The bigger they grow, more they seem to lose

How investments into Indian pest control industry have kept increasing the losses & what is the way out

Beginning with the early part of this century, we started seeing huge sums of money being invested in India to set up pest control companies or in buying existing players outright. In an industry where a crore of rupees was once considered an enormous sum, we have had investments of tens of crores and even hundreds of crores of rupees into PCO’s. Making us industry insiders wonder, is there something about our own business we don’t know?

The truth is, for all the significant investments we have seen in Indian pest control over the past two decades, the losses of bigger PCO’s and the industry as a whole have only mounted. There is no mystery why a PCO can’t be profitable, so the losses made and reported are not inexplicable. Here is my take on why investments into our industry have fuelled losses and what I think is a way out.

Any business runs by fundamental principles of offering products or services to customers at a price that helps to meet the cost of the offering. The company sustains itself over the long term by keeping customers happy and being able to manage the cost to be able to pay employees and vendors and return something to the investors too. One or more of these basics of running a PCO are missing in the industry today, perpetuating the losses of the more prominent players and giving the feeling that their turnaround is unlikely. My analysis of the issue has identified the following reasons why investments into PCO’s have led to losses.

Lack of knowledge and expertise: The investors pouring money into pest control as well as the senior management teams running the bigger PCO’s all have very little or no knowledge of pest control services or the Indian market for such segment. With such handicaps, they are easily ‘taken for a ride’ by their management teams who are from the pest control industry. Busy as they are with board room discussions and analyzing voluminous reports, the investors and senior management fail to visit the market or have a pulse of our industry is. No doubt, they continue to be optimistic about the Indian pest control market and bring fresh funding or continue to bear losses.

Weak pricing: If a big PCO cannot meet the costs of its services, then there is no way that it will be able to survive or to thrive. In a bid to show growth and business volume, when contracts are taken at an incorrect price, it shows sooner or later in the profit and loss statement. This single metric, if corrected, can set right the profitability of many PCO’s. Alas, in their quest for market share and topline, which they use to impress their investors with, they keep accepting poorly priced contracts and continue bleeding by funding even to retain their services afloat.

Applying wrong models: The lack of knowledge about our industry among senior management of companies has been compounded by their enthusiasm to apply wrong business models to traditional pest control. When you have people from FMCG, logistics, retailing, financial services, and other unrelated business segments switch to pest control, you can expect a lot of experimentation and, sadly, failures! Full-page newspaper ads for soliciting residential customers may look very impressive till you realize that recouping that cost may need the enterprise to operate at level 20X the current size of business. PCO’s with foreign funding thought they could replicate their overseas models here to realize soon that regulatory issues prevent using the same products used abroad.  Further, cultural aspects come in the way of adopting systems and processes that are working in another country. Of course, I am not saying we have nothing to learn from other industries or countries. It is just that any idea has to be thought out and adopted to the PCO that is taking it up and also localized so that implementation is successful.

Not focusing on the customer: The customers don’t care about the source of funding of their PCO or the management institute of the CEO of their PCO. They want efficient and effective services at a reasonable cost and quick responses when things go wrong. I have found that the top management of our larger PCOs is virtually unknown among customers. You don’t see them during tender bids or industry events, making you wonder how they run businesses without any customer or industry interaction. There is very little interaction among the management of bigger PCOs – so each PCO’s team is trying to manage issues by itself without the benefit of learning of the fellow PCO and the industry as a whole.

Absence of innovation: Of the investments made into the pest control industry, if a good portion were spent on innovation, maybe we would have seen our industry itself progress and the market size increase. Sadly, none of the new PCO’s, whether Indian or multi-national have brought any noteworthy innovation to the market. The same methods that were used historically are being adopted and are giving sub-par results. And the customers are getting to choose a PCO purely based on price and not on service features.

The way out: Shocking as it may be, my prediction is that the industry will improve and consolidate with the shutting of some or all of the leading loss-makers. In an industry starved of funding, we saw equity infusion in tens and hundreds of crores of rupees, all going to fuel losses that only seem to mount with each passing year. The investors require a sanity check on whether their investees have a business model that will ever generate profits.

