530: Too Many Pet Sitters? Identifying Saturation in Your Area
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Is your pet care market becoming too crowded with competitors? In this episode, we explore how to determine if your area is reaching market saturation and what it means for your business. We break down essential factors like competition with lower prices, difficulty acquiring clients, and tracking pet ownership trends. By analyzing these elements, you can decide whether to differentiate services or adjust marketing strategies to stay ahead. With actionable insights, this episode helps you navigate a potentially oversaturated pet care industry.
Main topics:
Market Saturation and Competition Indicators Analysis
Tracking Client Acquisition and Retention Metrics
Differentiating Services to Stay Competitive
Assessing Local Pet Ownership Trends
Adapting Marketing to Client Demands
Main takeaway: Just because there’s an increase in competition doesn’t necessarily mean the market is saturated.
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A VERY ROUGH TRANSCRIPT OF THE EPISODE
Provided by otter.ai
SUMMARY KEYWORDS
clients, pet, businesses, pet sitters, pet ownership, market, calculate, service, saturation, competition, year, care, number, providers, saturated market, people, lower prices, pet owners, households, sitters
SPEAKERS
Collin, Meghan
00:02
Hi, I'm Meghan. I'm Collin, and we are the hosts of pet sitter confessional, an open and honest discussion about life as a pet sitter. Thank you for joining us today. Thank you also to our sponsor, pet sitters Associates, and also our Patreon people. If this podcast has helped you run your pet sitting business and you want to contribute back to it, you can go to pet sitter confessional.com/support,
Meghan 00:21
to see all of the ways that you can help out. We really appreciate it. Recently, we're seeing an increase in people starting pet sitting and dog walking. Businesses. There's a lot more people entering the market. There are some reasons for this. The first is the cost of living increase. Obviously, inflation is through the roof. Groceries are continuing to be more expensive. People's
Collin 00:39
hours are also getting cut at their current job, meaning that they don't make as much money as they are needing to, and the cost of living increase is compounding that. And so because of this, people are looking for low barrier to entry side gigs, then extra income, where they're not having to spend hours and hours extra on top of their day, and they can fit it in within their existing schedule. But
Meghan 01:00
is the pet care market really saturated? Just because there is competition doesn't necessarily mean it is saturated. When we talk about saturation, it means in a market where the demand is the same but there is an increase in supply, there's a lot more pet sitters and dog walkers down the street than previously. We've seen a lot of people starting to say their market is saturated. What does that mean? How do we know? It's important to note that it's very market specific, and not just that, but your service area specific as well. Even just a two mile radius is going to make a difference. We are very specific to a geographic region as a service based business, and we have to look at where we are serving you also need to look at what kind of business you're running and who you need to compare it to. Do you offer training or exotic care or do adventure hikes. Who are the other people in your area doing this as well? Just because there's an increase of people in the market doesn't necessarily mean they're running a high capacity pet sitting business or dog walking business like you may be doing if you're doing this as your sole income. Many of us are starting to feel like there are too many providers every corner in our areas, we see new people posting every single day, whether they're professional or hobby sitters. The great thing is, is that with some research and simple math, we can actually put numbers on this. Determining if our market is saturated involves assessing a few key indicators. We'll first walk through each of them and then give a possible example, the first one being high competition with lower prices. If you notice an influx of dog walking services with very low prices to race to the bottom to attract customers, it could be a sign of market saturation. Competitors may be reducing prices to stay competitive. Everybody wants that $5 dog walk. Not everybody, but that may signal, if you see that a lot, it may signal that there are too many businesses chasing too few clients. So to do this, you can calculate the average cost for services in your area. So if you pick 10 legitimate professional businesses, and then you pick 10 other sitters or hobbyists, then you're going to calculate the average of each for the exact same service. So let's say a 30 minute dog walk. So the average of the 10 professional businesses, the average of the 10 hobby sitters, and then compare that to your business in a saturated market, you'll see a downward trend in price for the same service as people, again, race to the bottom. The second thing
Collin 03:13
you can track is whether you have a difficulty in acquiring new clients, if you have your marketing efforts, if you're putting out ads, you're doing social media posts or your word of mouth, if those are not generating as many new leads or inquiries as they used to despite your constant efforts, you haven't changed a single thing, but you're noticing that the return is diminishing. This could indicate that the demand for services is not keeping up with the supply of dog walker. So how would you know this? You need to be tracking these efforts. You need to be when somebody calls you whenever somebody submits an inquiry form, you need to have a space on this that's how did you find us. You should be able to say something like, yeah, I got five clients from Google last month, and you need to compare that to your other efforts over time, because in a saturated market, you're going to see a general decrease across those efforts over time. So if you do a month to month. You can do quarter to quarter or year over year.
