I have regular conversations with pest control business owners across the world and going up against companies that are selling their services way too cheap is at the top of the complaint list.
It seems that everyone out there is trying to lower their price to gain new clients or keep the ones they have.
Don’t do it! When you lower your price for service you are saying, “yeah we suck, and we have so little to offer to the prospect or client that we have no other option but to lower our prices.” Just remember this: “If you live by price, you will die by price.”
In the early years of my pest control career I had a very productive termite inspector working for me who accounted for about half of the total sales of my business at the time. We will just call him Joe to protect the guilty. On paper Joe was very successful, so I kind of let him do his own thing for a while because he was generating so much new business. However, upon closer inspection, Joe was drastically screwing me on his Proposals. In fact, some of his proposals were 40% lower than the competition out there. To make things worse, Joe was crossing out and changing things on my termite contracts that could have a negative impact on the company if we were to get audited by the department of agriculture. I also noticed that about 35% of his proposals were for spot treatments only. And you know as well as I do… If you do subterranean termite work, that a spot treatment is a partial treatment and a temporary fix and a big pain in the ass of a hassle in the future, so this is something that I frowned upon.
I sat down with Joe and had a come to Jesus meeting and told him to stop changing my contracts, stop lowering my prices to get sales, and to quit selling subterranean termite spot treatments.
I told Joe that he sold a lot of jobs, but the profits were extremely low. So, he had to change… I gave it about six months and reevaluated Joe. He got the message about changing my contracts, but he still was selling treatments way too cheap and he was also still selling spot treatments when I told him not too.
During our evaluation I told Joe that he had one more shot to fix the problem. If he turned in termite contracts that were too cheap or sold spot treatments, they would be rejected, and he would be terminated.
Joe was trained to promote the benefits first and then the features of our termite programs. His problem was that he just couldn’t sell anything without giving it away… After our last meeting it only took about three weeks for Joe to decide that he was done. And he quit.
This was a blessing in disguise because the new guy that I hired was not even from the pest-control industry. I trained him up and he was very successful for a long time. He didn’t have the volume that Joe did, but we actually made a good profit when we serviced the jobs that he sold.
Be careful! You might think the solution is simply just having your inspectors hold their ground on pricing. If you are feeling price pressure, then something is wrong with your value in the eyes of the client or prospect. Remember value is defined by the client or prospect. Think of your pricing like a seesaw. If you feel like you need to lower your price, it is probably a sign that something is wrong with your value equation. Instead of adding weight to the price side of the equation, add features, benefits and value, which can allow you to have those higher prices and ultimately more profit. The prices for your pest control services are determined by a variety of factors: market maturity, market competitiveness, age and strength of your competitors, your need to acquire new business, availability of alternatives and branding. You may have more leverage on your clients than you think.
Your service must be different from other services so that you can command a premium for it. The only way that you can steal business from your competitors is with your value proposition. If you cannot, you need to rethink your value proposition and how different you are from your competitors.
In layman’s terms, you have to be very different and offer a whole hell of a lot more than your competitors are. You also have to be able to present your service better than your competition.
Your inspectors need to be well-trained and have the ability to show a prospect how your service will take them from a horrible before state, to an ideal after state.
Over the years pest control business owners have told me ‘what’ their clients SHOULD value. They have talked about how they offer services to people with a take it or leave it mindset.
It’s time to stop drinking your own Kool-Aid! If your clients aren’t buying your services, you need to stop buying it yourself. Here is a simple rule: pay attention to the client’s wallet, not your mouth, your employees’ mouth, your spouse’s mouth, etc. Your clients vote with their wallet! If they aren’t voting, then nothing else matters! Tinker with the value that your services provides. Also, tinker with the outcome that your services give to your clients until your clients vote yes with their wallets.