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Home Magazine [Cover Story] Forecast: A New Termite Reality

[Cover Story] Forecast: A New Termite Reality

Features - Cover Story

Most PMPs aren’t counting on weather or the market to boost this year’s termite revenue. Instead, they’re banking on their sales ability.

Anne Nagro | February 27, 2012

Photo by Dr. Michael Potter

It’s starting to sound like a broken record: The termite season ain’t what it used to be.

Swarmers, once the main reason phones rang, seem to have dried up with the weather.

“Weather patterns have a huge impact on what people see,” said Cindy Mannes, chief marketing officer for Arrow Exterminators in Atlanta. Without this visual reminder, “it’s going to be very challenging.”

Termites need moisture and they’re not going to find much this spring in the Southeast, South Central or Southwest United States, according the National Weather Service’s Climate Prediction Center. Drought is expected to persist, intensify or become a problem from California to Florida through March, at least.

That’s not good news for PMPs. Bobby Jenkins, president of ABC Home & Commercial Services, Austin, Texas, lowered his termite revenue expectations this year. In 2011, revenue from rodent and wildlife control exceeded termite revenue “by a good bit.”

RID Pest Control Owner Ron Durall in Blair, Okla., said, “The market is going down.” From a revenue standpoint, “it’s hard to count on it now.”

J&J Exterminating Regional Manager Bryan Gaspard in Alexandria, La., saw fewer Formosan termite swarms last year than in 2010 and his market is “probably in line for the same this year.”

In 2011, 39 percent of pest management professionals said termite revenue remained at the same level as 2010, according to a PCT direct mail survey. Forty-six percent characterized the 2011 termite season as “average,” closely followed by 41 percent who called it “below average.”

It’s going to be “another year of self-generation” from a sales standpoint, said Northwest Exterminating Sales Leader Jeff Dunn in Marietta, Ga. He doesn’t think real estate transactions will drive a big need for termite letters.

Any uptick in the housing market could help. The number of improving housing markets nearly doubled in January, reported the National Association of Home Builders. And the National Association of Realtors expects existing home sales to increase by 200,000 units, new home sales to increase nearly 50,000 units and new home starts to jump by 110,000 units in 2012.
 


Orkin Senior Technical Director Paul Hardy said he believes the economy is getting better and people who put off pest service last year will get onboard in 2012. He said Orkin sold more termite jobs in 2011 than 2010, and expects more growth this year.

The industry may see even more crawling insect activity in 2012, said Hardy, who recently spotted termites under the hedges in his yard. “Not all termites have gone away. We could have a very good year this year. It’s possible,” he said.

Alan Schumacher, vice president of Integrity Pest Control in North Richland Hills, Texas, also remains optimistic. Termite work has stayed consistent the last four years, and “I would expect a small increase if we get rain this spring.”


 


Not Giving it Away.
Most PMPs don’t plan to cut the price of termite treatment. Last year, 72 percent of PMPs surveyed by PCT said they maintained termite treatment prices.

“My pricing will stay the same as it has over the last five years,” said Schumacher. Cutting price is not the way to grow the business, cautioned D.R. Sapp Jr., CEO of Florida Pest Control & Chemical Co. in Gainesville, Fla. “It’s a short-term solution to a permanent problem.”

Having good quality people doing the work “costs a little extra in most cases,” added Rentokil North America Termite Control Manager Sean Hunter in Reading, Pa.

Still, price is always a consideration in a competitive market and termite control seems to be getting more competitive.

Durall hasn’t cut his prices but has lost jobs to the “squirrels” in his market. “It’s pretty aggravating” and not good for the customer or industry, he said.

A termite warranty is an important and valuable insurance policy for the homeowner, said Dunn. Commoditizing treatment may cause its perceived value to drop.

“The market has a place for a value-driven termite option,” said Mannes, as long as the company providing it is there should the customer have a problem.
 

Investment to hold steady. PMPs continue to seek new and better ways to detect and control termites. Orkin is investing in better inspection tools, like improved moisture meters, infrared cameras and electronic “sniffers.”

“These won’t replace good, quality inspections, but they are useful tools,” said Hardy.

Schumacher began using a dry termi-ticide formulation for wood floor infestations and has had “good results so far.”

Compared to 40 years ago, “we’re in the driver(’s) seat” with a lot of great control options, said Hardy. The advancement of bait technology is “going to be huge for the pest control industry.” So are products with low toxicity and that protect groundwater.

With 48 percent of his business termite-related, Gaspard always will invest in products and technologies that make termite work more efficient or productive. When it comes to Formosans, “you want every tool that’s available,” he said.
 

Selling Value. Given market conditions, the best strategy is a proactive one. This requires trained “people on the ground keeping an eye open” for opportunities, Hunter explained.

