strategy and doing the right things at the right time. Today we are going to look at a proven step by step strategy to maximize profits in your company.
WHAT IS A REALISTIC PROFIT MARGIN? 35%
30%
25%
Uh oh Ho Hum
20%
Average Better Even Better
15%
Wow Holy Moly
10%
5%
0%
“The biggest challenge to profitability is complexity.” Primarily there are two opposing philosophies on the way a pest service business is structured. Neither is right or wrong, simply two divergent philosophies each with differing margins. a. Offering multiple unrelated service offerings to your customer base to extract additional gross receipts from those customers, typically with lower margins overall.
b. Narrowly focused residential pest and termite control only, typically with higher margins.
1,726,000 449,000 276,000 245,640 179,400
Population in the Charlotte Market. or 26% that have a pest/termite service. or 16% that are currently experiencing a problem. or 89% of the 16% have internet access or 65% of the 16% regularly access the internet through a mobile device.
Insects/Pests inside home 100%
89% 90%
80%
65%
70%
60%
50%
40%
30%
20%
10%
0%
% with Internet Access
% who regularly access Internet from Mobile
Black Pest will attain a 32% profit margin in 2014. How did we get there without sacrificing infrastructure and quality of service.
LET DATA TALK
There are several key components enabling us to reach a 30 some percent margin. First and foremost, we let our data talk. We didn’t rely on opinion. Always remember the old sage, “you cannot do what you cannot measure”. We ran the numbers, built the models, and then simply put the processes in place and let time work its magic.
a. Service Offerings. First, we had to have a service offering. And not just any service offering, a high margin one that also created great value for the customer. We decided it had to be a recurring and/or contract service as they are the key building block of high profitability. The stand alone feature of our bundled PreventionPLUS™ treatment is a termite . baiting system. (This eliminates the need to obtain waivers). Then we treat the soil with a termiticide liquid. Lastly if the customer has a crawl space foundation, we treat all interior, accessible foundation walls, sills, piers, etc. with borates The pest portion is an exterior service covering well over 40 different pests including fleas, carpenter ants, fire ants, rodents, yellow jackets, etc. Our PreventionPLUS™ service comes with a written money back guarantee. It is an outside service. We only go inside on the initial and then if there is a problem inside. We also offer a general pest service without the termite attached. It covers the same general household pests as our Plus Service and is also backed by a written money back guarantee. Additionally we guarantee same day service for pest. We do not offer a termite service without pest.
b. Service Frequency. Before we can talk about pricing we have to arrive at the service frequency we are going to use. The service frequency will impact profitability more than any other component we will talk about today.
ANNUALIZED COST OF SERVICE
QUARTERLY PER TRIP CHARGE
TRIANNUAL PER TRIP CHARGE
PEST
$357.00
$89.00
$119.00
PLUS
$571.00
$143.00
$190.00
IF YOU ARE SERVICING QUARTERLY, UNDERSTAND THIS IF NOTHING ELSE. I AM GETTING PAID 33% MORE THAN YOU ARE FOR THE SAME SERVICE TRIP AND IT IS COSTING ME 25% LESS THAN YOU TO PRODUCE THAT SAME SERVICE TRIP.
“The word ‘invoice’ is too soft and friendly. We need a new word that means ‘pay up or die’.”
c. Billing Terms. Again, before we can talk about pricing, we have to choose billing terms. How quickly we get paid influences how much we have to charge.
Actual receivables
Accounts Receivable
Current
Over 30
Over 60
Over 90
Total
53,965.94
-9,185.77
-8,350.97
-38,866.24
-2,437.04
NO SOLICITING We Found Jesus We Love Our Vacuum We Gave At The Office What Do You Mean Termites? d. Cost of sales. We still cannot talk about pricing until we know what it is going to cost us to actually sell the service.
e. Cost of servicing the account. Well we still can’t put a price on the service until we know what method we are going to use to pay the route tech and more importantly how much we are going to pay him.
f. Product cost. We still need to add in our product cost before we can put a price on our service.
Top 4 most expensive substances in the world. 1. Termite Chemical 2.
Plutonium
3.
Platinum
4.
Gold
PRICING Finally we are ready to decide what our pricing should be. All of our services are sold over the telephone and are priced per square foot. We actually have the pricing up on the website. If you know the square footage of your home, you can simply go to the website and find your cost instantly.
Pest Control Pricing Square Footage
Initial Price
Monthly
0-1999
$59
$27
2000-2999
$69
$30
3000-3999
$79
$33
4000-4999
$89
$36
5000-5999
$99
$39
>6000
Inspection
PreventionPLUS™ Pricing Square Footage
Initial Price
Monthly
0-1999
$249
$47
2000-2999
$299
$50
3000-3999
$349
$53
4000-4999
$399
$56
5000-5999
$449
$59
>6000
Inspection
Because we are getting recurring revenue the very next month instead of having to wait 4 months to a year we are able to offer upfront or initial pricing at a much reduced cost.
Being in the service business, obviously efficiency is everything to us. Our PreventionPLUS™ service was designed from the start as the most efficient possible service that would deliver way above average margins for us and way above average value for the customer.