The complicated organizational structures and expensive overheads (numerous functions that all are contributing little to revenue or profit but piling on the cost) have to be ruthlessly cut. Our services in the pest control industry cannot afford fancy functions and over-paid top management. The customer is unwilling to pay for excessive overhead a PCO carries, so there is no choice but to scale back the team size and costs.

The current mid-sized PCO’s can learn from the mistakes of the bigger PCOs and scale-up smartly. Indian pest control is still an industry with great potential, but customers will only be willing to pay a fair cost for hassle-free services. Loading on the cost structure by investing in expensive senior management or infrastructure cannot bring reasonable returns at the current size of the market.

Pest control is a low margin business, and only the high-volume X small margin operation managed efficiently will help generate returns for investors. The day of reckoning is already past for Indian PCO’s that have grown at any cost. Unless they scale back by shedding unprofitable contracts, they will continue to bleed and maybe to their death. The time for experimentation is also long over. It is better to run a pest control business by having management teams who know what this industry is and how to handle services. All the fancy management education from premier business schools are of no avail if one cannot run a PCO at scale profitably.

Switching from paper to digital processes in your pest control business

Six compelling reasons for you to stop using paper and start becoming digital

Paper memories from my history: Two decades ago, I used to handle the quality system and food safety audits for my company at Kerala.  For each audit, we had to prove compliance with records, and that in the late ’90s meant paper records.  So, we would prepare for audits by having marked box files and ring binders containing records.  We would dedicate the conference room of our factory for the audit, and it was common those days to have the large table in that room full of files to which we showed to the auditor!  That seems a very distant memory now, as, in 2020, we can prove compliance to auditors just by opening our computers, either laptops or desktop.  Even when the original records are on paper, they can be scanned and retrieved from any part of the world using servers or email.  In just twenty years, the world of business has changed so much concerning records that one can’t believe that we did business with so much paper at work.  Sadly, days of paper at work & even at home seem numbered.  Here are six reasons why I think each Indian PCO should go digital and forget paperwork in their business.

Manpower unavailability and costs: It is increasingly becoming difficult to find people at any level of the organization right from someone to head a company to the operator who does the actual work in customer premises.  PCO’s have to learn to run their businesses with fewer people than hitherto as having fewer people than required is a reality of the twenty-first century.  There is an additional reason too to go digital, and that is to save on workforce costs.  Every Indian industry had the luxury of over-staffing and using more people for a process than required, but those days are now history.  With profit margins shrinking in every segment, including pest control, PCO’s have to cut costs to remain viable if not survive.

Customers now prefer doing business digitally: Whether retail customers or B2B customers, each segment today deals with vendors either on the Smartphone or on the web.  Customers want the ease of doing business with businesses from whom they buy products or services.  The present-day environment is called an attention economy as people’s attention spans are very low & they can spare seconds if not minutes in dealing with any matter, including ordering pest control services.  Customers today also want ‘On-Demand’ services and prefer to place their orders or access their information at any time of day or night and using the means they are comfortable with – either an app, a web browser, or as we see Voice Assistants increasingly!  If any PCO can’t be digital, customers will go to the next one who can be contacted digitally and deals with a customer over that medium.

Paper-work is more expensive than digital records: My generation grew up using paper, but in 2020, paperwork is costlier than going digital.  Company stationery costs money to print & store at offices; when used for printouts, stationery costs even more, not to forget the cost of sending invoices by paper.  In big cities, office space is expensive, and every office soon runs out of space for flat files & box files.  If you are still not convinced, remember, locating paper records however well they are filed is a big task.  Try it.  Lastly, the paper is prone to destruction – as it is affected by fire, water, and our friends – termites!  Digital records, on the other hand, don’t need any space other than on a server, and that too can be on the cloud.  Theoretically, a PCO can store all records on a Cloud Server and not have any computer server or other storage devices.  Of course, they won’t need an office either if it is mainly to store records.