At J&J Exterminating, “the whole team is knowledgeable and can educate customers” on preventive service, said Gaspard.

“It’s our responsibility” to make termite revenue happen through networking, cross-selling and prospecting, added Dunn.

This is certainly true when it comes to pretreats. Hunter advised leveraging relationships with contractors and builders to communicate the value of this service. Though not an expensive cost, customers who aren’t required to have it won’t want a pretreat “unless they see the value.”

Orkin is outfitting field inspectors with iPads so they can deliver electronic proposals that incorporate photos of a property’s problem areas. “It’s amazing how clear the story is,” said Hardy.

Schumacher is capitalizing on his expertise in tilt wall construction to build his referral base. Other companies are encasing crawlspaces and installing vents to reduce conducive conditions and increase revenue.

Pest management professionals may need to adjust their business models. “What got you where you’re at is most likely not going to take you where you want to go,” said Sapp, especially if your termite revenue came from real estate transactions or pretreats.

Jenkins made termite service an add-on to his pest service agreement. “We think it’s the ultimate win-win, particularly for customers.”

Compared to an annual inspection, technicians look for termite damage and conducive conditions four to six times a year. Technicians get a better idea of what’s going on at the house, and they can respond faster if remedial treatment is needed.

The program helps retain customers: Cancelling pest control service annuls the termite warranty.
 

Could Bed Bugs Trump Termites?

Bed bugs may have the customer’s ear (and back, arms and legs), but the money spent controlling them still falls short of termite revenue.

Customers spent $319 million controlling bed bugs in 2010 compared to $1.19 billion for termites, said Gary Curl, president of Specialty Products Consultants in Mendham, N.J. “Bed bugs have been gaining on termites, but there is still a big gap.”

They are a welcome sight given the economic challenges, said D.R. Sapp, Jr., CEO of Florida Pest Control & Chemical Co.

Bed bugs “could be the new termite,” said Jeff Dunn, sales leader at Northwest Exterminating, Marietta, Ga. They cause people to make quick, emotional decisions with little regard to price. He’s found people are quicker to treat for bed bugs or exclude rodents than address termite swarms.

Bobby Jenkins, president of ABC Home & Commercial Services, predicts “bed bugs continuing to grow at a very rapid rate for the next several years.” His market is “still new to the game” compared to others, but, like termites, bed bugs are not a do-it-yourself problem and cannot be ignored.

In Louisiana, the number of bed bug jobs is increasing monthly, said J & J Exterminating Regional Manager Bryan Gaspard. They are “becoming part of our regular daily business.”

In a 2011 PCT survey, PMPs said their top three growth market opportunities were pest control (28 percent), ant control (19 percent) and bed bug control (18) percent. Termites were a distant fourth.

Interesting? Yes. But don’t count termites out.

In the Southeast, it’s not a question of if you get termites but when, reminded Arrow Exterminators Chief Marketing Officer Cindy Mannes.

The cost of homes and termite damage is still high on customers’ minds in Texas, too, agreed Integrity Pest Control Vice President Alan Schumacher.

Given the damage they can cause, “termites are a stand-alone pest,” said Sapp.

— A.N.

 

Housing Makes a Positive Move

Forty metropolitan markets were added to the National Association of Home Builders/First American Improving Market Index in January. These markets showed measurable improvement for at least six consecutive months in housing permits, employment and house prices:

  • Florence, Ala.
  • Tuscaloosa, Ala.
  • Fayetteville, Ark.
  • Denver, Colo.
  • Greeley, Colo.
  • Bridgeport, Conn.
  • New Haven, Conn.
  • Cape Coral, Fla.
  • Jacksonville, Fla.
  • Punta Gorda, Fla.
  • Honolulu, Hawaii
  • Ames, Iowa
  • Des Moines, Iowa
  • Dubuque, Iowa
  • Elkhart, Ind.
  • Indianapolis, Ind.
  • Lafayette, Ind.
  • Lake Charles, La.
  • Worcester, Mass.
  • Grand Rapids, Mich.
  • Lansing, Mich.
  • Monroe, Mich.
  • Minneapolis, Minn.
  • Columbia, Mo.
  • Joplin, Mo.
  • Fargo, N.D.
  • Manchester, N.H.
  • Cincinnati, Ohio
  • Oklahoma City, Okla.
  • Tulsa, Okla.
  • Corvallis, Ore.
  • Erie, Pa.
  • Philadelphia, Pa.
  • Chattanooga, Tenn.
  • Clarksville, Tenn.
  • Nashville, Tenn.
  • College Station, Texas
  • Dallas, Texas
  • Victoria, Texas
  • Madison, Wis.

 



The author is a frequent contributor to PCT magazine. She can be reached via e-mail at anagro@giemedia.com.

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