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Recurring
Pre-treat
Other
52%
37%
11%
61%
29%
10%
74%
23%
3%
86%
10%
4%
93%
2%
5%
89%
1%
10%
86%
1%
13%
94%
1%
5%
91%
1%
8%
92%
0%
8%
TODAY
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
92% RECURRING SERVICE 90% MONTHLY BILLING 65% CREDIT CARD ON FILE 53% PLUS SERVICES $357.00 AVERAGE PEST SERVICE SOLD $571.00 AVERAGE PLUS SERVICE SOLD
PLUS 3% 14% 25% 33% 37%
42% 44% 47% 51% 53%
PreventionPLUS™ Attributes 1. There are only (3) ways for any company to treat for termites. With PreventionPLUS™ the customer gets all three. a. We install the Advance Termite Bait System™ by BASF™ around the perimeter of their home. b. We treat the soil around and under the home with Altriset™ by DuPont™ c. We treat all accessible foundation walls, sill plates, piers in their crawlspace with BoraCare™ by Nisus™. NO OTHER COMPANY TREATS ALL THREE WAYS. THEY TYPICALLY TREAT WITH THE CHEAPEST GENERIC LIQUID ONLY. EVEN IF THEY USED A NAME BRAND IT IS STILL A ONE DIMENSION TREATMENT.
2. The Termite portion guarantee is a $1,000,000.00 REPAIR warranty with a MONEY BACK guarantee. This means if after treatment, should they get a new infestation of termites and/or damages, not only will we treat those termites at no cost to them, we will repair any structural damage up to a maximum of $1,000,000.00 caused by that new infestation.
MOST OTHER COMPANIES ONLY GIVE THE CUSTOMER A RE-TREATMENT ONLY WARRANTY, NOT A REPAIR WARRANTY. A RE-TREATMENT ONLY WARRANTY MEANS A COMPANY IS BASICALLY SAYING, YES IF YOU GET TERMITES, WE WILL COME BACK AND TREAT FOR THEM, BUT IF THEY HAVE CAUSED ANY DAMAGE, THAT IS YOUR RESPONSIBILITY TO PAY TO REPAIR AND NOT MINE. THE CUSTOMER NEEDS TO ASK ANY COMPANY ONLY OFFERING A RE-TREATMENT ONLY WARRANTY, WHY THEY ARE NOT CONFIDENT ENOUGH IN THE QUALITY OF THEIR WORK TO OFFER A REPAIR WARRANTY. MOST OF THE FEW THAT DO OFFER A REPAIR WARRANTY, LIMIT THE LIABILITY AMOUNT ON DAMAGES THEY WILL COVER OR APPLY A DEDUCTIBLE TO ALL CLAIMS. Our guarantee as found on our web site…. Our PreventionPLUS™ Termite Protection with Altriset™ is backed by a comprehensive, no nonsense one million dollar damage and re-treatment warranty. One of the best in the business. If for any reason you are not completely satisfied with our termite protection treatment, we’ll keep coming back, at no additional cost to you, until you are satisfied. In the event Black Pest is unable to correct your termite problem, we will refund your initial treatment charge.
3. With our PreventionPLUS™ Service the customer never has to re-treat at their expense or have a “booster” treatment at their expense a few years down the road to keep the warranty in effect. THEY SHOULD ASK ALL COMPANIES GIVING THEM A QUOTE IF THEY REQUIRE A “BOOSTER” TREATMENT IN 3 TO 5 TO 7 YEARS AT THE OWNER’S EXPENSE TO KEEP THE WARRANTY IN EFFECT. MOST DO.
4. We proactively monitor the bait stations every 4 months to ensure that termites do not return and invade their home. Once each year we go under their home for a comprehensive, complete visual inspection. COMPANIES USING SENTRICON™ ARE NOW ONLY CHECKING THE BAIT STATIONS ONCE A YEAR REACTIVELY. THE CUSTOMER NEEDS TO ASK THEM IF THEY ARE ONLY CHECKING THE BAIT STATIONS THEMSELVES ONCE A YEAR OR ARE THEY ALSO PERFORMING A COMPREHENSIVE INSPECTION OF THEIR HOME AT THE SAME TIME AS WELL. THIS IS NO BETTER THAN AN ATR AND AS SUCH SHOULD COST THE SAME ANNUALLY AS AN ATR. WE CANNOT USE THE WORD SENTRICON™ WHEN CONVEYING THIS. WE COULD SAY USING “A COMPETING BAIT SYSTEM.” ADDITIONALLY, THE “ALWAYS ACTIVE” BAIT IS LEFT IN THE STATION YEAR ROUND MAKING ACCIDENTAL CONTAMINATION MORE LIKELY.
