Terminix Turnaround

Features - Cover Story: Top 100

2018 was a grind at Terminix. Strategic acquisitions and an internal focus on people and processes are helping build a culture of serving, caring and delivering at one of the industry’s most recognized pest control operations.

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May 20, 2019

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At a series of five town hall meetings across the country in early 2018, involving all 800 front-line leaders of Terminix, the new president of its residential pest control and termite business tuned in to days of listening.

“This is a fast-paced business where you can drive a lot of change in a short period of time if you are driving the change correctly,” says Matt Stevenson, who stepped into the role in October 2017 after a career in the auto industry, where he dealt with wholly owned distributors, dealers and franchisees. He knows how to motivate the front line in a branch-based network.

Change in the automobile industry — for example, rolling out an innovation — could take years. “That is not the case here,” Stevenson says of pest control, digging into what’s known on Wall Street as the Terminix Transformation.

“We can make changes that improve employees’ and customers’ lives, and we can literally do that in days and start to see the impact,” he says.

An overnight turnaround of a nationally recognized residential brand that had collected some dust over the years might be a bit ambitious. But the truth is, in just one year, Terminix is making measurable headway on a culture rebuild and strategic objectives focused on serving customers, taking care of employees and delivering profitable growth. “We call that our ‘wheel of life’ here,” Stevenson quips.

These initiatives are a direct result of listening — and therein lies the opportunity to improve, Stevenson says. “Terminix has an amazing brand, but it was an organization that hadn’t been listening to customers and employees the way they should have been. There was a big disconnect relative to what our front-line teammates were asking for and needed, and what was being driven from the home office.”

Terminix’s residential business had lackluster Net Promoter scores; a notable number of cancels were related to service delivery, based on equity research by the firm William Blair. The company had seen more team member turnover than desirable, with 70 percent of sales representatives citing their reason for breaking up with Terminix was because of an old compensation structure.

“My staff and I, alone, visited 100 branches last year,” Stevenson reports. “We met with small focus groups of technicians and outside sales professionals, we connected with branch leadership and did ride-alongs. We visited customers.”

Dialogue centered on a few themes: customer service, policies and procedures, and work-life balance. They relate to the “wheel of life” that Stevenson and his leadership team are driving as they build a culture focused on what matters most: people. “It’s about serving, caring and delivering,” he says.

Naumann

RE-ENVISIONING EXPERIENCES. The Terminix turnaround is not limited to its residential business. Terminix Commercial’s interim president, Deni Naumann, is leading an integration of the businesses — particularly, merging national accounts by assessing client portfolios across the businesses and leveraging synergies.

“At Copesan, one thing we are very proud of is our rich history of doing national accounts best, and that’s evident through our great client retention — higher-than-normal Net Promoter scores,” says Naumann, who is wearing two hats and also serves as president of Copesan.

“We have been able to take our model, which we feel is value-added for national accounts, and move that into Terminix national accounts,” Naumann says.

The Terminix Transformation includes growth in the commercial market, a commitment made by ServiceMaster CEO Nick Varty in 2018. Naumann points out that since 2000, commercial pest control has grown 146 percent, while the residential pest control sector has grown by 35 percent. “From a commercial perspective, regulation has actually been our friend,” Naumann says, pointing to an elevated awareness of and demand for pest control services following the passage of the Food Safety Modernization Act (FSMA).

Naumann is passionate about the industry’s mission to preserve and protect public health — and she believes Terminix will move onto a more visible stage from an association involvement and advocacy perspective. “We have the same mission, which is to protect food, health and property,” she says of the industry at large. And, regarding the Copesan and Terminix Commercial integration: “Any time you can bring in best practices and improve service delivery to build client loyalty, that’s a positive thing for pest management.”

Client loyalty is a focus of the Terminix Transformation, and Stevenson points to the company’s investment in systems to improve the customer experience. The culture is shifting toward one focused on digital technology, retention and growth. For example, a Salesforce partnership was announced in November 2018 and is guided by ServiceMaster’s chief transformation officer, Pratip Dastidar. Salesforce will help ServiceMaster, including Terminix, leverage data so technicians can better recommend products and services.

Stevenson
Terminix has an amazing brand, but it was an organization that hadn’t been listening to customers and employees the way they should have been.” — Matt Stevenson, president, residential pest control and termite business, Terminix

“We are living in a world where people want instant gratification,” Stevenson says. “We are evolving our processes and systems so we can get a 360 view of the customer. Using AI to see their buying patterns and knowing everything about their interactions will help us know their expectations before they even ask for something.”

Just as important is understanding what employees need to perform. Again, Stevenson’s listening. “Employees who are doing the work at ground level are helping us redesign processes as opposed to people in the home office who don’t do it every day,” he says.

Employees are seeking consistency, he adds. “There have been a lot of people in my job. They want longevity — a leader they can trust, with a strong culture and direction. They’re overwhelmingly saying, ‘Let’s stay on the same path.’”

Source: ServiceMaster 2018 annual report

SMART BUYS. In the last 15 months, Terminix’s parent company, ServiceMaster, has closed 29 M&A transactions (as of February 2019), and perhaps the most notable is the Copesan acquisition for $150 million. Copesan continues to operate its business under three brands: Copesan National Accounts, Wil-Kil Pest Control (Wisconsin, Minnesota, Iowa, Illinois and Michigan) and Holder’s Pest Solutions (Texas).