Millennials are digital natives comfortable in a digital environment: Whether your employees or your customers, you will deal with a lot of Millennials (also called Generation Y).  These are people born after 1985 and considered digital natives – those who are comfortable in a digital environment.  Going forward, the next generation of employees (called Generation Z) will be totally digital.  Many are unused to taking notes on paper or are uncomfortable doing so.  To attract and retain millennial and post-millennial generation as your team members and those buying your services, you have to be digital.  There is no other option.

Customers find you digitally: Some time ago, we were discussing with an agency a company brochure we wanted to make.  That agency was also to prepare an audiovisual clip, a presentation, and a video.  After a few months into the process, we decided to scrap the paper brochure!  Unlikely that customers actually like receiving collaterals in paper any more.  More likely, they will ask you to send them an email or share your website with them or even ask for details by messaging apps like WhatsApp.  If a PCO does not have a good website, then, for practical purposes, the PCO is thought not to exist!  As the first thing any prospective customer searches for when wanting pest control services is “PCO Near Me.”  If one is not online, then that PCO is not in line to do business in the present day. 

To make business process dependent: Our industry with so many small PCO’s all run by a few people in the team is very people-oriented and less process-oriented.  Sadly, however good one or more employees may be in your team; they turn out to be its limitation as the business remains dependent on them!  Scaling up or growing a business requires standardizing processes, which is very easy with digitization.  Once the business processes are online, either by software or through the use of an App, then any employee, including a new one, can easily adapt to it.  Even if a good employee leaves (this is sadly typical of our industry with that person going on to become our competitor), the business does not suffer.  As the records remain with us and the replacement has just to get familiar with the online process and start using it.  And the digitized process ensures that requirements are met even if not fully understood or known to the employee involved in the process.  Yes, this also means we can get rid of Standard Operating Procedures or SOPs.  Why have SOP’s on paper when nobody reads them & when you can ensure that your digitized process is as per the SOP?

Going digital does not mean having a fancy Smartphone with the latest generation processor!  Every PCO has to switch to the digital platform to conduct all aspects of its business right from managing its employees, dealing with the government, customers and vendors, and everything else that happens in the company.  The tools to do so are now available at a very reasonable cost that makes it viable for any PCO, big or small, to afford. 

In future issues of PCO Mentor, we shall go over the ways to become digital in Pest Control Services. 

Till then, I Wish You A Great Weekend Ahead. 

Do write to me and share your feedback on PCO Mentor content so far and your suggestions to make our industry’s only newsletter, better! 

Thank you.

Expanding The Pie of Pest Control Services in India

The Basics To Increase Your Business Illustrated With Some Real-Life Examples

As we don’t have information on our industry size, we have to assume the market for pest control services in India. It has been variously estimated between INR 1500 to 1800 crores and, one challenge that exists is deciding whether this market is expanding, shrinking, or remaining stagnant. While we continue our efforts to size Indian pest control, let us explore how we can increase our own business through simple steps, but without eating into the market share of our competitors. That way, we would have contributed to expanding the market size and Indian pest control pie.

Only ways to create a new business: In our industry, the simple ways to create new revenue streams are by the increasing price of our services or catering to previously unmet service needs of the customer or by providing services to a customer not catered to. There is also the possibility of creating new services that customers avail and help expand the PCO’s business. What I have seen in Indian pest control industry is that all the PCO’s are mostly fighting for a piece of the pie that is not expanding (some may even say it is shrinking) with no company creating new customers or new services. When an employee leaves a PCO to start a new company, they bid lower than their previous employer; when this happens over time and across India, the national pie shrinks!

I have three examples from my experience on how each of the approaches to expanding business was used and helped increase the size of the pie for pest control.

Stored pest monitoring services: I started my career as a Food Safety Manager, and while working at an export-oriented food processing company, I set up what was then India’s most extensive pheromone trap monitoring program. Using pheromone traps for insect pests in spices, we would track the presence and the level of adult insects at the warehouses and also processing areas. Corrective action would be initiated when the insect count in any one trap or the average count across all traps exceeded a threshold. The traps we used were imported, and even today, all pheromone traps for stored pests in India are imported.