5. PreventionPLUS™ is a very environmentally friendly service. a. The Advance Termite Bait Stations™ constitute a very low impact for their family and pets. Children or adults cannot open the stations without a special key. In fact bait is only introduced into the station when live termites are found in the station and removed once they are gone. b. Altriset™ The U.S. EPA requires that all registered pesticides display a signal word on the label, such as “warning” or “caution,” depending on the level of toxicity. Altriset™ is the exception. It is the first and only liquid termiticide that does not have any signal word. This achievement is one reason why the U.S. EPA has awarded Altriset™ reduced risk status. This is a breakthrough accomplishment based on extensive research and is currently unequaled in the professional termite protection industry. Although Altriset™ is extremely effective on termites, it stops termites from feeding in just hours providing their home with immediate and long lasting protection, it’s unique chemistry is targeted so it has little impact on the organisms they do want in their yard—such as honey bees and earthworms. Altriset™ has no known adverse effect on human health and requires no specific first aid intervention if anyone is accidentally exposed. The MSDS sheet states unequivocally – “This product has no known adverse effect on human health.” c. BoraCare™ is a borate material made from Boron, a naturally occurring substance found even in all our bodies. Borates pose a very low risk to humans and mammals and are sustainedly water efficient. (meaning it takes very little water to mix them. The typical house will only require 2 gallons of water to apply borates) THEY SHOULD ASK OTHER COMPANIES IF THEY ARE USING A DIFFERENT LIQUID PRODUCT WHY THEY ARE NOT USING ALTRISET™ WITH IT’S EXTEMELY GREEN LABEL AND ABILITY TO STOP TERMITES FROM FEEDING IN JUST HOURS.
6. We do not use “generic” products of any kind. Particularly in our PreventionPLUS™ Service. THE CUSTOMER NEEDS TO ASK ALL COMPANIES IF THEY ARE GOING TO USE NAME BRAND PRODUCTS OR A CHEAP GENERIC KNOCK OFF.
7. The PLUS in PreventionPLUS™ means they also receive our Integrated Pest Service. a. We perform an extensive Pest Prevention initial service inside and out. b. We will automatically follow up one month later to ensure all problems are taken care. c. We will monitor and treat the exterior on a triannual basis. d. This service covers over 40 different household pests. e. No add fees on or additional one - time charges for carpenter ants, fleas or rodents.
8. We use state of the art metered injection systems. THE METERED INJECTION SYSTEM TAKES THE GUESS WORK OUT OF THE APPLICATION. THE TECHNICIAN DOES NOT HAVE TO MIX THE TERMITICIDE WITH THE WATER POSSIBLY MAKING A MISTAKE. IT ELIMINATES THE GUESS WORK OF HOW MUCH PRODUCT HE IS APPLYING; HE KNOWS EXACTLY HOW MANY GALLONS HE IS APPLYING PER LINEAR FOOT SO APPLYING TOO MUCH PRODUCT WHICH COULD BE DANGEROUS FOR CHILDREN AND PETS OR APPLYING TOO LITTLE RESULTING IN A SUB-STANDARD TREATMENT IS A THING OF THE PAST. OTHER COMPANIES STILL MIX AND APPLY THE OLD WAY BECAUSE THEY DO NOT WANT TO SPEND THE MONEY ON THE EQUIPMENT.
9. The pest portion guarantee also has is MONEY BACK guarantee. Our guarantee as found on our website….. Our Integrated Pest Prevention Program is guaranteed or your money back! If you are not completely satisfied with the results of our Integrated Pest Prevention Program, we will provide additional necessary service at no additional charge. After 30 days, should your pest problem persist, we’ll continue to provide service at no additional charge until you are satisfied, or we will refund your last payment, no questions asked.
THE CUSTOMER SHOULD ASK OTHER COMPANIES IF THEIR PEST SERVICE HAS A MONEY-BACK GUARANTEE AND IF NOT WHY NOT.
Advantages of a bundled pest and termite service with a triannual rotation and credit card on file monthly billing. 1. 2. 3. 4. 5. 6. 7. 8. 9.
Obviously very profitable. You don’t need to pay an outside salesman to sell it. It appeals to a more affluent customer. Reduced cancellation rates. Tying the pest in with the termite reduces cancellations. The customer readily sees the value inherent in it. There are only 3 mainstream ways to treat for termites and with our PreventionPLUS™ the customer gets all three. It comes with a written and published money back guarantee. It carries a million dollar retreat and repair warranty. It is less expensive up front for the customer than even a generic liquid only treatment with a retreatment only warranty from a questionable operator.
10. It is an extremely “green’ treatment, while at the same time an extremely “effective” treatment. 11. With the monthly billing, at the end of the initial contract, no renewal notice goes out. You simply continue to hit the credit card every month. 12. With the monthly billing, the service is paid for in advance. 13. If the customer wants to skip a service for any reason, the monthly billing does not stop. 14. Ease of marketing. It has an inherent differentiation component making it easy to sell when going against traditional treatments from other companies. 15. You pay no royalties on the bait stations. 16. You have no paper billing/invoicing cost 17. Product costs as a percentage are much less even though using premium products. 18. With the triannual rotation, you need 25% less people, 25% less vehicles, 25% less gas and 25% fewer products compared to a quarterly rotation.
SOME UNRELATED ITEMS THAT CONTRIBUTE TO THE BOTTOM LINE
PRICE INCREASES
If a company producing $5,000,000.00 in annual gross revenue with a 15% net profit ($750,000.00) raised prices by 3% they would add 20% ($150,000.00) to that net profit.
