VOL. 126 | NO. 167 | Friday, August 26, 2011
CEO: Shift in Strategies Necessary for TruGreen
By Bill Dries
Memphis-based TruGreen lawn care is changing its neighborhood sales strategy as the CEO of parent company, The ServiceMaster Co., continues to talk about the need for the company to improve its performance.
The second-quarter results for ServiceMaster, which has seven commercial and residential service subsidiaries, were released earlier this month.
ServiceMaster revenues in the quarter increased 3 percent to $967 million from $940 million a year ago with revenue growth in all reporting segments. Overall operating performance grew 9.8 percent in the quarter from a year ago.
ServiceMaster CEO Hank Mullany gave TruGreen a blistering critique during a first-quarter earnings call with investors and analysts earlier this year that was his first as CEO.
In the Thursday, Aug. 25, second-quarter earnings call, Mullany said some strategies implemented since then are starting to work.
But Mullany said the second-quarter figures still show TruGreen has room for improvement and “didn’t meet expectations” for the quarter that ended July 30.
“This isn’t complicated stuff we’re talking about here,” Mullany said. “This is knocking on people’s doors before we service their lawn to let them know we’re there.”
TruGreen took a hit in customer counts from a shift in tactics that puts less emphasis on neighborhood door-to-door sales.
“What we’ve found is that neighborhood selling isn’t as effective as it was in the past,” Mullany said. “We will rebalance our sales and marketing efforts and focus more on profitable sales.”
TruGreen revenue for the quarter increased only 1.2 percent compared to a year ago, which Mullany again said was unacceptable. TruGreen also showed a 5.2 percent decline in its customer count with decrease in new unit sales. Some of that was attributable to the shift in sales strategy. But Mullany said he was prepared for the short-term impact of moving away from neighborhood blitzes.
“It’s still in existence but I think at more rational levels in neighborhood sales,” Mullany said. “That was our most costly sales channel and frankly had some of our lowest customer retention rates.”
TruGreen is the most visible sign of the shift in philosophy at ServiceMaster since Mullany replaced Patrick Spainhour at the helm in July. And it is where Mullaney has been the most outspoken.
“There’s too much variation in service standards from branch to branch,” he said Thursday. “We compounded the problem by introducing too many initiatives to the field team and then not sticking with them very long.”
Terminix president Tom Brackett has been heading TruGreen on an interim basis as the division readjusts and looks for a permanent leader.
As that is happening, Mullany also announced that Terminix, whose operations are seen as a model for the recovery of TruGreen, will see some new technology to enhance its sales and service mobility. The changes to be rolled out early next year include a new Web portal for Terminix customers and a smart phone application should debut this fall.
Mullany also announced Roger Cregg becomes the new ServiceMaster chief financial officer effective Aug. 29. Cregg comes from PulteGroup Inc., one of the nation’s largest homebuilders, where he was also CFO.