One of the industry’s top growth areas, the termite market, is one business that stirs up perhaps more differences of opinion than any other in the industry. Not only are there a growing number of control products and treatment techniques available, but go to any industry conference and you’ll also find a multitude of beliefs about termite activity, persistence and control. Add to this the fact that termite control is continuing to provide more business opportunities for pest management professionals and you have a market sector with a lot of buzz going on.
One thing industry professionals do agree on, however, is that the termite business is one of the industry’s brightest, for a number of reasons. The nation’s market for both new and existing homes continues to be strong, fueling the need for termite inspections, prevention and control. Also helping to bolster the market appears to be a greater public awareness of termites, the damage they can cause and the many well-trained professionals in business to control them. Greater regulatory oversight of and media attention to termite work means that occurrences of less-than-label treatments and predatory pricing practices may be declining. And with newer control tools on the market, namely a variety of termiticides, baiting systems, barriers and borates, PCOs have plenty of options to choose from. This variety also helps when it comes to marketing termite services to today’s more knowledgeable customers.
And while control options have improved in recent years, that doesn’t mean termites will go away any time soon, says Richard Kramer, technical director of American Pest Management, Takoma Park, Md., and contributing technical editor to PCT. "I don’t think any magical chemicals have worked miracles yet to cause the market to decline in termite control," he says.
MORE ENTERING MARKET. As would be expected, it appears there are more professionals entering or returning to the healthy termite market. About 75 percent of respondents in PCT’s 2003 independent survey said their companies offer termite control. That’s a significant increase from the 2001 survey, in which about 62 percent said they offered termite control.
Termite control has also remained the second most popular choice among PCOs when asked which one service represents their largest growth market. About 27 percent of PCOs selected it. (The only pest selected more frequently than termites as a growth area was ants.)
Michael Katz, president of Western Exterminator Company, Anaheim, Calif., agrees the termite is one of the industry’s top pests in terms of business opportunity. "It’s tied to real estate transactions as well as being an ongoing threat to most people’s largest investment — their home," he explained.
Other PCOs also have a positive feeling about this market. "Termites are a very destructive pest and there’s a sense of urgency when you have a termite problem compared to an ant problem," says Jeff Johnson, vice president of A-Active Termite & Pest Control in Virginia Beach, Va. Johnson says this season his termite business has posted a 20 percent increase over last year, due in part to the company’s strong reputation, a mild winter and a healthy housing market.
Like Johnson, for most PCOs, termite business does appear to be up, despite the spring’s inclement weather conditions. The majority of PCOs — 61 percent — said in 2002, termite revenues increased. Just under one-third (28 percent) said revenues remained the same. About 11 percent said termite revenues decreased.
Tom Hardin, owner of Hardin Services Pest Control, based in Rock Hill, S.C., believes greater public awareness is boosting business. "I think national advertising, for one, has helped the awareness of how much damage termites do," said Hardin. He says more people are requesting inspections, and even if termites aren’t found, they still want their homes protected. "I’m getting more and more treatments just to place them under termite warranties," he said.
Hardin also says his termite revenues have increased in part because he’s imposing more cost controls. "We’ve been watching our bottom line to make sure that our methods and out treatments are not overused but are still meeting standards," he explained. Furthermore, he adds, termite swarms in his area seem to be up in recent years. "It appears that we’re having more calls," he said.
RISING PRICES. One factor explaining increased revenues may be that termite prices are rising. Just more than one-half of pest management professionals surveyed said they have increased their termite treatment prices for 2003. About 46 percent held prices the same and 3 percent actually decreased their prices. For example, Hardin says he increased his prices simply because his chemical and insurance costs have risen. However, he adds, "our percent of profit is exactly the same as it was."
A-Active also increased its termite prices, says Johnson. "Everything is going up — fuel, general liability, health care, the 401k — everything is costing us more," he said.
A related issue is that pest management professionals’ costs are also rising. The survey indicates the percent of total service revenues spent on termiticides has increased for most PCOs: the average is now 12 percent of revenues, compared to about 8 percent in 2001.
According to research from Gary Curl at Specialty Products Consultants, 67 percent of pest control companies report that they primarily use soil treatments only. About 11 percent of PCOs in the termite market said they offer both baits and liquids in their termite treatments. About 11 percent said they offer baits only.
MARKETS VARY. As the survey indicates, how termite control is performed varies widely from company to company. For example, a number of PCOs have chosen to use baits as their primary treatment method. Jay Jorns, owner of JNJ Pest Control and Grounds Care in Katy, Texas, says he uses baits simply because he likes the system and for him it’s very "sellable" to customers. "I think it’s the best thing since sliced bread," Jorns said. "What makes the system work is there is a protocol involved." Since he began using baits five years ago, Jorns says his callbacks have decreased from one in four to one in 100.
Johnson of A-Active is another PCO using primarily baits. He cautions that while the new nonrepellent liquids are effective, PCOs shouldn’t think of them as silver bullets. "I just think it’s in the consumer’s best interest to go with a baiting system that’s going to guarantee them pest elimination." Further Johnson adds, in the eight years he’s been using baits, he’s been very pleased with the results. "We’ve solved some of the most difficult termite problems I’ve ever seen in 19 years," he said. Using baits has also reduced liability for the company. Slab-on-grade construction in the area is widespread, he explains, but with baiting there’s no need for drilling. "It’s a win-win for everybody," Johnson said.
A-Active also has two termite detection dogs that can be taken out to properties as part of the company’s comprehensive termite service. "If there is a problem we’ll bring in our termite canine," he says, explaining it’s all part of the company’s "zero-tolerance" marketing plan.
Meanwhile, Jeff Ledford, owner of 1st Choice Pest Services, Wichita, Kan., uses primarily liquids, along with termite detection monitors. He explains this technique can be offered at a significantly lower cost than baiting and it’s a technology he feels comfortable with. In fact he is so confident in the program he recently extended his termite warranty to seven years. Previously the company offered a one-year warranty, renewable annually. Besides being more cost-effective for customers, says Ledford, the new warranty also helps 1st Choice stand apart from its competition. "I’m the only one in this area that offers a seven-year warranty on my termite work," says Ledford.
Some pest management professionals, like Tim Hulett, president and owner of Hulett Environmental Services, Riviera Beach, Fla., feel comfortable using both baits and liquids. "We use whatever the customer wants," Hulett says, though there are exceptions. "Sometimes a bait is a better choice and sometimes a liquid is a better choice. But, he says, "99 percent of the time, the customer can choose."
Hulett is also involved in what he calls the cutthroat pretreat market. He entered the business in 1990, after buying an existing pretreat business and lost a lot of money in the early years. "But I went back on the football field and we did what we had to do," he says. "Now we’re one of the largest pretreaters in the state."
Hulett admits the pretreat market is still a difficult business to be in, with large product purchases and complex logistics to be worked out. However, he notes in Florida the pretreat market continues to grow. "We are one of the competitive companies," he says, explaining his prices aren’t the lowest, nor are they the highest.
"We do everything we can to keep the prices up as high as we can," he says, "but supply and demand works that out and it is just a very tough business." Still he says, it’s an area that the company will stay involved in. "We get a lot of new customers in pest control and lawn because of it," Hulett notes. PCT