John Q. Public 123 Any Street Charlotte, NC 28224
Dear Mr. Public, It is the vision of Black Pest to improve our environment one customer at a time by making protecting your family and home more effective, more convenient and more affordable. Over the years, we have worked hard to provide the most efficient pest and termite services possible in our markets. Our commitment towards making pest prevention and termite protection affordable, while still providing a high quality, environmentally friendly service, has been reflected in minimal, if any, increases in the pricing of our services over the last decade. This letter is to inform you of an impending increase that we must implement for 2013. In order to maintain the level of service you have come to expect from Black Pest, we will be implementing a small price increase on these services to better reflect the underlying costs of providing those services. Effective January 1st, 2013, your invoices will reflect a very modest increase of $1.00. We appreciate the opportunity to continue to serve you with the outstanding services that you have come to expect from Black Pest. Please contact our Customer Service Department at 888-315-0308 if you have any questions.
Sincerely,
Michael C. Davis Chief Operating Officer Black Pest Prevention, Inc.
Insurance Deductibles
You can greatly lower your vehicle and liability insurance cost by increasing your deductible. A $25,000.00 dollar deductible will cut your rates tremendously and after a just a couple of years without a claim you will be dollars ahead. If you are at $10,000,000.00 or more in revenue you should consider self-insuring.
Yellow Pages Advertising Get the hell out now. Just a tidbit of information on using billboards. Out of 900 people interviewed in the Charlotte Market when asked what advertising media they felt was most influential, billboards were ranked dead last at 0%.
Now that you have made all of these profits, how do you hang on to them?
Croaker Swamp Lodge
“Advancing Re-Services”
Jan
Feb
Mar
Apr
1 1
May
Jun
Jul
retreat
1
1 1 1
retreat
1 1
2 retreat
1
3 retreat
1
Feb
Mar
Apr
May
1
2
1
2
1
2
1
2
Jan
Jun
Jul
Nov
Dec
1
2
1
2
4
1
2
1
2 2
1
2
1
2
1
2
Jul
Aug
retreat
Sep 3
1
2
3
1
2
3
1
2
3
Oct
Nov
Jan
Feb
Mar
retreat
3
1
2
3
1
2
3
1
2
3
May
5
2
3
1
2
3
1
2
3 2
3
1
2
3
1
2
3
1
2
3
6 6 6
6 6
5 retreat
6
5 5
6 6
6 5
7 6
6
4
retreat
6 7
5
7 6
5
5
retreat
7 7
6
5
7 6
6
4
1
7 7
7
5
Total
7 7
6
5
retreat
Dec
6
6
retreat
Nov
6
5
retreat
Oct
6
retreat
1
Sep
5
retreat
3
Aug
6
7
5
retreat
2
Jul
6 6
6
5
4
1
Jun
6 6
6
6
retreat
2
6
5
retreat
6 6
5
Apr
7 6
6
5
4
1
6
4
Dec
6
7
5
4 retreat
2
6
5
7 6
6
5
4
7 7
5
5
7 6
7
6
4
retreat
1
6
5
3
7 7
6
4
Total
7
6
4
Dec
7
5
4
Nov
6
6
4
4
Oct
7
5
3
Sep
5
4
retreat
Aug
6
6
5
retreat
Jul
6
4
retreat
Jun
5
4
1
May
5
retreat
2
Apr
6
4
retreat
1
Mar
6 6
5
4
retreat
2
Feb
6 6
6 5
5
3
1
Jun
Jan
6
6 6
4
7 6
6
5
4
retreat
2
May
Oct
retreat
1
Apr
Sep
retreat
2
Mar
Aug
6
5
3
6 7
5
4
3
1
Feb
4
retreat
6
4
3
6
5
7 6
5
5
3
7 3
6
5
7 6
7 2
4
7 7
6
5
Total
7
6
4
3
Dec
6
6
4
Nov
7
5
4
Oct
6
4
3
Sep
7
1
3
retreat
Aug
6
4
3
Jul
6
5
3
retreat
Jun
5
4
2
May
4
3
1
Apr
5
4
3
retreat
Mar
5
3
retreat
Feb
4
2 retreat
Jan
5
3
1
Dec
4
3
1
Nov
4
retreat
1
Oct
3
retreat
1
Sep
3
1
Jan
Aug
2
6 6
6
THANK YOU
Michael C. Davis Chief Operating Officer Black Pest Prevention, Inc.
Mike Davis is the Chief Operating Officer for Black Pest Prevention, Inc. headquartered in Charlotte, N.C. Black Pest has several Service Centers in the Charlotte metro region as well as a Service Center in Charleston, S.C. Black Pest is a residential service company offering pest prevention and termite protection. Mike began his working career with the CSX Railroad as a clerk working his way up to Chief Dispatcher when he left 15 years later. He then spent 14 years with Bug Out Service, Inc. in Jacksonville, Fl. working with Paul Felker pioneering the bundling of general pest and termite services, marketing them as one service and developing the monthly billing concept. Ten years ago Mike accepted his current position with Black Pest Prevention and was tasked with implementing the same business model there. Ten years later Black Pest has successfully made the transition from a new construction pre-treatment company to the leading residential service company in the Carolinas. Under his leadership Black Pest transitioned to all recurring residential service with monthly billing and credit card on file. Black Pest achieves negative net receivables every monthly billing cycle, an achievement no other pest company has ever attained.
