[Business Management] Customer Retention: a PCO's Guide to What Really Works

If you are typical of most pest control managers, your answer to the first question is “retaining an existing customer” while the response to question number two reveals a far greater investment in customer expansion.

Call it the paradox of the pest management industry: The industry as a whole invests hundreds of millions to expand its customer base and virtually nothing to retain existing customers. Could it be the heritage of the chlordane age? When the post-World War II generation of operators — the founders of the modern industry — applied chlordane to control termites, they never expected to interact with that customer again. No wonder, then, that as the residential general pest control market grew, customer retention was neither a priority nor a skill that was handed down to succeeding generations. It’s not that customer retention is ignored altogether: Many companies mask loss of customers by tracking “net gain” data, or the number of new customers compared to those they lost. To these managers, gaining more customers than you lose is a “win,” when in fact this comparison ignores the loss of customers by claiming victory from a positive, but totally unrelated, activity. Grabbing new customers while accepting a high loss rate is similar to hauling water with a bucket riddled with holes. It makes sense to get a new bucket.

If you answered question number one correctly you know at least intuitively that keeping an existing customer is even more important than getting a new customer. Your intuition is correct. When you analyze the true cost of losing a customer, you can see why your first priority — and primary investment — should be directed at keeping the customers you already have.

LIFETIME VALUE. What is the real cost of losing a customer? To be successful, most pest control firms develop a core group of highly satisfied, and therefore highly loyal, customers. How much revenue do you generate from this group over a period of 10 years? Fifteen years? You won their business and unless they move or die, they are yours for as long as you retain their loyalty. If they leave your business, they will probably move on to your competitor, meaning that you paid to get them and, for one reason or another, handed them over to another company that now benefits from your largesse. It is a painful and expensive loss.

There is another cost that cannot be so easily calculated — lost referrals and negative comments. Your satisfied, lifetime customers typically recommend your services to new neighbors, friends, relatives and anyone who asks. In contrast, dissatisfied customers rarely complain. One customer retention expert estimates that for every customer that registers a complaint, at least 25 never let you know of their dissatisfaction. That does not mean that they remain quiet, because they are busily informing an average of eight to 16 friends, relatives and neighbors how you failed them. That kind of negative word of mouth can undo a sizable advertising investment.

All of this reinforces the point that retaining customers should rank as the highest priority you have. To improve customer retention, you need to understand two things: what causes customers to quit and what you can do to keep them. Most customers want to be satisfied if, for no better reason, than to avoid the effort of replacing their service firm. But satisfaction does not represent a high enough goal for your customer retention program — You should always strive for loyalty. A loyal customer has no interest in a competitive pitch because the positive experiences they have had with your company outweigh the possible financial benefits of a change.

What causes a pest control customer to develop loyalty to your firm? It almost always comes down to the actions, attitude and behavior of the service technician. You know from experience that some technicians build a loyal customer base while others do not. You want to keep those technicians and reward them for helping you train other technicians to attain the same level of relationship with their customers. This doesn’t mean that only an outgoing, affable individual can be successful. A dedicated professional who demonstrates concern about the customer gains loyalty that is more enduring than a sunny personality. You can train just about anyone to show that they care; those that cannot take the time to show an interest in increasing their value to your customers should be working for your competitor.

You can begin your customer retention program today. 

GETTING STARTED. When developing a customer retention program, keep in mind the following keys to success:

Select the right customers. Target your promotional efforts to neighborhoods with the customers you want. Pest control customers by definition are more affluent than average, so target those upscale housing developments that draw those kinds of people. Use the Jiffy Lube model: Follow their customers — not their employees — home to find your target neighborhood.

Sell a program, not individual services. Instead of selling an initial service followed by quarterly services, sell and charge an annual program fee. You are a pest control professional, not a carpet cleaner, and you know that individual services cannot keep a structure pest-free. Sell and describe your program accordingly.

Get out of the accounts receivable business. Perhaps the second-greatest source of annoyance after missed service calls are conversations about money owed. They rarely build trust. Provide an incentive to your new and existing customers to pay for pest control the way they pay for everything else — by check (with a significant discount) or credit card (with a lower discount). Let other, more financially oriented organizations manage your credit and especially your receivables.

Promote your customers within your organization. Attitudes about customers come from the top down and must be relentlessly positive. Promote your customers to your co-workers every chance you get. The efforts of your best service technicians can be immediately undone by a rude clerk. Listen in on phone conversations with customers to ensure that you don’t unwittingly tolerate this behavior in your office. Phone in yourself or have someone you trust do it for you. How would you rate your experience calling your own company? The investment required to improve that experience may pay off far more than an increased page size in the Yellow Pages.

Train your technicians to become educators. A common complaint among dissatisfied pest control customers is that they have no idea what the service technician did during his 15-minute blitz but that it probably wasn’t worth the money. Teach them to explain what they are doing, why they are doing it and what they will be doing on the next trip. The most effective way to train them to do this is to have your most-effective technicians take the lead in training them. Role-playing works especially well when senior managers take part and show that they are willing to expose themselves to a little positive reinforcement by the service group.

Over-communicate. They may complain about “junk mail” but most homeowners, like most people, appreciate attention. Your customers should hear from you at least four times per year — without an invoice in your hand.

There is always something to talk about. Each spring, promote your added services, like mosquito control or gutter capping. In the summer, you can remind homeowners of the importance of moisture control or dealing with late-summer bee activity. Each autumn, you can talk about the need for rodent exclusion and, in the winter, how your technicians are preparing their home for the coming spring invasion.

Do the “little” things. Change a light bulb, fire alarm battery or furnace filter. Notify the homeowner of a leaky basement faucet. Your technicians can always do something more than pest control.

Intervene. Don’t assume that an irate customer is automatically a lost customer. Go out for a visit. Show concern. Offer a better deal or free mosquito service. Making an effort pays off, especially when the customer feels that he or she has been ignored. You will win some and lose some but the winners are worth your effort.

Track progress. Any investment should yield measurable results. Maintain your own report card on how many customers you lose and why. Over a period of months and then years, you will see what works and then refine your customer retention program accordingly. Be tough: The only acceptable loss rate is zero.

Improving customer retention has another, more subtle benefit: It is the very best way to expand your customer base.

The author has been a sales and marketing executive in the pest control industry for 20 years.

Customer Retention the Walton Way

No businessman ever succeeded in developing and retaining customers better than Sam Walton, founder of Wal-Mart. Here are a few tenets that have been credited to him.

A customer is…

• the most important person in any business.
• someone who is not dependent upon us. We are dependent upon him.
• not an interruption of our work. He is the sole purpose of it.
• someone who does us a favor when he comes in. We aren’t doing him a favor by waiting on him.
• an essential part of our business — not an outsider.
• not just money in the cash register. He is a human being with feelings and deserves to be treated with respect.
• a person who comes to us with his needs and his wants. It is our job to fill them.
• someone who deserves the most courteous attention we can give him. 
• the lifeblood of this and every business. He pays your salary. Without him we would have to close our doors. Don’t ever forget it.