Orkin USA President John Wilson says the firm is taking concrete steps to better understand its customers as a way to break the cycle of industry commoditization.
Editor’s Note: One of the most talked about speeches at the PCT Top 100 Awards Ceremony and Executive Summit, held earlier this year in Chicago, was a presentation by John Wilson, president, Orkin USA. In a thought-provoking, widely praised 15-minute speech, the veteran industry executive shared insights about what Orkin is doing to better understand its customers and fight the trend of industry commoditization. An edited transcript of his speech follows. The PCT Top 100 Awards Ceremony and Executive Summit was sponsored by Univar Environmental Sciences.
Before I begin addressing the subject of today’s presentation — “Reinventing the Pest Management Industry” — I wanted to speak to you for a few minutes about what has NOT changed in our industry.
The first is that what we do as an industry is important. It always has been. We help protect two of the most important and most valuable things most people will ever possess — their home and their health. We should be proud of that. And if we do the right things as an industry, that won’t ever change.
Fifty years ago, about 1 in 5 American households used a professional pest control provider. Does anybody want to venture a guess as to what that number is today?
It’s about 22 percent, or still roughly 1 in 5. So we provide an important service, and I think we can all agree our methods have gotten more advanced, more effective, more environmentally responsible — better in every way. But our market penetration has hardly budged in 50 years.
This brings me to one of the most concerning trends we’re seeing in the industry, and what I want to talk about with you today. And that’s commoditization. Despite the fact that we provide a valuable service that’s constantly improving, nearly 80 percent of potential users of our services are not using them — they’re out there waiting for us. That’s because as an industry we’ve done a better job taking customers from each other, sometimes by undercutting prices, than we have of attracting new users. Am I wrong? I don’t believe any of us wants to see the pest management business turn into the airline or hotel industry, but if we keep competing primarily on price, that’s exactly where we’re headed.
Sell Value, Not Price. So let’s talk about how we are trying to fight this trend. One of the ways you break the cycle of commoditization in any industry is to change the basis of competition. We’re working very hard to move the consumer’s focus away from price so that we’re competing more on customer service and the customer experience. We believe that when customers see the value of what we provide each and every day, they’ll find the money to spend to protect their home or the reputation of their business, because at the end of the day the additional investment is relatively small.
So how are we doing it? At Orkin, we knew that we couldn’t improve the customer experience without understanding it better than ever before. One of the first ways we’ve done this is by recognizing that every customer is not the same. This sounds incredibly obvious, but let’s be honest — if we all were to take a hard look at how we structure our operations, how we manage our people and where we focus our efforts, I think we’d find that historically we haven’t done much to understand the different needs of our customers.
We’ve started segmenting our customers into groups based on a number of factors. For example, we’ll look at them by “initial need,” meaning the reason they called us in the first place. We’ll look at them by geography. We’ll look at them according to their tenure as customers. And what we’ve found is that when we start looking at customers according to these and other characteristics, their buying behavior, their levels of satisfaction and their average longevity as customers can be very different.
By looking at these differences more closely, we’ve started to diagnose ways to change their experience with our company for the better. In the past we might have had a “one-size-fits-all” approach based on basic things like the type of structure and the pest issue, and also candidly maybe an approach of what might have been more convenient for us! We now are seeking to tailor our services for every customer based on two additional factors — lifestyle and tenure. Lifestyle from the standpoint of, “is this the right service for this customer,” and tenure because at different points in the service relationship the needs of that customer can be very different.
For example, we may offer a family where both parents work full-time evening or weekend service options, vs. a stay-at-home mom who will be home during our regular service hours. What’s important is that our service works for them, and that we have more opportunities to create that face-to-face relationship that’s so important in our business.
