Real Startups Aren’t Sexy.
Me and my brother launched Balanced Home in July of this year. We are third generation in the family business; our grandpa founded the family pest control business in 1962 and not much has changed since.
The State of the Market
For 50 years our industry hasn’t changed. The pest control industry is using the same sales, pesticides and methods from half a century ago. Sales still focus on, now primitive, door to door salesman or tacky radio ads. There has been little to no real innovation of the product or customer experience. Pest control companies demand expensive, first-time services and recurring contracts with terrible cancellation fees. These companies make customers sign service contracts before they even provide a single service. Customers are never aware of what products they use or the risks these products carry. “Green” companies are some of the worst offenders, slapping “organic” or “green” labels on the same synthetic pesticides other providers use. The US pest control market is going to hit $7.5 billion in 2016. We want to be a serious player in the growing segment of residential green pest control services.
Why We Are Different
We are a web-based company. With our service you can skip, reschedule or cancel anytime with no hassle, all within a web browser. We also offer our customers the first service completely free with no commitment. The only products we use to control pests are EPA approved, Organic Essential Oils. With us there is no wondering about the products we apply. We list every product used in an email sent immediately after every service.
Our Funding
As of right now we are bootstrapping this thing from scratch. We invested a small portion of resources from our existing pest control company to get this thing off the ground.
Our Team
We are in the early stages. It’s just my brother, a part-time field technician and me. I’m a budding Rails developer and I built the entire website front-end and back-end. My older brother, Tim, took a long time testing the Organic approach we use in controlling pests and our part-time technician handles a meek load of services, we hope to transition him to full-time as well grow.
Our Technology
I built the first full working prototype in 30 days. We spent a single month beta testing with a small group of friends and family and launched within days. The entire site is Rails and runs on Heroku servers. Here is a full list of the tech that powers our startup. I was able to integrate every one of these services with less than a year experience as a developer. I think that says more for the simplicity and effectiveness of these utilities than my skills as a developer.
- Heroku — Our servers for our rails site. (~$95 /month)
- PostgreSQL — The database backend. (Required by Heroku)
- Amazon S3 — Storage for photos and documents. We use backend in conjunction with the carrierwave and imagemagick gems.
- Twilio — We use this for SMS notifications and communications. (~$35 / month)
- Intercom — All our customer service happens through intercom, emails and instant chat. (~$90 / month)
- Mandrill — For all of our transactional emails, I used and loved mailchimp for years, and they had a nice gem, so it was a natural choice. (~$20 / month)
- Bootstrap — Made the front end development dead simple. I am a one man team so I needed something super modular and easy to implement.
- Stripe — Handles all our payment processing and credit card storage. (% of charges)
- ReplyApp — For our drip email campaigns. (free tier)
Some technical challenges
Some of the most frustrating challenges I encountered on the technical side were surrounding two things: recurring payments and recurring calendar appointments.
Recurring payments were tough because we don’t have a true subscription model. Customers have a monthly service but they are not charged for the month until the service is completed. This is different from Stripe’s built in subscription based features. Stripe’s subscription model charges a card for a set amount on a set schedule. I had to work around this using Stripe’s invoicing capabilities. When a customer signs up a customer in I create a customer using stripe. When the service is complete our system creates an invoice using the Stripe API. Stripe then charges the amount for that monthly service against that same invoice.
Recurring scheduling was tough because we wanted to be smart about resources. As our service routes grow, we didn’t want technicians wasting gas and time. I ended up creating a ServiceTime model that is a child of my ServiceArea model. Within each available service time there is a “recurrence rule.” Using the ice_cube gem, this recurrence rule lays out the schedule, month over month. When a customer selects a service time, that slot is no longer available to any other customer. This ensures we can never have a double booking and that the area’s schedule is always doable.
Marketing
Marketing
TL;DR — Our #1 most successful tool has been Google Adwords.
Below is an outline of every marketing method we’ve tried, including how much each method cost and what kind of results we ended up with. Hopefully, this data helps you in your own startup, I wish I had a comprehensive list like this when I was getting started.
Disclaimer: All the marketing we have done is low-volume and location specific. Take our results with a grain of salt. Your industry or market may vary your results.
Door to Door — Walking and Knocking.
Me and my brother put on button-ups and some walking shoes before hitting local neighborhoods. We wanted to talk to customers to get feedback and impressions, we wanted to hear the types of questions or opposition potential customers may have. I wanted to understand the friction first hand that customers would have when signing up so that I could try to address each one of them.