Meghan 04:03
If you are in a networking group with other dog walkers and pet sitters, you can even ask them to do this as well. To see if there is a general trend across all your businesses, you could attend local pet industry events or talk to others about their experiences and their similar challenges in growth or client acquisition. See if it's on the same level as yours, or if they see a lot of clients coming in their doors, or not a lot. It can confirm that the market is competitive or nearing saturation. Another element in tracking the saturation is the growth demand. Look at the local population and your pet ownership trends. If the number of new dog owning households or cat owning households. If your city tracks that isn't growing or the demographic of pet owners is relatively stable, it might be harder to expand your client base. So how do we find this? Ask other pet businesses, ask your city, do they track the pet ownership is the pet supply shop seeing a decrease in foot traffic? Do the realtors not see many? Pet owners buying. Get to know the veterinarians as well and see what their new client intake is. Is it up? Is it down? Year over year, even the local dog registration list to see the rate of new additions. If they track it every month, get a copy every month, or maybe year over year. Continue doing this to see if it goes up or down. If pet ownership is going up, but you aren't really growing with it, that could mean possible saturation, as maybe they're finding other businesses or going elsewhere for their pet care needs. In a saturated market,
Collin 05:28
you're also going to have trouble with client retention, if your existing clients are regularly switching to other providers, or maybe there's a lack of loyalty despite offering good service, again, you may not have changed a single thing. It's still high quality. You're still meeting your standards, but you see high turnover in your clients. This could indicate that there are too many other options available to them, and we see this as an increase in one off clients, where they're going to come in, go through your services, they're going to bounce off, and you're going to see them pop up somewhere else. We also want to ask clients why they stopped using us. This kind of exit interview can be sometimes hard to do is feel self conscious about it. We don't want to ruffle feathers or anything. It's going to help you understand why on earth did this person stop using me? Because in a saturated market, the switching costs become negligible for clients because the prices become way more relevant. We just talked about Megan. You know, the price of a service decreases as people race to the bottom, because they're trying to compete for the same customers that everybody else is, which means, from the customer perspective, they're flush with options, and they're super cheap. It's great to be a customer in a saturated market. It's terrible to be a business. But
Meghan 06:32
the tricky part is, people don't tell you that they are going to stop using you most times, unless you've done something egregious, they're just going to stop using you. So there's most times, there's not really a way to do that exit interview or to really ask them why they've gone somewhere else, but you can follow up if somebody hasn't used you in six months or a year and say, Hey, we miss fluffy. How are you guys doing? We hope to see you again soon. All of these things that we're talking about really involve a lot of tracking. It's very important track the other businesses, track the pet ownership, do your market research. When we conduct market research and review industry reports on the pet care sector, it's important to look at the data on the number of pet service businesses and the estimated number of pet owners. If the number of businesses seems high for the population, that could be a sign of saturation. Look at the number of business licenses in your area and how many people post that they do pet sitting on those Facebook posts that come up seemingly every week that everybody's posting on. But what
Collin 07:24
does it mean for there to be a high number of businesses to the population? What does this disproportionately high number mean? It is a little tough to get to this, but it's relatively a simple ratio. You see, the closer that it gets to one to one, one business to one pet owner, the more saturated the market is now, obviously that is a ridiculous scenario, because no business is just going to have one client. Every business serves more than one client. So it may be closer to something like the number of businesses per 1000 people, or the number of businesses to 100 people. That's something that you can play around with to really determine, and you get an idea of the relative size of businesses that you're running and that you are comparing to, or that we need to compare to, when we're looking at our market, where we're operating in, of how many other really large businesses are there, or how many other solo businesses are there, and what's the relative ratio of clients that they would be serving to what the other People are and what the what the overall pet population is in my area. Other
