Self-limiting beliefs in the Indian pest control industry

Common industry behavior limits our industry’s potential and growth

Each industry has common beliefs that arise over time with differing impacts on its progress.  For example, with eight-to-nine-decade history, the Indian pest control industry has some undesirable behavior patterns.

Over three decades of interacting with PMPs and operating businesses for twenty-two years, I have found that our colleagues thinking limits their business and the industry.  The following ten patterns may not apply to all PCOs, but every Indian pest control company frequently shows one or more.

1. We lose the customer asking for payment: Most customers don’t pay the pest control industry because PMPs don’t ask for payment because they fear that customers switch when you ask them for money!  As a result, our industry’s average Daily Sales Outstanding (DSO) is sixty days and likely ninety days in the case of some companies.  In addition, delayed payments and poor margins hurt our industry by increasing capital costs and the risk of payment defaults.

2. Once lost, a customer won’t return: Many years ago, I asked a colleague why he did not disengage with a customer with unfavorable terms for his business.  He answered that, as lost customers don’t return to us, it was better to deal with customer tantrums and continue transacting with them.  But, on the contrary, some customers return when they find out that the other vendor cannot meet their requirements.

3. Price is the only means of competing: Without differentiating their services, most PCOs assume that price is the customer’s only selection criterion.  Yes, if not most, numerous customers choose pest control services looking at the price.  But many customers are willing to pay a higher price for better quality and reliability, on which few PCOs focus.

4. The market is finite: Each market has an addressable segment and the current business level.  Old and new entrants into pest control focus excessively on the existing customers.  In India, the penetration of pest control is very low, and the industry will grow only when the unmet needs of unsigned customers are added to the current market.  The pest control pie is larger than what we see and assume to be about US$300 million.  My guesstimate is that the Indian addressable pest control market is about US$2 billion.  Thus, the current market is just under 7% of its potential. 

5. Customers won’t accept new technology: I suspect that the PMPs who think so are uncomfortable with innovation and wrongly presume that customers won’t be comfortable with new products.  Customers look for solutions, and they will adopt new ones when we convince them of the efficacy and benefits of new tools, equipment, and chemical pesticides.  A big part of our responsibility to customers is to educate them on the newer approaches to pest management. 

6. Customers don’t pay for quality: We can’t claim so unless we have ensured that our service quality is high, and we find that customers refuse to pay a fair price in return for it.  Marketing involves creating and communicating value, and we may have failed to convince customers to pay for quality through our collateral and interaction.  Positioning is also important in marketing, and by pitching to a customer solely on price, a PCO unwittingly fails to capitalize on the benefits of hassle-free service.

7. All other PCOs survive by low pricing: In industry meetings, I find PMPs complain about the poor pricing of others, but everyone making such a complaint is doing the same when they are back at work.  A few PCOs stay off poor margin contracts, but they are few.  Why don’t the low bidders realize that if the industry refuses to breach the lower price threshold, the customer has no choice but to pay higher?  Bid winners incorrectly presume that by their low price, they have won.  Instead, they have lost, as they have perpetuated poor pricing and affected the industry’s growth.

8. Train employees to leave to become our competitors: I entered our industry when secrecy was the norm in all matters.  Companies presumed that employees would misuse it if we shared business information to start their own business.  Employees leaving to become competitors is not novel to the pest control industry.  Though it happens in every service industry, companies don’t stop training employees or being transparent with company details.  I read a quote some years ago that we must be more afraid about an untrained employee staying rather than a trained employee leaving.  When we don’t train employees, we limit our business potential through less efficient employees whose work slows the company’s progress.

9. Customers switch if we ask for a hike at renewal: A common and hilarious scenario company owners face the sales team that is reluctant to seek rate hikes at renewals, shows no hesitation to demand a high salary hike at the end of the year.  Of course, customers do resist hikes, and many don’t change their rates easily.  However, that should not prevent a salesperson from asking for a hike or negotiating a hike mutually acceptable to the PCO and the customer and being unafraid to walk away from an unprofitable negotiation.

10. Expensive products reduce our profitability: I found such a strange belief among technicians and managers who don’t realize that the cost of a unit of pesticide emulsion is more important than what a liter of the product costs.  Also, it would help if you viewed cost wholistically.  For example, if you use a cheaper product that fails and calls for retreatment, would you not account the additional costs?

I am sure you would have come across other self-limiting industry beliefs which have prevented the growth of the Indian pest control industry.

The challenge with the above behavior is that it is easily imitated and has become an industry-wide practice with undesirable outcomes.

I don’t deny the challenges that the salespersons or the small business owners face daily while running the business.  However, universalizing wrong beliefs as the truth and using them is regressive and hurts business.

Industry change happens with courage and the willingness to adopt alternate behaviors which are progressive and lead to company and industry growth and prosperity.