My brother and I visited about 200 homes over the course of 2 weeks during our spare time and lunch breaks. The feedback and reactions I got were fundamental in shaping our future marketing materials.
Door to door was hard, hot work. It was actually surprising how nice people were, I expected to get the door slammed in my face by annoyed homeowners. Not at all. People were super polite, asked helpful questions and took my flyer with little fight.
We printed the flyer in house on a laser printer. We used old grocery bags, cut them up and printed on them. The idea of dumping paper goes against our grain, so we up-cycled. You may notice the flyer has the domain “geenscv.com”. SCV, or Santa Clarita Valley, has been our small launch market. It’s a sprawling suburb with a population consisting of the exact demographic we are targeting. We used a different domain in order to track conversions from our flyers and conversations. I wanted to see the costs involved with getting people to our site. We didn’t use that particular domain anywhere except on this specific run of flyers.
What we learned from the door to door marketing:
- Not everybody feels they need pest control. But people want a good solution in case a problem presents itself. Pest control is “need-based” in their minds. Few potential customers ever consider recurring pest control before they have a severe problem.
- People are hesitant to enter into any repeating service agreement.
- People were super skeptical of a trial offer with a first free service when we are delivering a physical service.
- Homeowners had no interest in signing up for a web service from a door-to-door salesman. They’d take a flyer, ask questions but they didn’t want to enter a credit card number into a stranger’s iPad (big surprise, right?).
Door to Door Marketing Results
Total Spent on this round of flyer and distribution (including labor) — $1,090.00 for about 900 flyers.
Here is the percentage returns we saw:
- 0.5% of people who received a flyer visited our site.
- Of these people who visited, 22% viewed pricing and schedule for their service area.
- Of these people who viewed pricing and service area, 50% visited the signup page.
- Of these people who visited the signup page, none signed up.
Using door-to-door knocking and talking we paid $24.23 for each visitor to our site. We didn’t sign up a single customer.
We could have done this cheaper by spending less time at people’s homes. Or even paying a print shop instead of printing the flyers in-house. But all this was valuable, first-hand marketing research.
Flyer Distribution — Straightforward Canvas Approach
There was a big difference in our next approach. Instead of knocking on doors, we decided to just canvas our target markets. We would also go to a print-house to print all the flyers. We wanted to get more people on our landing page for less money. That way we could A/B test and dial things in from there. We had a chance to gather feedback and refine our marketing materials. We were hoping for a higher conversion rate with a lower cost per site visitor. We had also hoped that a higher volume of flyers sent would increase the conversions by a percentage.
What we changed in the marketing materials
Based on the feedback we got door to door, we modified the marketing materials accordingly:
Based on the feedback we got door to door, we modified the marketing materials accordingly:
- Price was now the biggest thing on the flyer.
- An organic seal was added.
- “No Contracts” was highlighted.
- “Pet Safe” Was added.
- Several other layout tweaks.
What we learned from the canvassing approach
- A conversation with a live person does a lot more for conversions than any visual marketing content.
- Although the cost per flyer was nearly 5x cheaper, the cost per website visitor was nearly identical.
Canvasing Marketing Results
Total Spent on this round of flyers and distribution (including labor) — $1,311.00 for about 5,000 flyers. This is nearly 5x cheaper than our earlier attempts at doing this in-house and “knocking and talking”
Here is the percentage returns we got on the total number of flyers:
- 0.12% of total people who received a flyer visited our site.
- Of these people who visited, 53% viewed pricing and schedule for their service area.
- Of these people who viewed pricing and service area, 41% visited the signup page.
- Of these people who visited the signup page, one customer signed up.
After canvasing 5,000 flyers we paid $21.85 for each visitor to our site. We only signed up one customer.
The results were pretty clear for us. Door to door and canvassing seemed to be expensive while not yielding worthwhile results. At the very least, we received valuable input into the product from the conversations we had. Besides, physical flyers are the antithesis of a web based business. We also hated all the waste of printing flyers that never got read.
Events — Farmer’s Markets & Community Events.
We learned from door to door sales that customer conversion is high with a personal conversation. Instead of walking door-to-door trying to reach to our market, we wanted our target customers to come to us.
The farmers’ market at our local Westfield Mall seemed to be the perfect fit. People shopping at our farmers’ market seemed to be older homeowners. These people were also conscious about the environment and synthetic chemicals. This was a great opportunity for brand awareness.
We also sponsored a local river cleanup event, providing donuts for all the volunteers. Event sponsorship and participation was much cheaper than we anticipated.