Meghan 08:24
places to check for this data include your chamber of commerce or Business Development Center. They really have that demographic data that's going to be important for you to do these analyzes. When you do go to look at that demographic data, it is important to know that having a growing population is a good sign that you are not saturated. The issue becomes, who is moving in? Do they have pets? Are they your target client? Are they manufacturing workers? But you what would rather have teachers and healthcare? Looking at all these metrics is really going to give you an idea of who you can best serve in your area. Well,
Collin 08:56
it's also important to note that and remember that we're not all going after the same clients. Not all of the businesses that you do research on, not all of them are serving the clients that you are serving. Our business has its own target clients. Yours has something completely different, and that's good and wonderful and amazing. So when we do these calculations, that is a big caveat, and you could potentially drill down more into these numbers to go how many teachers are in the area? How many healthcare workers are in the area, and of them, how many pets do they have? That will really give you an idea of what the cap is and what the market actually is for the services that you are offering. One
Meghan 09:33
of the greatest demographics that we found for our area is home ownership versus renters, because essentially all of the rental houses do not allow pets. There are very, very few that do. So we knew, Okay, all of the renting people, not our clients, because they don't have pets. So we focused on the homeownership, and then we drilled down from there. So let's
Collin 09:53
go into a hypothetical analysis on just a random city with some general data. But before we do, we'd like
Meghan 09:57
to tell you about our friends at pet sitters Association. See us as pet care professionals. Your clients trust you to care for their furry family members, and that's why pet sitters Associates is here to help. For over 20 years, they've provided 1000s of members with quality pet care insurance. Because you work in the pet care industry, you could take your career to the next level with flexible coverage options, client connections and complete freedom in running your business. Learn why pet sitters Associates is the perfect fit for you and get a free quote at petsit llc.com you can get a discount when you join by clicking membership Pet Sitter confessional and use the discount code confessional when you go to checkout. Check out the benefits of membership and insurance once again at petsit llc.com
Collin 10:34
now again, this is all hypothetical data that we're putting together here, but trying to put together a realistic scenario that you might expect, and we're going to walk through each of those elements that we just described with those action steps, then what we calculated, and then some interpretation from there. So the first one is, let's assume that you know, this is the third largest city in the state, with an estimated population of around 400,000 people. We know it's got a strong sense of community and a love of pets, particularly dogs and cats, because of the boots on the ground research and networking that we've already done. So let's focus on that first element that we need to calculate whether that high competition and low prices. It's important
Meghan 11:08
to remember that we probably won't be serving all 400,000 of these people, but we're gonna drill down as best we can. Yeah. So
Collin 11:14
let's focus on that first element that we talked about, about calculating for saturation or not, of high competition and lower prices. So what did we need to do for this? We needed to look at established pet care businesses and identify 10 of these professional companies in this area. And then we also need to go find 10 independent pet sitters through platforms like rover or other classified hobbyist sitters and calculate an average for those. And when we did that, what we did is we found that those established businesses charge almost seven and a half dollars more per walk than the hobby sitters. So for every business we looked at, we looked at their 30 minute walks, again, calculating the average across all 10 to 10 and 10, and we found that, on average, those established businesses, those professional businesses, were seven and a half dollars more than the hobby sitters. And the implication for this is that this, this is a pretty big price gap that could lead price sensitive clients to offer those lower priced providers. And unfortunately, this presence of these low priced hobbyists suggests that there is an increase in competition and potential downward pressure on prices, which would be indicative of a saturated market.
