I learned the hard way that brand recognition is vital in new markets.
When I purchased the business I had opened and operated — Killingsworth Pest Control in Charlotte, N.C. — in 2007, I thought I was ready to take on the world. I was only partially right.
I had started my career as a Yellow Pages sales representative in Florida, working there for 12 years before approaching one of my best clients, Killingsworth Pest Control, about the possibility of representing the company in Charlotte. I opened a branch office there in 1993, and went on to build a very successful business. After 14 years, I decided to buy the Charlotte company along with the rights to the Killingsworth name in North and South Carolina.
Today, Killingsworth Environmental of the Carolinas and Killingsworth Enviro-Klean represent nearly $12 million in annual revenues. Over the past five years that we’ve owned the business, we’ve grown it nicely, including an 18 percent gain this year alone. We have 110 employees, 90 vehicles, 10 branch offices and four divisions: termite and pest, lawn, mold remediation and bed bugs. Our primary focus is residential work, but we continue to build the commercial side of our business. We also regularly explore new service offerings and opportunities for aggressive growth.
But, when I bought the business in 2007, I thought it would be a great idea to open branches in Raleigh and Asheville, N.C. These are definitely strong markets, but I hadn’t figured into my business plan the lack of brand recognition there. Each of these markets is a three-hour drive from our main office, and virtually no one in either market had ever heard of Killingsworth. Add to that challenge the new-construction bust that started in 2007, and we were definitely swimming upstream.
Be Ready for the Work. With my Yellow Pages background, I’ve always been a firm believer in the power of advertising, and I thought we could build our brand exposure through the same vehicles we were using in our Charlotte market: TV, radio, Internet, and of course, Yellow Pages advertising. But I had underestimated how much of an advertising expenditure would be required to get the results we needed. We were pouring tons of money into these markets, but it was never enough to get us into the black. By 2012, we had sold both the Raleigh and Asheville operations because we were clearly losing money in those markets, even as our Charlotte offices were thriving.
Here’s what I learned from the experience: Unless you’re a national name, like Orkin or Terminix, moving into a new market requires a lot of planning, research and marketing. You will spend substantial amounts of working capital promoting and establishing your brand, particularly if your competitors in those markets have achieved strong brand recognition and customer loyalty.
These expenditures won’t be enough on their own, either. You also need tireless, dedicated individuals or teams running your new offices. These folks have to know how to build relationships and be willing to get involved in the communities you’re serving. When you’re assigning someone to open an office for you, never assume that he or she is as ambitious and as committed to success as you are. Make sure they have proven themselves before you cut them loose in a new market. An important part of our culture at Killingsworth is that we promote from within — our managers understand our culture and expectations, so when we ask them to open new offices, we have confidence they will provide outstanding leadership.
Lesson Learned. We’ve flourished under these principles in the Charlotte market. Of course, our managers in this market also have the backing of a well-known name brand. Everyone in this market sees our TV commercials and hears our radio spots. When we open a new office, the brand recognition is already there. We’re simply expanding our presence in areas where our business is already growing. It’s a much different experience than jumping into a new market where no one knows your name.
One day my sons will take over this business, and they might have different ideas about how to take our brand into new geographic markets. As for me, I’ve learned my lesson. If I want to enter a new market, I’ll do so by acquiring a company that has already built a solid business. Otherwise, I’m spending a whole lot of money and effort on what could be a lost cause.
As told to PCT contributor Donna DeFranco.