Again, we handed out a set of flyers with a distinct URL to track all our conversions at these events.
Event Sponsorship and Participation Results
Total on booth and events — $1,650. This was for a total of 5 different events across a few weeks. Conversions are more difficult to nail down on this kind of blanket marketing. We don’t have an exact number of how many people saw our signage at events, we only know that between 2,500–3,500 people total were at the events combined.
Here is the returns we got on local events:
- We had 16 unique website visitors on that URL in that timeframe.
- Of these people who visited the site, we signed up 2 customers.
After spending $1,650 for our booth and event fees we paid $103.12 for each site visitor. We signed up 2 customers.
Not a total waste, we will likely do more event sponsorship in the future, but we will try to focus on events that narrow right down to our target market. We also now have a nice booth that is a sunk cost but the more we use it the cost will amortize over-time. There is also something to be said about the long-term brand awareness this kind of event creates. Although it is less quantifiable.
Facebook Marketing
Although it may not be the best fit, we thought it couldn’t hurt to put Facebook marketing to the test. We began with small scale A/B testing with meager $15-$25 campaigns to test and optimize conversions. Our first attempts were action driven approaches along with content-based approaches. We even had a couple posts go relatively viral for our niche startup. One post collected 87 organic likes and 3 shares without a single “boosted” dollar. All that to say, we weren’t lazy. We didn’t just throw money at a Facebook campaign and hope to reap results. We measured and optimized.
Things we learned in Facebook ads
- Ads with very clear and bold calls to action converted best. Things like: “Kill Bugs” or “Book a Free Pest Control Service Now.”
- We wrote and “boosted” some content about green and sustainable living along with DIY tips on killing pests in general. This sort of content would get great engagement and shares, but didn’t do much to convert customers, not directly at least.
- Facebook isn’t the place for a need-based business, people aren’t on Facebook to solve pest problems.
Facebook Marketing Results
After spending $766 in Facebook marketing we paid $4.30 for each site visitor. We signed up 2 customers.
Even though the cost per visitor was lower, the conversions were lower than any other channel. We will review how all this pans out in the marketing wrap up later in the article.
Movie Theater Ads
We thought the pre-roll ads in our local movie theater would be a great place to try getting the word out, especially since our launch is so location-specific. Theater audiences seemed like a captive, local audience. The video shoot also allowed us to capture some photos for the marketing materials and website.
We wrote a basic script, found a local videographer and hired a voiceover actor on Fiver. The whole project took a timeline of about a month and cost a total of about $1,300. It was a good move to get nice assets for the web and marketing materials.
For the movie theater we cut a shorter version that had captions and a specific URL on the screen, we wanted to be able to accurately track our results. We signed a 3 week contract with 2 local theaters.
Movie Theater Ad Results
Total Spent on the ad only — $2,210 (Not including the cost of shooting the video). The contract included a total of 24 screens for 4 weeks at every showing, on every screen, our ad would be played. That is a lot of local eyeballs. Conversions are more difficult to nail down with something so (for us) large scale. We don’t have an exact number of how many people actually saw our ad, we only know that between 55,000–85,000 people saw our product video.
Here are the returns we got on our movie theater ads:
- We only had 8 unique website visitors on that URL in that timeframe. 8.
- Of these people who visited the site, not one signed up.
After spending $3,510 producing and marketing our product video we paid $438.75 for each site visitor. We didn’t sign up a single customer.
It wasn’t all a loss though. We gained a great product video and some nice assets to stimulate our marketing material. Also, brand awareness does carry some value. Thousands of people saw our product video even though only 8 hit that URL. It doesn’t mean it’s all for nothing long-term.
But , Our Product Video Transformed Our Homepage Conversions
We had no idea the impact this short video would have on our landing pages. You can see below an outline how implementing the video breathed life into our landing pages.
Hindsight is always 20/20. If we had this product video at launch we could have doubled our conversions.
Having a basic product video more than doubled our conversions. It didn’t matter what channel a customer came though.
That said, we learned that our product video in itself was not a marketing tool. However, it was a powerful force in multiplying marketing conversions, especially when it came to Google Adwords. Speaking of…
Google Adwords
It took us a long time to get our Adwords campaigns dialed in and converting well. For months, our Customer Acquisition Cost (CAC) through Adwords floated above $500 per customer. This month our Adwords CAC is less than $84.00 per customer.
What we’ve learned with our Google Adwords Campaigns:
- Our keywords were too broad — We were trying to hit all pest control. When we focused on our specific niche we made huge strides in cutting our spend. We see higher conversion rates and pay less per click for these specific keywords.