Meghan 12:17
But a lot of people then say, well, the clients who are wanting the $5 dog walk, those just aren't my clients. I'm gonna go out and get the ones who actually want to pay my prices and see the value that I provide
Collin 12:29
absolutely and so there you do have to spend more time and potentially more money in educating and advertising why your services are better than the $5 walk down the road. But the fact of the matter is, is that, if you were in a true saturated market, the only way to actually retain clients there is to have a lower price. But what we can do as a business is, instead of offering just a cheaper, or less costly, 30 minute walk, we could offer a 15 minute visit, or a 20 minute visit that is less costly and then still be providing our same high quality of service, but a slightly better price for the more price sensitive consumers. We then want to calculate our difficulty in acquiring new clients. So what did we have to do for this? We had to look at our client acquisition data over the past two years. Is what we want to do. And then we need to evaluate what's working and what's
Meghan 13:21
not. If you're using software, you can pull a report like this pretty easily. So what you
Collin 13:26
want to do is go back as far as you can with the data that you have. So we went back two years for this, and we had three different categories, Google searches, social media and direct referrals. So for two years ago, we found that it was 40 new clients from Google searches, 25 new clients from social media, and then 35 new clients on referrals from the most recent year, we had 30 new clients from Google searches, 20 new clients from social media, and only 30 new clients from those referrals. So we saw an overall decrease in new client acquisition through these three channels, above 20% year over year. We didn't change anything about our marketing spend or advertising or our referral program. Those will maintain consistent, consistent, but we saw a decrease in returns, which again, is showing that acquiring new clients is becoming more challenging, possibly due to an increase in competition as the market reaches saturation.
Meghan 14:20
Then we want to calculate what the demand is doing in our service area. So the action steps are. You assess the pet ownership trends, whether through your chamber of commerce or your city records. You obtain that data on pet ownership growth rates. Is it up? Is it down? What's it doing? Then you consult your local sources, your veterinarians, your pet supply stores, your animal shelters. What are they see in our scenario here, we saw that our town population growth was up about 3% and pet ownership was about 60% of households. The pet ownership for last year was 4000 and it was up about 12% to over 5000 for this year, the feedback that we got from local businesses with the vet clinics said that they reported a state. Number of clients, with a big increase in wellness visits. And then the pet supply stores that we talked to had pretty steady sales as well, with modest growth in their pet food products. So when we calculated all of this, we saw that the demand growth was up, the pet ownership was growing, yay, much higher than the population growth, and that the supply growth was pretty steady. There was a slight increase in new pet care providers entering the market, but not a ton. So if the supply of Pet Care Services isn't really growing faster than the demand, this could indicate no market saturation.
Collin 15:32
This is where have being located in a growing city is very beneficial to you, as long as the growth in population and the growth in population who are moving in, and there are in your service area and they have pets, as long as that is higher than the rate of increase of new pet care providers you are not you don't need to be worried about there being market saturation, having too much competition, because the demand side is growing way more than the supply side can meet. We then want to look at our client retention challenges again. We want to look at our client retention rates year over year, to understand why this is going on and reach out to those clients. Megan already mentioned that sometimes they just kind of fall off the map. They disappear. We don't know why, but when we can, we want to gather that data. So we calculated a retention rate of 80% two years ago, and our most recent retention rate, we did 70% and when we looked at our reasons for leaving based on our client surveys, we found that 40% said that they had found a lower priced alternative. 25% said that they no longer needed our services. 15% moved away. 10 had service issues, so they were actually weren't happy with what was going on. And then there was a 10% there was a 10% other reason. So we had a decree and a 10% drop that indicates an increase in client turnover, and they This was mostly due to price sensitivity, because 40% of the people who left us, who filled out the survey and everything, said that they did so to leave for a cheaper option. If this was a scenario that we were facing in our business, we would see that this high client turnover due to price competition suggests a saturated market with low switching costs for the clients, because, again, they want to go switch to a lower priced service, even though they have to fill out all the same forms and even though they have to get reacquainted and get into the software and go through all those processes because they think it's going to save them money in the long term, and that's what's most important to them. Next, we want to dive deep into those market research insights. We need to calculate the ratio of pet care providers to pet owning households, and we also need to identify the number of licensed pet care businesses. So in our hypothetical situation, we dove deep into the demographic data. We looked at the business license and registrations, we talked to our chamber of commerce and our business development centers, and we found that approximately serving this area, there were approximately 60 pet care businesses, and there were about 400 independent contractors or hobbyists