Black Pest bought property and has expanded to four locations during his tenure. Additionally Mike oversees the management of almost a thousand acres of timberlands the company has acquired under his leadership and direction. Mike devotes a lot of time giving back to the industry freely sharing Black Pest’s knowledge and expertise with other pest co mpanies. He enjoys traveling with his wife and best friend Gracie. They are booked to China in the spring and Mike is going to South Africa on Safari next May.
WHY ARE YOU IN BUSINESS? Perhaps you were: Laid off from a job; grew up in and then took over the family business; married someone who had their own business; maybe you are just living your dream of owning a business; or was financial independence a key factor in your decision to take a huge financial risk to go into business. The truth is, it really doesn’t matter as most people get into business by default. And they think the profits will automatically follow simply because they are in business.
By virtue of owning and running an established, successful business, you know profits are not always what you anticipate or plan for. Profits just don’t happen. They require a great deal of work, strategy and doing the right things at the right time. Today we are going to look at a proven step by step strategy to maximize profits in your company.
WHAT IS A REALISTIC PROFIT MARGIN? 35%
30%
25%
Uh oh Ho Hum
20%
Average Better Even Better
15%
Wow Holy Moly
10%
5%
0%
“The biggest challenge to profitability is complexity.” Primarily there are two opposing philosophies on the way a pest service business is structured. Neither is right or wrong, simply two divergent philosophies each with differing margins. a. Offering multiple unrelated service offerings to your customer base to extract additional gross receipts from those customers, typically with lower margins overall.
b. Narrowly focused residential pest and termite control only, typically with higher margins.
1,726,000 449,000 276,000 245,640 179,400
Population in the Charlotte Market. or 26% that have a pest/termite service. or 16% that are currently experiencing a problem. or 89% of the 16% have internet access or 65% of the 16% regularly access the internet through a mobile device.
Insects/Pests inside home 100%
89% 90%
80%
65%
70%
60%
50%
40%
30%
20%
10%
0%
% with Internet Access
% who regularly access Internet from Mobile
Black Pest will attain a 32% profit margin in 2014. How did we get there without sacrificing infrastructure and quality of service.
LET DATA TALK
There are several key components enabling us to reach a 30 some percent margin. First and foremost, we let our data talk. We didn’t rely on opinion. Always remember the old sage, “you cannot do what you cannot measure”. We ran the numbers, built the models, and then simply put the processes in place and let time work its magic.
a. Service Offerings. First, we had to have a service offering. And not just any service offering, a high margin one that also created great value for the customer. We decided it had to be a recurring and/or contract service as they are the key building block of high profitability. The stand alone feature of our bundled PreventionPLUS™ treatment is a termite . baiting system. (This eliminates the need to obtain waivers). Then we treat the soil with a termiticide liquid. Lastly if the customer has a crawl space foundation, we treat all interior, accessible foundation walls, sills, piers, etc. with borates The pest portion is an exterior service covering well over 40 different pests including fleas, carpenter ants, fire ants, rodents, yellow jackets, etc. Our PreventionPLUS™ service comes with a written money back guarantee. It is an outside service. We only go inside on the initial and then if there is a problem inside. We also offer a general pest service without the termite attached. It covers the same general household pests as our Plus Service and is also backed by a written money back guarantee. Additionally we guarantee same day service for pest. We do not offer a termite service without pest.
b. Service Frequency. Before we can talk about pricing we have to arrive at the service frequency we are going to use. The service frequency will impact profitability more than any other component we will talk about today.
ANNUALIZED COST OF SERVICE
QUARTERLY PER TRIP CHARGE
TRIANNUAL PER TRIP CHARGE
PEST
$357.00
$89.00
$119.00
PLUS
$571.00
$143.00
$190.00
IF YOU ARE SERVICING QUARTERLY, UNDERSTAND THIS IF NOTHING ELSE. I AM GETTING PAID 33% MORE THAN YOU ARE FOR THE SAME SERVICE TRIP AND IT IS COSTING ME 25% LESS THAN YOU TO PRODUCE THAT SAME SERVICE TRIP.
“The word ‘invoice’ is too soft and friendly. We need a new word that means ‘pay up or die’.”
c. Billing Terms. Again, before we can talk about pricing, we have to choose billing terms. How quickly we get paid influences how much we have to charge.
Actual receivables
Accounts Receivable
Current
Over 30
Over 60
Over 90
Total
53,965.94
-9,185.77
-8,350.97
-38,866.24
-2,437.04
NO SOLICITING We Found Jesus We Love Our Vacuum We Gave At The Office What Do You Mean Termites? d. Cost of sales. We still cannot talk about pricing until we know what it is going to cost us to actually sell the service.
e. Cost of servicing the account. Well we still can’t put a price on the service until we know what method we are going to use to pay the route tech and more importantly how much we are going to pay him.
f. Product cost. We still need to add in our product cost before we can put a price on our service.
Top 4 most expensive substances in the world. 1. Termite Chemical 2.
Plutonium
3.
Platinum
4.