When I joined the pest control industry in 2000, I introduced this activity as Stored-product Insect Monitoring (SIM) service. A PCO just had to decide which stored insects were present at customer’s premises, estimate the number of traps required, deploy those, and provide weekly counts to customers. Sadly, even two decades later after I introduced a new service or revenue stream, PCO’s either don’t know this service nor do they offer it even when they are aware of it. Pheromone trap monitoring is a straightforward service that involves no pesticides. It can easily be provided as an add-on service, which can generate even more business as one of the actions when trap counts exceed the threshold is to fumigate the infested commodity.

Periodicity of fumigation: When I joined NBHC as head of pest management services in 2007, the prevailing practice in their industry for fumigation was very crude. Indian grain trading companies would have fumigation carried out pre- and post-monsoon to control insect infestation. One of the first things I did in the Warehouse Service Provider (WSP) industry was to schedule fumigation every eight weeks by which any infestation could be controlled. As a result, the number of cycles of fumigation increased, and so too the revenue to the fumigators.

Remember, WSP’s are liable for the stock quality of grain at their warehouses, and the cost of fumigation is meager compared to damage to the grain due to insects. We even used an illustration table for salespersons, which showed that even after fumigating a stack six times a year, the cost incurred would be less than even 1% of the value of the grain being protected.

The WSP segment is a significant lost opportunity for Indian PCO’s. As PCO’s were slow even to understand the opportunity, most WSP’s set up their pest control teams denying PCO’s a share of the fumigation and related pest treatments at organized private warehouses in India. Just think of the revenue from pest protection of 5 million MT of fumigable grains Indian WSP’s handle annually, and you will understand the size of the lost opportunity. My guess is it is the tune of INR 50 crores per annum.

Bird proofing: Some time ago, one of my ex-colleagues, a Key Account Manager, bagged a contract for bird proofing at a brewery. The value of the order was INR 18 lakhs, and this was for netting just one part of the factory. The customer had a nationwide presence and the factory for which we got the order was only one of many. In fact, at the same factory, more requests for netting were given out, increasing the order size from just one location. Bird control, by proofing, is staring at us practically across India. However, a lot of the business is taken away by contractors who are installing fishing nets to cater to customers’ bird proofing requirements. In other cases, no solution is offered by PCO’s with customers continuing to suffer the presence of birds. There is a range of tools that can be deployed against birds ranging from spikes, shock strips, sprays, netting, and even bird repellant gel. However, if you check with a PCO chance are they either are not aware of the options or don’t

In summary, the Indian pest control market is more substantial than what our industry makes it out to be. Even the customers we have are not catered to fully. Then, some customers have never been approached by any PCO at all. Like it is commonly said, “If we continue to do things the way we always did, we will get results that we always got.” Each PCO leader should understand that the market size limitation we perceive is of our creation. Don’t believe your sales team when they tell you opportunities are few or don’t exist. We have to create new opportunities with old customers and create new customers. The Indian pest control services market is far from saturation. It is for you to seize if you are willing.

How to use Google My Business to improve your sales

Tips to use a free Google feature to attract and retain customers

The most common thing customers do today when they are looking for any product or service is to search for it on Google or any other search engine.  In this article, we shall discuss web search using Google only as though there are other search engines, Google is the most popular and best-integrated one in terms of listing businesses as also showing them on a map.  With Google recommending users to phrases that other users keyed in while searching for similar items, ‘’pest control services near me’’ is a common search term now used by people.  All of this is closely linked to the search and Search Engine Results Page (SERP) as managed by Google.  Smart PCO’s can easily ensure that they get listed in a SERP by making minimal effort to updating their information on Google My Business, which is a free feature and as we shall see later in the article, very important to connect with customers.

Any search on Google leads to both organic (unpaid) and inorganic (paid or advertised) results.  A search for “pest control services in mycity” on Google now will show advertised services at the very top and sometimes to the right of the screen.  Increasingly, however, Google now shows a Google Map with service providers marked on it and a list of service providers below the map, as the first of organic listing.  Even in the Maps listing, Google has started showing paid listings, so the first few results at the very top are ads.  Clicking on “See more listings” in this box leads the user to all the service providers who Google thinks are relevant for the service and the location where it is being searched for. 