that we could find while scraping the Facebook groups, looking on rover and wagon, all of those places, again, on the online and local ads. So there was a total providers of around 460 in this particular area. In looking at recent census data, we were able to find that there are about 180,000 total households in this hypothetical town. Then we're able to calculate, just hypothetically, or estimate how many of those households are pet owning households. We know from the other demographic data, it's about 60% so we have 108,000 households that have some pet that could be cared for. Now we get into our fund ratios. If we do 180,000 divided by 460 we now know that the ratio of household to provider is one to 235 we can actually take a deep dive into this even more, because we know that of the 108,000 estimated households that have pets, not all of them are even going to be interested in using a professional service. So if we estimate around 50 or 40% are interested in using that, we've reduced this now to 43,000 household now we can compare the 43,000 households that are interested in using a professional service to the 60, or the approximately 60 professional and licensed pet care businesses in our area, and this gives us a much more favorable ratio of one to 720 meaning that there is a very low competition here among those professional service providers, keeping in mind that a provider may need around 100 clients or so to be sustainable. Again, this is where we have to understand. Who are we comparing to? Is the hobby sitter needing to make a full income from this? They're going to need a lot more clients. Are they just doing this to do one or two or help out a friend here and there, or just weekend only. That is something to keep an eye on as that ratio goes up and down. The ratio suggests that the market is still very competitive. It's still very healthy. However, that continued growth in providers without a corresponding in demand could lead to saturation. But. Not worried about that in this situation, because we've already seen that the population is growing quite healthily. Obviously,
Meghan 20:05
we're getting into the weeds here on numbers, but it is important for you to actually figure out your numbers and your city's data. But the final thing we want to calculate is it has actually nothing to do with numbers. It's your local industry networking. So when you engage with local professionals, the groomers, the trainers, the veterinarians, attend industry events, reach out to other pet care providers, gather anecdotal evidence, or what are they seeing? How are their businesses doing? Up, down, sideways, what's going on? Let's say we've done this scenario already, and our findings in the industry feedback is that the established businesses are reporting some challenges the economy is really starting to affect them in attracting new clients, and there's a lot of competition in the area. There's also several new pet care providers have started in the past year. They're offering lower prices. And you also observe that there's an increase in price competition, a difficulty in differentiating services. Everybody offers dog walking, everybody offers pet sitting. If you do this, and you see that clients are also more price conscious. So when you gather all this data, you can see that the collective experience here is increased competition, and that suggests that the market may be moving towards saturation. So let's put
Collin 21:14
this all together. We've walked through tons of numbers, and again, all this is a hypothetical situation, but it's designed to see how can we calculate these numbers? And, more importantly, once we get those numbers, what do they actually mean in terms of market saturation? Because that's what we as businesses are concerned about. We're concerned about what is going to happen with supply and demand, and how my business can adapt.
Meghan 21:35
And when you plug in your own numbers, it's going to make even more sense. Exactly. Yeah.
Collin 21:40
So, so again, based on these this analysis, you know, if we look at the competition with lower prices, we would say, yes, there's a significant price competition from Hobby sitters. We would say that there is a difficulty in acquiring new clients because we've seen a decline year over year. We would say that demand growth is moderately strong, while their supply of providers is also increasing. But we've got that population growth with new pet owners moving to our area, so that's a really good sign. When we look at client retention challenges, we'd say, yeah, there's a decrease in retention due to clients opting for those cheaper alternatives that we saw before and that we've also seen, that the provider to client ratio indicates that there is some competition here, but that one to 720 is a really, really healthy number that's not even close to saturation yet. And then, as Megan just walked through those local industry findings when we were networking and talking with other people, yeah, there were some other local professionals who were before reporting some competition, some frustrations around pricing, and new people popping up. So this pet care market exhibits a sign moving towards saturation if, and this is really important, if population growth begins to slow, we're seeing this increase in competition, modest demand growth, pricing pressures and client retention challenges suggest that this market is becoming more competitive and may soon reach saturation if these current trends continue. I think
Meghan 22:58
it's important to note that you can do just one of these, but the holistic approach is really what's going to tell you, if you're moving towards saturation? Yep, and
Collin 23:06
exactly, especially whenever you look at that price sensitivity, of price sensitivity and price decrease happens in a fully saturated market when we compound this with a bad economy. So even bigger picture here, we're in a really bad economy, and we're also reaching saturation. Price sensitivity really has an exponential impact on clients' ability to choose and pick who they're going to use as their pet care provider.