Gold
PRICING Finally we are ready to decide what our pricing should be. All of our services are sold over the telephone and are priced per square foot. We actually have the pricing up on the website. If you know the square footage of your home, you can simply go to the website and find your cost instantly.
Pest Control Pricing Square Footage
Initial Price
Monthly
0-1999
$59
$27
2000-2999
$69
$30
3000-3999
$79
$33
4000-4999
$89
$36
5000-5999
$99
$39
>6000
Inspection
PreventionPLUS™ Pricing Square Footage
Initial Price
Monthly
0-1999
$249
$47
2000-2999
$299
$50
3000-3999
$349
$53
4000-4999
$399
$56
5000-5999
$449
$59
>6000
Inspection
Because we are getting recurring revenue the very next month instead of having to wait 4 months to a year we are able to offer upfront or initial pricing at a much reduced cost.
Being in the service business, obviously efficiency is everything to us. Our PreventionPLUS™ service was designed from the start as the most efficient possible service that would deliver way above average margins for us and way above average value for the customer.
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Recurring
Pre-treat
Other
52%
37%
11%
61%
29%
10%
74%
23%
3%
86%
10%
4%
93%
2%
5%
89%
1%
10%
86%
1%
13%
94%
1%
5%
91%
1%
8%
92%
0%
8%
TODAY
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
92% RECURRING SERVICE 90% MONTHLY BILLING 65% CREDIT CARD ON FILE 53% PLUS SERVICES $357.00 AVERAGE PEST SERVICE SOLD $571.00 AVERAGE PLUS SERVICE SOLD
PLUS 3% 14% 25% 33% 37%
42% 44% 47% 51% 53%
PreventionPLUS™ Attributes 1. There are only (3) ways for any company to treat for termites. With PreventionPLUS™ the customer gets all three. a. We install the Advance Termite Bait System™ by BASF™ around the perimeter of their home. b. We treat the soil around and under the home with Altriset™ by DuPont™ c. We treat all accessible foundation walls, sill plates, piers in their crawlspace with BoraCare™ by Nisus™. NO OTHER COMPANY TREATS ALL THREE WAYS. THEY TYPICALLY TREAT WITH THE CHEAPEST GENERIC LIQUID ONLY. EVEN IF THEY USED A NAME BRAND IT IS STILL A ONE DIMENSION TREATMENT.
2. The Termite portion guarantee is a $1,000,000.00 REPAIR warranty with a MONEY BACK guarantee. This means if after treatment, should they get a new infestation of termites and/or damages, not only will we treat those termites at no cost to them, we will repair any structural damage up to a maximum of $1,000,000.00 caused by that new infestation.
MOST OTHER COMPANIES ONLY GIVE THE CUSTOMER A RE-TREATMENT ONLY WARRANTY, NOT A REPAIR WARRANTY. A RE-TREATMENT ONLY WARRANTY MEANS A COMPANY IS BASICALLY SAYING, YES IF YOU GET TERMITES, WE WILL COME BACK AND TREAT FOR THEM, BUT IF THEY HAVE CAUSED ANY DAMAGE, THAT IS YOUR RESPONSIBILITY TO PAY TO REPAIR AND NOT MINE. THE CUSTOMER NEEDS TO ASK ANY COMPANY ONLY OFFERING A RE-TREATMENT ONLY WARRANTY, WHY THEY ARE NOT CONFIDENT ENOUGH IN THE QUALITY OF THEIR WORK TO OFFER A REPAIR WARRANTY. MOST OF THE FEW THAT DO OFFER A REPAIR WARRANTY, LIMIT THE LIABILITY AMOUNT ON DAMAGES THEY WILL COVER OR APPLY A DEDUCTIBLE TO ALL CLAIMS. Our guarantee as found on our web site…. Our PreventionPLUS™ Termite Protection with Altriset™ is backed by a comprehensive, no nonsense one million dollar damage and re-treatment warranty. One of the best in the business. If for any reason you are not completely satisfied with our termite protection treatment, we’ll keep coming back, at no additional cost to you, until you are satisfied. In the event Black Pest is unable to correct your termite problem, we will refund your initial treatment charge.
3. With our PreventionPLUS™ Service the customer never has to re-treat at their expense or have a “booster” treatment at their expense a few years down the road to keep the warranty in effect. THEY SHOULD ASK ALL COMPANIES GIVING THEM A QUOTE IF THEY REQUIRE A “BOOSTER” TREATMENT IN 3 TO 5 TO 7 YEARS AT THE OWNER’S EXPENSE TO KEEP THE WARRANTY IN EFFECT. MOST DO.
4. We proactively monitor the bait stations every 4 months to ensure that termites do not return and invade their home. Once each year we go under their home for a comprehensive, complete visual inspection. COMPANIES USING SENTRICON™ ARE NOW ONLY CHECKING THE BAIT STATIONS ONCE A YEAR REACTIVELY. THE CUSTOMER NEEDS TO ASK THEM IF THEY ARE ONLY CHECKING THE BAIT STATIONS THEMSELVES ONCE A YEAR OR ARE THEY ALSO PERFORMING A COMPREHENSIVE INSPECTION OF THEIR HOME AT THE SAME TIME AS WELL. THIS IS NO BETTER THAN AN ATR AND AS SUCH SHOULD COST THE SAME ANNUALLY AS AN ATR. WE CANNOT USE THE WORD SENTRICON™ WHEN CONVEYING THIS. WE COULD SAY USING “A COMPETING BAIT SYSTEM.” ADDITIONALLY, THE “ALWAYS ACTIVE” BAIT IS LEFT IN THE STATION YEAR ROUND MAKING ACCIDENTAL CONTAMINATION MORE LIKELY.