Timely Feedback a Must. Beyond just understanding our different kinds of customers, we are trying to step up our game when it comes to measuring customer satisfaction and looking at customer feedback all the way from a companywide picture down to the route level. For several years now we have conducted telephone surveys to track customer satisfaction scores — I know a lot of you have been doing that — but more recently we’ve implemented an online system that surveys a rolling sample of customers immediately after their service visit so our managers at every level get real-time satisfaction information every morning. It’s a heck of a way to start your day! And really helps our managers keep their eye on the ball.
Not only is the customer feedback instant, which is great, but it’s also trackable down to the region, branch and even the route level. This helps us figure out exactly where we have problems and how we can manage them, ideally before we lose any customers. It’s been incredibly useful to be able to look beyond —for example — a customer satisfaction or customer retention dip in a region or branch, to find out if it’s really just one or two service technicians who have a lot of upset or cancelling customers. That becomes a much easier issue to fix. Conversely, you can see exactly where the bright spots are — where customer satisfaction is well above average — and figure out what those branches are doing right and make sure we share it across other routes in the branch or across other branches.
A Return to Basics. Another thing we see is that when our customers aren’t happy, it’s usually for one of a very few reasons, so what we really have to do is listen to what they’re telling us and act on it.
So we can call our increased focus on customer experience and customer satisfaction a “reinvention” in response to a more demanding consumer, but it’s really a return to the absolute basics of our company. When Otto Orkin was selling rodent control to his first customers back in 1901, he promised he would get rid of their rats before asking for one cent in payment. How many of us would offer something like that today?
Even as a 14-year-old kid, Otto knew that to build his business, he had to surprise customers with his commitment to their total satisfaction. This would not only make them hire him again, it meant they would tell other people about him. He wasn’t just growing his business, he was growing the category. In fact, he was creating a new category for himself. Why can’t we do the same thing?
Otto knew from the beginning that by providing a remarkable customer experience, he would earn the word of mouth that was priceless for him. His commitment to customer satisfaction a hundred years ago is the difference between me being on this panel today and you never having heard of Orkin Pest Control. Because he was one of the earliest pioneers of our industry, it’s arguably one of the reasons all of us are here today.
As we look ahead, we all need to think like Otto did. That’s the biggest point I want to make. The worst thing we can do as an industry is keep fighting over the same business, and commoditizing our services until price is the only thing that matters, when there’s a whole market out there that’s waiting for professional pest management services — whether they know it or not.
The only way we’re going to grow our industry and reach those non-users is to build more and more value into our services and by making our current customers so happy with their experiences that they tell others who might not have considered using a professional before. So I encourage all of us, when we leave here, to look very hard at the way we do business and ask ourselves if we’re getting dragged into competing only on price when we should be investing in creating more value for our customers.
If we do, I believe it will pay off big time, for our entire industry.
In 1918, Otto Orkin serviced a relatively small food storage warehouse on a contract worth $318 a month. He was able to charge that because of the reputation and trust he had built up with his customers. In today’s dollars…anyone want to guess what that would be? That contract would be worth more than $58,000 a year. For one food warehouse, not a food processor! Do we think we could sell a warehouse for that today? If we could, it may be the exception rather than the rule.
Four Key Fundamentals. You know, the fundamentals of our business have changed very little. As a matter of fact I came across this old article from the Atlanta Business Chronicle in my files titled “Four Ingredients Add Spice to Orkin Pest Control Operations,” dated November 1996 and it quotes Gary Rollins. Some of you may well recognize some of these fundamentals.
Intensity — is all about passion for the customer and a passion for service excellence.
3 Days In The Field Forever — is about our managers leading from the front and setting a good example for our team members.
Accountability — is reflected in a variety of ways, whether it is performance to our goals or setting a high bar for one another for customer service excellence.
Leadership — and I believe at Orkin (or any company for that matter) that means leading from the front.
These fundamentals certainly haven’t changed since 1996 or maybe forever, but as we have been discussing, our customers have changed pretty dramatically!
We have so much potential as an industry, and if we keep our focus on building value and delivering a really good customer service experience every step of the way, the sky is the limit for how we will be able to grow our businesses and this industry!