Meghan 23:33
So now what do we do? What are the practical implications of this? This is always my favorite. The first is differentiating your services, specialize niche down to what you want. Maybe offer pet training, care for exotic pets, administering medication. Get those certifications. Showcase the trust that people can have in you. Unique offerings, adding something like pet photography or pet taxi services. Make your business, wow. Make it something that is not like anybody else.
Collin 23:59
Well, because this is very important, what did we do at the very beginning when we compared pricing to see if there was a downward trend, we looked at what the same service across businesses. If you don't offer the same service, you're not part of that market. That's a completely different aspect of the pet care market. If you just compare dog walks, there may be saturation in dog walks, but not pet taxi services or not adventure hikes, because there's no competition there. When we look for the blue ocean, we look for where is there no competition? And then that's where I need to be to completely avoid the discussion of saturation or not. This is difficult as business owners, because we our services become bedrocks. They become our bread and butter, dog walking, pet sitting, our bread and butter to what most of us do, and we don't like to change those. We don't like to mess with those. But when we look at our markets, we need to determine, Okay, I've looked at the standard rate for the standard service across these 20 different things. How can I be different? I'm not included in that average. That really does help you. Wow and stand out.
Meghan 25:05
You can also enhance those client relationships, tailor the services to individual client needs. Our businesses are really good at that. We offer personalized one on one care. We tout this all over social media and our websites, but provide those regular updates, be responsive. Have loyalty programs reward clients for talking about you on social media or giving a referral, and
Collin 25:25
find those targeted marketing efforts that you can do, just as we said, that not everybody in your service area is a potential client, you need to figure out, once you know that client avatar, how do you actually get to them so that they only see you and they only know who you are? By focusing on those niche markets, you're actually better able to focus your marketing efforts and tailor everything around to targeting that specific client, especially if you're thinking of premium or specialized services. You're talking to them that changes the language you're not talking to everybody you're talking to that one person who needs you and make sure that you have good local SEO optimization on your website, that you have your Google business profile set up appropriately to improve your online visibility for local searches. We're not competing globally here for a dog walk. That would change everything that we've ever talked about. If it was a global competition, you have a two mile service radius. You've got a six mile service radius that you're the potential clientele in there is 100,000 people or 40,000 people, whatever. How do you make sure that the right clients find you at the right time? And the great way to do this is have positive reviews that reflect the experiences that your current clients have had with your business
Meghan 26:36
and with that, team up with vets, groomers, pet stores for mutual referrals. It can be hard when we aren't a brick and mortar store, like a pet store, but we can use our social media as being a brand ambassador for those other services and stores get involved in the community, local events, pet related activities, again, shout it from the rooftops of I'm involved in this, and this helps give back to our community in this way, people love to see that when you monitor market trends, you can be kept abreast of industry developments and local changes. This is very important to our businesses that only serve a certain population, and then, most times, a population within a population within a population, be ready to adjust the offerings that you have based on client needs and market gaps. Again, not saying that you need to offer overnights just because people want overnights. If you're tired of them, if you hate doing them, don't offer them. But there are client demands that we can meet.
Collin 27:31
So whether you are in a saturated or unsaturated market, depending on what you have calculated for where you are serving and the clientele that you want to have, all of these things are beneficial, differentiating your services, enhancing those relationships, targeting your marketing efforts, collaborating with others, and staying on top of those marketing trends. Those five things are really going to help you stay ahead and make sure that even if the market does become saturated, because you're staying on top of those trends, you're also adapting and growing, meaning that you continue to shape and shift your services to serve new people in different ways.
Meghan 28:04
If you have done a saturation analysis in your business, you can let us know how it went for you. Or if you think we're full of baloney here, you can let us know too at Pet Sitter confessional@gmail.com, or leave us a voicemail at 636-364-8260, we appreciate you listening today. Thank you for taking your time. We would also like to thank pet sitters associates and we will talk with you next time bye. You.