Just see what has happened – Google now ensures that its paying advertisers get the most attention at the top and right of the page with the word Ad used to distinguish such listings.  Thereafter, Google lists relevant businesses on its Maps and only after all ads have been shown, will Google show organic search results of businesses matching the search term.  Do you see what I am getting at – if you have not spent time updating your company of Google My Business (GMB) to appear in Google Maps, you are losing out being featured FREE during searches for your type of business in your city.  We can’t predict whether Google shall one day charge companies to be listed on GMB, but as of now it is free, and PCO’s should make use of it.

Points to consider when listing a PCO on GMB:  The name of the company, of course, is most important and should be entered exactly as it is known legally and commercially.  There is no need to add the branch name as the city in the address is enough to clarify that it is an office in the place where it is based.  Thereafter, fully and correct address should be entered after which Google Maps starts showing the PCO at the exact location as the address.  Don’t worry if the location map is wrongly placed on Maps – Google Maps allows business owners to write to it and get any errors including location corrected.  With name and address correctly entered, timings of the company, the company website and telephone number too have to be entered. GMB also allows businesses to update any information about themselves which will be shown when users click on a company.

In the Google Maps list of the search results, when users click on a PCO shown and whom they want to evaluate, a screen with the name of the PCO at the top opens with the location on the map shown to the right.  At the top of this screen, the GMB information is listed with the star rating including the number of Google reviews – with second-row having links to the company website, the directions to reach the PCO and option to save the information.  Google Maps incidentally shows all this information from the perspective of its user, not the PCO!  So, it has sections where the user can request for editing of information, add missing information or even ask a question.  As one scroll below, Google Maps shows the star-wise ratings it has received from users and single-line summaries of what its customers are saying about a PCO.  Also, actual Google reviews are shown with the user, their rating and their full review are shown, all to help potential customers make a decision based on the experience of other users.  At the end of this split-screen, Google lists Company Update, What Other users also searched for and other web results about that PCO.

What Should You Do Now? As you have seen users now search on Google for a PCO near them and thereafter can easily find out a list of those who have paid for getting themselves featured (under Ads) and others who have taken the effort to update their information on GMB.  Entering details on GMB is only a start!  PCO’s have the option to put periodic updates and also edit information for any changes in address, timings etc. all of which will show up thereafter on searches.  Most importantly, each customer should be requested for a Google Rating and Review on Maps.  The more the number of reviews and higher the rating, the credibility of a PCO is higher on a Google Search.  Sadly, one user can rate a PCO only once (unlike in Ola or Uber cabs) but can always edit their review and rating.  Which means, it is in PCO’s best interest to track all ratings and reviews and respond to the reviews (Google allows it, again free of cost).  Incidentally, reviews are of the business and not just the pest treatments – so anybody who is a Google Maps user, including employees, vendors, family members of employees can and should be made to give Google reviews and ratings.  Do note that Google has its mechanisms to detect fake and not genuine reviews – so always ensure that the reviews are real and not influenced in any manner.

From the developments in Google search and listings, it seems that directories of any kind may over time become redundant.  If a user can search for anything, know its location and also its reputation as judged by Google users, why would anybody look for more information in any other directory?  Google Maps is likely to become the most comprehensive directory of every business on earth in the coming years.  And you can be on it by listing yourself on GMB, tracking your reputation and ensuring you engage with your users both online and off-line.

Value Proposition To Attract and Retain Customers

A Different to Selling Pest Control Services When You Don’t Want to Compete on Price

In last week’s PCO Mentor, we read about the challenge of using a Unique Selling Proposition (USP) to attract and retain customers availing pest control services.  In a commoditized industry like pest control, every other PCO is theoretically capable of offering service features that one PCO claims to have.  At the end of that issue, we saw how being superior on numerous features helps to position a company as different and choice of customers.  In this issue, let us further explore positioning a PCO by using what is called ‘’Value Proposition” in marketing.