5. PreventionPLUS™ is a very environmentally friendly service. a. The Advance Termite Bait Stations™ constitute a very low impact for their family and pets. Children or adults cannot open the stations without a special key. In fact bait is only introduced into the station when live termites are found in the station and removed once they are gone. b. Altriset™ The U.S. EPA requires that all registered pesticides display a signal word on the label, such as “warning” or “caution,” depending on the level of toxicity. Altriset™ is the exception. It is the first and only liquid termiticide that does not have any signal word. This achievement is one reason why the U.S. EPA has awarded Altriset™ reduced risk status. This is a breakthrough accomplishment based on extensive research and is currently unequaled in the professional termite protection industry. Although Altriset™ is extremely effective on termites, it stops termites from feeding in just hours providing their home with immediate and long lasting protection, it’s unique chemistry is targeted so it has little impact on the organisms they do want in their yard—such as honey bees and earthworms. Altriset™ has no known adverse effect on human health and requires no specific first aid intervention if anyone is accidentally exposed. The MSDS sheet states unequivocally – “This product has no known adverse effect on human health.” c. BoraCare™ is a borate material made from Boron, a naturally occurring substance found even in all our bodies. Borates pose a very low risk to humans and mammals and are sustainedly water efficient. (meaning it takes very little water to mix them. The typical house will only require 2 gallons of water to apply borates) THEY SHOULD ASK OTHER COMPANIES IF THEY ARE USING A DIFFERENT LIQUID PRODUCT WHY THEY ARE NOT USING ALTRISET™ WITH IT’S EXTEMELY GREEN LABEL AND ABILITY TO STOP TERMITES FROM FEEDING IN JUST HOURS.
6. We do not use “generic” products of any kind. Particularly in our PreventionPLUS™ Service. THE CUSTOMER NEEDS TO ASK ALL COMPANIES IF THEY ARE GOING TO USE NAME BRAND PRODUCTS OR A CHEAP GENERIC KNOCK OFF.
7. The PLUS in PreventionPLUS™ means they also receive our Integrated Pest Service. a. We perform an extensive Pest Prevention initial service inside and out. b. We will automatically follow up one month later to ensure all problems are taken care. c. We will monitor and treat the exterior on a triannual basis. d. This service covers over 40 different household pests. e. No add fees on or additional one - time charges for carpenter ants, fleas or rodents.
8. We use state of the art metered injection systems. THE METERED INJECTION SYSTEM TAKES THE GUESS WORK OUT OF THE APPLICATION. THE TECHNICIAN DOES NOT HAVE TO MIX THE TERMITICIDE WITH THE WATER POSSIBLY MAKING A MISTAKE. IT ELIMINATES THE GUESS WORK OF HOW MUCH PRODUCT HE IS APPLYING; HE KNOWS EXACTLY HOW MANY GALLONS HE IS APPLYING PER LINEAR FOOT SO APPLYING TOO MUCH PRODUCT WHICH COULD BE DANGEROUS FOR CHILDREN AND PETS OR APPLYING TOO LITTLE RESULTING IN A SUB-STANDARD TREATMENT IS A THING OF THE PAST. OTHER COMPANIES STILL MIX AND APPLY THE OLD WAY BECAUSE THEY DO NOT WANT TO SPEND THE MONEY ON THE EQUIPMENT.
9. The pest portion guarantee also has is MONEY BACK guarantee. Our guarantee as found on our website….. Our Integrated Pest Prevention Program is guaranteed or your money back! If you are not completely satisfied with the results of our Integrated Pest Prevention Program, we will provide additional necessary service at no additional charge. After 30 days, should your pest problem persist, we’ll continue to provide service at no additional charge until you are satisfied, or we will refund your last payment, no questions asked.
THE CUSTOMER SHOULD ASK OTHER COMPANIES IF THEIR PEST SERVICE HAS A MONEY-BACK GUARANTEE AND IF NOT WHY NOT.
Advantages of a bundled pest and termite service with a triannual rotation and credit card on file monthly billing. 1. 2. 3. 4. 5. 6. 7. 8. 9.
Obviously very profitable. You don’t need to pay an outside salesman to sell it. It appeals to a more affluent customer. Reduced cancellation rates. Tying the pest in with the termite reduces cancellations. The customer readily sees the value inherent in it. There are only 3 mainstream ways to treat for termites and with our PreventionPLUS™ the customer gets all three. It comes with a written and published money back guarantee. It carries a million dollar retreat and repair warranty. It is less expensive up front for the customer than even a generic liquid only treatment with a retreatment only warranty from a questionable operator.
