How Much Is A Pest Control Customer Worth
For most pest control company operators and owners, marketing is probably not at the top of the list when it comes to prioritizing the day’s activities.
It’s not that most of these companies don’t understand the value of marketing, it’s more of a case of not knowing how much to spend, how to measure the results and the fear of spending hard-earned money on something that might not provide a return.
So how do pest control companies determine how much to spend on marketing and how do they know it will be worth it?
As with any business, the more customers you have, the more revenue you should be able to generate.
But it’s not as simple as adding customers to the books. To understand how much to spend and what to expect as a return, one-time services, recurring services, and customer lifetime value (CLV) are some of the fundamental criteria when it comes to marketing effectively.
The value of different services and the profit margin involved must be understood when designing an effective marketing campaign.
Those values and an understanding of typical customer behavior create a good foundation for knowing how much to spend on marketing and measuring the worth of that marketing.
Pest Control Services Revenue
According to the White House Office of Consumer Affairs, the following breaks down the typical pest control services and the cost for consumers.
- Initial visit: The average for an initial visit, which typically includes inspection and assessment, runs about $180.
- One-time service. A one-time service will usually include a comprehensive treatment plan usually designed to treat a number of pests and costs around $425 on average.
- Recurring services. Recurring services are typically provided monthly, semi-monthly, and quarterly with average costs of $45, $60, and $180 respectively.
Termite services and other pest specific services incur charges across a wide range from several hundred to thousands of dollars.
While these services generate significant revenue, the acquisition of new customers, recurring services, and CLV should be the focus of marketing for growth.
“It is 6-7 times more expensive to acquire a new customer than it is to keep a current one.”
Source: White House Office of Consumer Affairs
Marketing to new customers is a necessity in any business, but keeping the customers you have already must be a daily focus. Taking good care of existing customers includes great customer service and effective pest control and provides prospects for a variety of additional services, recurring revenue, and profits.
“The probability of selling to a new prospect is 5-20%, while the probability of selling to an existing customer is 60-70%.” Source: Marketing Metrics
It’s far easier to sell to a satisfied customer than it is to a cold lead, so while marketing effectively will generate new customers and new revenue, the day to day approach of a pest control company will determine how fast, and how much, the company grows.
Doing the Math
Figuring out how much to spend on marketing and how to allocate those dollars isn’t as hard as it may first appear.
“As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between 1) brand development costs(which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns, advertising, events, etc.).”
If a pest control company’s profit margins are on the low end, which would be under 10% or so, then it may be time to make some tough decisions. A marketing budget simply can’t be based on existing profit margins to be effective.
It may be counter-intuitive, but when margins are tight, spending part of those hard-earned profits on marketing is the answer to getting those margins healthy again.
Especially in the pest control industry, the value of a customer isn’t so much how much services cost and the profit involved, but rather the long-term value of that customer.
“Customer lifetime value is the single most important metric for understanding your customers. CLV helps you make important business decisions about sales, marketing, product development, and customer support. For example:
Marketing: How much should I spend to acquire a customer?
Product: How can I offer products and services tailored for my best customers?
Customer Support: How much should I spend to service and retain a customer?
Sales: What types of customers should sales reps spend the most time on trying to acquire?”
CLV should be the single most defining factor in calculating the true value of a pest control company’s customers.
Remember, the expense of keeping, and selling to, an existing customer is far less expensive than finding a new one. Measuring and monitoring CLV provides the most accurate results when it comes to figuring out if the money spent on marketing is really worth it.
Once a marketing plan is in place, keep in mind that the CLV calculations will help determine if the money spent and the overall effectiveness of the campaign are working. The approach to marketing and its value is a flexible endeavor.
Watching the CLV results and monitoring overall growth will indicate where a marketing program needs adjustment and what kind of return is coming from money spent on marketing.
Money Well Spent
While CLV and growth numbers are important indicators of how well a marketing campaign is working, a strategy for measuring spending and the impact on the bottom line provides an accurate picture of whether marketing dollars spent are worth it.
Automating marketing efforts and, more importantly, the data that results from those efforts is one activity that will make understanding marketing costs and the return on that investment easy to calculate.
There are numerous programs and applications that take into account variables such as seasonal factors, various tactics and marketing channels, in addition to tracking costs, growth, and profits.
These programs use demographics, customer engagement, website visits, purchase history and more to analyze the effectiveness of marketing efforts and the costs involved.
The data created by these applications not only evaluates the ROI of a marketing campaign but also help identify sales opportunities with existing customers resulting in an increase in CLV.
For a simple exercise in how easy it can be to calculate the ROI on current marketing efforts, some basic knowledge of your customers and this handy calculator will give you a basic idea of how effective a current marketing campaign is at increasing the bottom line.
The Bottom Line
So when it comes to knowing how much to spend on pest control marketing and being able to determine if that expense is worth the money, knowing the value of different services and their profit margins, the ability to acquire new customers, and being able to capitalize on existing customers will make sure every dollar spent is generating a return.
Measuring the CLV of the average customer, while providing the best pest control and customer service, will not only generate increased revenues today but for years to come. Effective marketing WILL generate new customers and new revenue, but understanding CLV and focusing on increasing that value will compound the ROI of those marketing dollars.