- Our ad-copy wasn’t clear — Clear ad-copy that set expectations was vital.
- A product video did wonders — Our product video boosted all our conversions.
- Measure Everything — Dropping your CAC by 500% doesn’t happen by accident. A/B testing tweaks and landing pages is crucial.
Marketing Summary
Here are all our marketing channels compared thus far. We are only a few months into this and I’m sure I will post updates in the future. Keep in mind this is a summary of the results we have seen across the board for our company. It goes without saying that your mileage may vary.
CPV is the Cost Per Visit, how much we paid through this channel for a unique new website visitor. % Convv. is the percentage of those unique new visitors who converted.
Long term, we will need to track our customer retention across each of the channels. Also, things like event sponsorship and movie theater ads carry a brand awareness value, whereas something like Google Adwords did little to nothing for our brand awareness.
You have to consider both the costs of getting a visitor on the page and the conversion rate for that channel. The CAC of Google Adwords is less than half of Facebook and a third of event sponsorship. Adwords was by far the cheapest and highest converting channel we have.
Email Collection
For the first two months of our product launch we did not require a customer’s email address to view pricing. Potential customers simply entered their zip codes to view the pricing and schedule for services available in their area. When we were not available in the area, they were prompted to enter their email address. Once a customer was off our page, the relationship was over.
3% of our site visitors were entering zip codes just outside of our service area. This added up to be a strong list of potential leads once we expand. But since we weren’t collecting email addresses we had no way to follow up. I would see a lot of customers check pricing, schedule, pick a service-time and abandon at sign-up. With these customers, I had no way to follow up.
Up-front email collection was a hot-debate.
We were afraid that collecting emails would lead to an increase in our bounce rates. We don’t want to be that company with the annoying drip campaign that sends until you unsubscribe or sign up. Our reputation as a brand is more valuable than that. We are asking people to let us in their homes, trust and courtesy is a top priority.
When we started collecting emails upfront the results shocked us.
Before we started asking for emails 14% of new visitors entered in a zip code to view pricing and schedule. The sales conversion for these visitors was 1.2%. After we started asking for emails, 12% entered emails and zip codes to view pricing and schedule but our sales conversion went up to 5.8%.
Although a user is 2% less likely to enter our sales funnel they are 5 timesmore likely to convert to a sale.
When a customer gives you an email address they are deciding to begin a relationship. That has value in the next steps of our sales funnel.
Conversions from our drip campaign are less than 5%
Yes, we do convert with our drip campaign as well, but the numbers are low. Conversions from our drip campaign are less than 5%. We could probably squeeze out a few more percentage points with a longer or more aggressive campaign, but that’s not really something we want to do.
Our drip campaign is personal and simple: I send four scheduled emails from my own account, as the founder, over the time of about 45 days. I am tempted to think that feedback from our drip campaign is more valuable than a conversion. Balanced Home uses the service reply for our drip campaign.
On Our “Free to Try” Model
In our industry this is a bold move. Providing a free service to a potential customer isn’t cheap for us at all. We do collect a credit card up-front to confirm the first free service, however, there is some expectation that the service will continue. We make cancellation super transparent and easy. We are 100% fine if a customer doesn’t want to continue past the free service. Our goal is to be #1 on their list if they ever have issues again.
Less than 10% of customers cancel after the first free service.
Our statistics show a 90% retention rate after the trial. We do everything we can to make a lasting impression. Balanced Home also has the added benefit of seeing the customer in-person for the first pest control service. That person to person interaction goes a long way to build customer loyalty, especially compared to an SAS offering. We also guarantee that first, free service like they were any regular customer. We have had a few customers who have had more than one service without giving us a dime. We were happy to do it. We want customers for life, and building that kind of relationship takes time and money. As a thank you, when we complete our free service, we leave a handwritten note and a branded reusable tote bag.
Nuts and bolts of our Free to Try
When you consider this first free service as a marketing expense, our customer acquisition cost gets pretty heavy. Our break-even right now takes maintaining a customer about 5 months. In our previous company our average customer lifetime was well over 10 years. We hope to meet and beat that with these customers.
What’s Next
Now that our return on investment for a new customer is down to 4 months and our systems are solid, it’s time to start pouring more resources into marketing. Of course, there’s still plenty more optimization ahead. We are open to outside funding but haven’t explored it as an option at all yet. We hope to be able to sustain and grow through pure bootstrapping. The real question is whether we can hold onto customers for life like we have with our previous company.