10. It is an extremely “green’ treatment, while at the same time an extremely “effective” treatment. 11. With the monthly billing, at the end of the initial contract, no renewal notice goes out. You simply continue to hit the credit card every month. 12. With the monthly billing, the service is paid for in advance. 13. If the customer wants to skip a service for any reason, the monthly billing does not stop. 14. Ease of marketing. It has an inherent differentiation component making it easy to sell when going against traditional treatments from other companies. 15. You pay no royalties on the bait stations. 16. You have no paper billing/invoicing cost 17. Product costs as a percentage are much less even though using premium products. 18. With the triannual rotation, you need 25% less people, 25% less vehicles, 25% less gas and 25% fewer products compared to a quarterly rotation.
SOME UNRELATED ITEMS THAT CONTRIBUTE TO THE BOTTOM LINE
PRICE INCREASES
If a company producing $5,000,000.00 in annual gross revenue with a 15% net profit ($750,000.00) raised prices by 3% they would add 20% ($150,000.00) to that net profit.
John Q. Public 123 Any Street Charlotte, NC 28224
Dear Mr. Public, It is the vision of Black Pest to improve our environment one customer at a time by making protecting your family and home more effective, more convenient and more affordable. Over the years, we have worked hard to provide the most efficient pest and termite services possible in our markets. Our commitment towards making pest prevention and termite protection affordable, while still providing a high quality, environmentally friendly service, has been reflected in minimal, if any, increases in the pricing of our services over the last decade. This letter is to inform you of an impending increase that we must implement for 2013. In order to maintain the level of service you have come to expect from Black Pest, we will be implementing a small price increase on these services to better reflect the underlying costs of providing those services. Effective January 1st, 2013, your invoices will reflect a very modest increase of $1.00. We appreciate the opportunity to continue to serve you with the outstanding services that you have come to expect from Black Pest. Please contact our Customer Service Department at 888-315-0308 if you have any questions.
Sincerely,
Michael C. Davis Chief Operating Officer Black Pest Prevention, Inc.
Insurance Deductibles
You can greatly lower your vehicle and liability insurance cost by increasing your deductible. A $25,000.00 dollar deductible will cut your rates tremendously and after a just a couple of years without a claim you will be dollars ahead. If you are at $10,000,000.00 or more in revenue you should consider self-insuring.
Yellow Pages Advertising Get the hell out now. Just a tidbit of information on using billboards. Out of 900 people interviewed in the Charlotte Market when asked what advertising media they felt was most influential, billboards were ranked dead last at 0%.
Now that you have made all of these profits, how do you hang on to them?
Croaker Swamp Lodge
“Advancing Re-Services”
Jan
Feb
Mar
Apr
1 1
May
Jun
Jul
retreat
1
1 1 1
retreat
1 1
2 retreat
1
3 retreat
1
Feb
Mar
Apr
May
1
2
1
2
1
2
1
2
Jan
Jun
Jul
Nov
Dec
1
2
1
2
4
1
2
1
2 2
1
2
1
2
1
2
Jul
Aug
retreat
Sep 3
1
2
3
1
2
3
1
2
3
Oct
Nov
Jan
Feb
Mar
retreat
3
1
2
3
1
2
3
1
2
3
May
5
2
3
1
2
3
1
2
3 2
3
1
2
3
1
2
3
1
2
3
6 6 6
6 6
5 retreat
6
5 5
6 6
6 5
7 6
6
4
retreat
6 7
5
7 6
5
5
retreat
7 7
6
5
7 6
6
4
1
7 7
7
5
Total
7 7
6
5
retreat
Dec
6
6
retreat
Nov
6
5
retreat
Oct
6
retreat
1
Sep
5
retreat
3
Aug
6
7
5
retreat
2
Jul
6 6
6
5
4
1
Jun
6 6
6
6
retreat
2
6
5
retreat
6 6
5
Apr
7 6
6
5
4
1
6
4
Dec
6
7
5
4 retreat
2
6
5
7 6
6
5
4
7 7
5
5
7 6
7
6
4
retreat
1
6
5
3
7 7
6
4
Total
7
6
4
Dec
7
5
4
Nov
6
6
4
4
Oct
7
5
3
Sep
5
4
retreat
Aug
6
6
5
retreat
Jul
6
4
retreat
Jun
5
4
1
May
5
retreat
2
Apr
6
4
retreat
1
Mar
6 6
5
4
retreat
2
Feb
6 6
6 5
5
3
1
Jun
Jan
6
6 6
4
7 6
6
5
4
retreat
2
May
Oct
retreat
1
Apr
Sep
retreat
2
Mar
Aug
6
5
3
6 7
5
4
3
1
Feb
4
retreat
6
4
3
6
5
7 6
5
5
3
7 3
6
5
7 6
7 2
4
7 7
6
5
Total
7
6
4
3
Dec
6
6
4
Nov
7
5
4
Oct
6
4
3
Sep
7
1
3
retreat
Aug
6
4
3
Jul
6
5
3
retreat
Jun
5
4
2
May
4
3
1
Apr
5
4
3
retreat
Mar
5
3
retreat
Feb
4
2 retreat
Jan
5
3
1
Dec
4
3
1
Nov
4
retreat
1
Oct
3
retreat
1
Sep
3
1
Jan
Aug
2
6 6
6
THANK YOU
