We all know of people who enjoy the finer things life has to offer. They drive whatever exotic vehicles they want and couldn’t care less that gas is approaching $4 per gallon. They travel on plush private jets to business meetings and long Caribbean vacations. They wear silk, cashmere, linen, and organic-cotton clothes while dining on exotic food prepared by world-class chefs.
Not all of those folks are celebrities, captains of industry, or public officials. They live in peace with their families and do what they want when they want. If I listed some names, you wouldn’t recognize a single one. Yet, they live a dream lifestyle that few can even imagine.
How do they do it? They have built multiple businesses using a certain marketing mindset I’m going to teach you in this article. You’ll have a new view on marketing that will drastically increase the profitability of your pest control business and any other business venture you might embark on in the future.
The Gift That Keeps on Giving
As a pest control operator, you have a rare gift that most industries don’t get to enjoy without significant effort, planning and execution: You have the opportunity to earn repeat sales automatically when a new customer signs up for service from you.
Most industries must work diligently to create advertising that creates one sale. After that sale, they hope the customer’s experience was good enough to earn a second sale sometime in the future.
But that’s not true for you. In case you execute an initial service treatment and sign up that customer onto a common remedy program, then you promptly get the revenue from that initial sale. And then, one to three months later (depending on if you’ve sold a monthly or quarterly program), you get another chunk of revenue from that customer. This happens again and again until they cancel. Some folks will only opt for a few additional treatments – or revert to "as-needed" service, but others will stay on a regular, ongoing treatment schedule for years, paying you like clockwork year after year.
It’s a marketer’s dream come true to acquire a customer and automatically earn sales for months or years on end. Most operators take this valuable gift for granted. Imagine if you had to re-sell each customer every month. It wouldn’t be much fun or very profitable.
Once you understand the power of this, you can easily begin to focus your energy toward your most important objective, which is acquiring customers.
Savvy marketers understand that it’s perfectly fine to lose money on the first sale. And if the economics work out, it’s OK to lose money on the first few sales. In other words, if your average customer brings an average of $500/year, it’s worth it to pay $200 or even more to acquire that customer through a marketing channel.
Smart PCOs gladly pay $200 for a new customer rather than maintain unused equipment, trucks, excess staff, and other fixed costs. They don’t look at a customer as being worth only $100 for the initial treatment, because the total value of the customer is $500/year – and potentially $2,500 over the next five years.
Furthermore, they understand the importance of building the value of their business as a saleable asset by upwards of $950 each time a new customer is brought under contract, even if they pay $200 for a new customer! Or to put it another way, every 10 new customers generated can increase the saleable asset value of the business by as much $9,500.
You might think these numbers are unrealistic. If so, speak with a good broker about this as they deal with these numbers every day.
Yet, the fact remains: Most operators have a flaw in their thinking when it comes to marketing. They believe they need to recover their marketing investment after the initial treatment is paid by the new customers generated. In reality, as long as cash flow makes it possible for, you can wait for several months to begin profiting out of your marketing investment.
Operating expenses need to be considered when determining your net operating income. But, even after considering those expenses, you’ll be wise to think in terms of acquiring customers, cost-per-acquisition (CPA), and lifetime customer value.
I also realize that cash flow is a huge issue with this type of thinking. And if you’re in a start-up, growth, or expansion mode, dealing with this can be difficult, but it’s absolutely the smartest way to think about increasing the value of your business as an asset, which is why proper financing is crucial because you need the cash to sustain aggressive marketing like this.
The Bottom Line
The bottom line is this: Marketing is an extremely lucrative investment. The wealthiest people in the world realize marketing and innovation are usually the only two things that make you money.
If you don’t have the cash to invest as you should in marketing, beg, or borrow to get it; it will be well worth it.
Immediately after all, this billion-dollar marketing lesson has been operating because the beginning of absolutely free enterprise and will continue extended into the future.