Last year, ServiceMaster purchased Cooper Pest Solutions, “which brings a great level of expertise in bed bugs, as well as an anchor in the New Jersey/Philadelphia area,” Naumann points out. It also acquired Hometown Pest Services in Florida’s Palm Beach and Broward County region, bringing in a lawn care offering. The acquisition of Assured Environments elevates visibility in the commercial space. Assured Environments specializes in property management, hospitality, retail, education and food- processing facilities. Its blue-chip clients include some seof New York City’s landmarks: Rockefeller Center, Madison Square Garden and the 9/11 Memorial Museum.

Naumann says M&A has accelerated since Varty joined ServiceMaster (July 2017). The M&A strategy is centered on acquiring capabilities, systems, processes, platforms and people.

Meanwhile, ServiceMaster renamed its franchise services group ServiceMaster Brands.

Expect Terminix to expand on a global scale, with the William Blair report noting management’s interest in leveraging Terminix’s strengths and capabilities in fast-growing international markets where pest control services are increasing 20 to 30 percent annually.

Of the transition so far, Naumann says, “We’ve seen positive impact in client retention and Net Promoter scores on the Terminix brand, and we can see that those best practices are impacting the Terminix commercial and national accounts businesses.”

On the residential side, Stevenson says the grassroots approach to restoring a historically strong culture is paying off. “We’re getting back to [what’s important] — listening to employees, empowering them and putting customer service first,” he says. “We’re definitely in a better place.”

At an annual awards meeting, top- performers in the Terminix business were honored for their work. “We got great feedback about how personable they thought the home office was — how we are listening to them for the first time in quite a number of years, and they felt really valued and appreciated as employees,” he says.

Stevenson says a number of times, a colleague would tap him in passing and say, “Thanks.”

“We are gaining some trust,” he says.

Stevenson, who describes his leadership style as direct and fast-paced, yet humble, is excited to continue the momentum. And, he’ll keep listening. “We’re getting a foundation now — it was always there, just dusty, so we’re firming that back up — and we’re getting the morale going,” Stevenson says.

The author is a frequent contributor to PCT.

Phil Cooper to Lead Newly Formed Terminix Specialty Brands

In March, ServiceMaster announced the formation of a new business unit called Terminix Specialty Brands. The unit is comprised of 11 companies acquired by Terminix in recent years that are retaining their brand, along with new brand equity acquisitions.

Terminix Specialty Brands will be led by Phil Cooper, former owner of Cooper Pest Solutions, Lawrenceville, N.J., which was acquired by Terminix in May 2018. In this new role, Cooper will help drive process improvements, appropriately transition and integrate several long-standing acquisitions, and help integrate new acquisitions.

Cooper

Cooper also will be part of the strategy and business development team, reporting to Dion Persson. He will help in identifying companies with brand equity to join the Specialty Brands division, which includes A-Pro (California), Capelouto (Florida), Catseye (New York), Certified (Texas), Cooper (New Jersey/Pennsylvania), Godfather’s (Minnesota), Hometown (Florida), Schendel (Kansas/Oklahoma/Arizona/Missouri), Seitz Brothers (Pennsylvania) and SOS Exterminating (Arizona).

“Terminix has a great collection of brands with tremendous brand equity and we are adding more. We are creating a platform to leverage these brands, supercharge their revenue, gain operating efficiencies and put their teams into winning positions.” Cooper says. “These powerful brands will be part of a proud new tradition, resulting in new raving fans of Terminix, ServiceMaster and the culture we are designing.”

Nik Varty, CEO of ServiceMaster, added, “Acquisitions are and will continue to be an important source of growth. We are focused on bringing in companies that deliver incredible shareholder value through synergies, much needed capabilities and outstanding talent. Phil is an entrepreneur who understands what it takes to build brand value through superb customer service and great care of the front line.”

Copesan Services, including Wil-Kil and Holder’s, and Assured Environments, Terminix’s recent acquisition in New York City, will continue to be managed by their current leadership.

ServiceMaster Acquires Inspect-All Services

Brandon Lunsford (left) and Brian Lunsford (right), Inspect-All Services co-owners.

ServiceMaster, through its subsidiary, Terminix International, in April acquired the Atlanta-area pest control division of Inspect-All Services, headquartered in Conyers, Ga. The company ranked #81 on this year’s PCT Top 100.

Under the leadership of brothers Brian and Brandon Lunsford, who purchased Inspect-All in 2006 from their father, the company has become one of the industry’s fastest-growing firms and is on the Inc. 5000 list of America’s fastest-growing private companies.

Inspect-All Services, founded in 1984, will continue to operate under its current name and will complement ServiceMaster’s presence in the residential services market.

“Our top priority was to make sure the acquirer’s core values aligned with ours so that our team and customers would be in good hands moving forward,” said Inspect-All Services co-owners Brian and Brandon Lunsford. “After thorough research and many discussions with our adviser and the ServiceMaster team, we are confident that Inspect-All Services will continue to flourish under the new leadership.”

Not included in the sale was Inspect-All Services’ multi-state home inspection division, now called LunsPro Home Inspections, and its Jacksonville, Fla., pest control operation, now called Kingfish Pest Control. The Lunsford siblings will continue to own and operate those businesses.

Paul Giannamore of The Potomac Company acted as exclusive financial adviser to Inspect-All Services. Mike Stanczyk of Lynn D’Elia Temes & Stanczyk acted as legal counsel to Inspect-All Services. The terms of the transaction were not disclosed.

The Inspect-All Services staff.