What is a value proposition? It is how your pest control service solves your customer’s problems and benefits (both direct and indirect) that customer derives from your service.  The value proposition could be used to influence your customer to choose your company over that of a competitor.  It is a means of differentiation not involving price and clearly the most effective way out of a price-based competition that usually is a lose-lose proposition for both the winner and the loser.

In pest control, the pest itself is the obvious problem that needs to be solved and why customers avail services of a PCO.  So, marketing your services just claiming that your company will resolve pest problems is a very limited approach and likely to be ineffective.  Focus on the benefits the customer derives by availing pest control and highlight those.  Some examples on the usefulness of pest control are shared below:

  1. By helping a domestic customer get rid of cockroaches at their home, you are helping them avoid any food contamination.  Also, the home-maker would appreciate your role in helping her portray a clean and well-maintained home (free of cockroaches) to her family and visitors.

  2. A restaurant availing pest control services and has pests under check is advertising itself as a good place to visit and eat from.  Further, the restaurant is remaining compliant with municipal laws by having scheduled pest control done.  The establishment is also protecting itself from adverse publicity and loss of reputation that can occur if pests are spotted on the premises or in the food served.

  3. A food or pharmaceutical company has a higher stake in pest control than other businesses.  By availing pest control from a PCO who is both compliant and effective, the company avails many benefits.  They are able to carry out processing in an environment free of pests and deliver products that are pest-free.  They are able to be legally compliant and also face audits in which one aspect checked is pest control. 

So, we see that our services have both tangible and intangible benefits.  Those have to be known to us first, enunciated and thereafter consistently used in all our marketing collaterals.  It is not enough to have a value proposition but it should be incorporated in the sales pitch, the company brochures, and the website.  All employees should be aware of what the company delivers to the customer and be able to highlight it when required. 

Unless a value proposition is thought of, articulated and consistently shared within the company and with the customers, there is always a danger that pest control services are being sold solely on price.  To rise above price, value has to be highlighted and definitely delivered thereafter, as marketing includes delivery of value apart from creating and communicating it.

After reading so far your question may be how do you use it for your company?  If you don’t have any value proposition so far, it is time you start thinking about the same.  If you have one already, evaluate it against the criteria that we shall be discussing below.

Value propositions can be summarised and sometimes could be the tagline like Uber’s – The Smartest Way to Get Around.  But, if you can’t have a short value proposition, don’t worry about it.  Overall, it is better that your summary value proposition is short and can be written in 50 words or less.  Do remember that it has to be recalled by your employees & a long one can be difficult to memorize (apart from the risk that the customer hearing it may lose interest mid-way).

I offer below some examples of what could be used by PCO’s:

Specialist in food industry pest control – providing services compliant to all standards.

  • Best residential pest control service provider in Thane, serving satisfied customers for the past 25 years.

  • The proven specialist in termite control with less than 1% recall from 10,000 sites.

  • One-stop service provider for all residential pest control needs at Chembur.

  • Hassle-free service – completely digitized processes, round the clock service & 1 hour response time to complaints.

Making value proposition is tricky and I don’t claim that the statements above are a perfect fit in a PCO’s marketing pitch.  The first step necessary is to start thinking about what to highlight to the customer and include it in the company presentation under why customers should choose you (no need to list Value Proposition as a title).  Thereafter, include this content in your website and brochures and make sure your sales team is trained in highlighting the reasons why you think your team is unique.  In fact, all team members should know the company value proposition. 

Periodically, call and quiz employees to find out how well they have internalized and can recall reasons customers should choose your service.  Do also talk to your customers (preferably in person) and find out whether they agree with your own assessment – whether they think you are different and if yes, why they think so?  All businesses survive and endure delivering value to their customers – so, it is not any different in pest control.  Make sure you know what value your pest control service brings to the table & ensure that your team delivers it.  Once customers know what benefits you provide them apart from the routine, but as a whole, they will appreciate you and retain you.

Thank you for being a subscriber and or reader of PCO Mentor.  Look forward to continuing this journey of bringing you useful business topics each week. 

Wish You A Very Successful 2020!

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