When Mike Patton started Patton Termite & Pest, Wichita, Kan., 14 years ago, he quickly found he needed to “fill the revenue hole” when winter income dropped by half.
Patton accomplished this by offering holiday lighting service. Today, the add-on generates $70,000 a year and delivers a 25 percent profit margin, he said.
That extra revenue is needed for “maintaining a constant workforce” in the off-season, said Gene Chafe, general manager, Senske Pest Control, which began providing holiday lighting more than 10 years ago. Historically, the Kennewick, Wash.-based company laid off employees in winter, but only 30 to 40 percent returned in spring. Holiday lighting retains good employees while reducing the “substantial cost of hiring and training,” Chafe said.
Harvey Jacks, president, Assassin Pest Control, Spicewood, Texas, said his Amazing Holiday Lights operation keeps employees on the payroll with “six weeks of additional work” and contributes 10 percent to overall revenue. Eradico Services, Novi, Mich., added holiday lighting 18 years ago for the same reasons, but Vice President Steve Russell soon realized the service was a “profitable business unto its own.” Last year, it generated $800,000 for the company; he expects a 15 to 20 percent increase this season.
Despite its potential, the add-on requires a different approach to sales, administration and installation, cautioned PMPs, who shared these tips for success:
Target the affluent.
Holiday lighting is a luxury. The average sale costs $800 to $1,000 for trimming the house, walkway and hanging wreaths, said Chafe. Jacks’ best customers want to “win the neighborhood contest” for holiday décor. Two wealthy clients spend $10,000 each with Patton, who targets the top 1 percent of income earners. It’s harder to sell those in the top 10 percent, he said. The service builds relationships with customers who are ideal prospects for pest service when competitors aren’t active, said Brandon Stevens, president of holiday lighting franchisor Christmas Décor.
Find a partner.
Franchises and distributorships provide product, training, operations and marketing support to get PCOs up and running. A consistent supply of quality product is critical, affecting both the finished look and the number of callbacks to repair and replace lights, said Russell. Senske and Eradico are franchisees of Christmas Décor. Patton, a distributor of the Brite Ideas product line, said expert support programs let him focus on finding and selling customers. Jacks works with Brite Ideas, Holidynamics and Seasonal Source. Get familiar with partner operations before signing on; many affluent markets are sold, said Chafe.
Provide turn-key solutions.
PMPs design displays with client input, install lights and décor, maintain and repair systems, take down and store items at their facilities; customers write the checks. Some PMPs require clients to purchase lights and décor; others, like Jacks, lease items so clients avoid big up-front costs and he retains the products if the customer moves or cancels service.
In July, Chafe creates advertising pieces, and evaluates and orders inventory to accommodate sales forecasts. Marketing gets serious in September: Senske cross-sells to pest customers and promotes system upgrades to existing holiday clients; business cards, sales collateral and uniform shirts are branded Christmas Décor by Senske. Take time to win over and transition sales people, said Russell.
Deliver Professional-Grade Holidays
A Christmas Décor franchise can help pest management professionals offset fixed overhead costs, maintain employees during slow winter months and build relationships with affluent prospects for recurring pest services.
Franchises report net margins in the mid-30 percent range, primarily because they’re using existing assets to generate revenue, not adding overhead like extra trucks, trailers, tools or people, said President Brandon Stevens. People are “willing to pay good money” for the service; that, combined with high demand, helps margins,” he explained.
The investment is $9,900, plus tools you don’t already own. Stevens recommends an initial inventory order of $5,000 to $15,000, depending on how quickly you can scale up. Additional costs include marketing, personnel and other operating expenses.
Christmas Décor has a 5 percent royalty and a 1 percent advertising fund. The company generates leads through its website, supplies and sells products to franchises, and provides systems for sales, pricing, client retention, design, and installation. Christmas Décor has nearly 400 franchisees.
More information can be found at http://christmasdecor.net.
Because “you’re using resources claimed by other services in the company,” significant planning is required, said Russell. Train clients for early installation in mid-October with take down in late January/early February and a final clean-up after the snow and ice is gone, he said.
Don’t underestimate the demand — you have to be ready — and it’s not easy, said Christmas Décor’s Stevens. If you run out of product in November, “you’re doomed,” he said. Anticipate labor needs. Your potential is limited by your time and ability to produce, Stevens said. This can be challenging when warm weather extends the pest season; there is no delaying the arrival of Christmas, warned Russell. To fill the gap, Patton hires seasonal workers like painters, who have ladder experience. Getting technicians who work solo to function as part of a three-man crew can be a “management burden,” said Russell. “It’s critical to have a crew chief who understands how to put it all together,” added Patton.
Working with ladders and in inclement weather puts you in a different insurance category, reminded Patton, who encouraged PMPs to work with a good agent. Russell commended the ladder and safety training provided by the franchise. Knowledge of electricity, such as the charge you can carry on a circuit, is important, said Jacks. He “learned the hard way” how to keep moisture out of plugs to prevent lights from shorting out. “You don’t want an unhappy customer on Christmas Eve,” or to be changing lights out then, he reminded.
Adapt as necessary.
Customer churn is not uncommon, cautioned Patton. During the recession, he adapted his product offering for clients willing to spend $300 to $500 for holiday lighting. Don’t compete with low-cost vendors who saturate the market, as the service remains “extremely labor intensive,” Patton cautioned. But profit potential exists even in a slower economy since you’re not adding overhead, said Russell.
Senske Services uses its holiday light expertise to raise money and awareness for hunger relief, and gain community recognition. For the past 11 years, it has decorated its office with an elaborate, set-to-music light display valued at $100,000. Visitors who donate food or funds to Second Harvest at one of several open houses get their photo taken with Santa. Other businesses provide in-kind donations and donate profits from food sales. The event attracts thousands of visitors each year, and “takes on a life of its own,” said Chafe.
Most pest management professionals focus on exterior winter holiday lights, but Patton said the service could be “more of a year-round endeavor.” Retail outlets, interior decorating for homes and businesses, year-round landscape lighting, and lighting for special events and other holidays offer potential, he said. Russell cautioned PMPs to consider how expanded services might impact company resources, especially if jobs occur during peak pest seasons.
The author is a frequent contributor to PCT magazine. Email her at email@example.com.