http://critterguy.museum.msu.edu/FAQ/Woodpeckers.html

Remedies include:
• Direct harassment, such as chasing, arm-waving, spraying holes lightly with water, etc. (Hard to time, birds sometimes just move down!)
• Scaring birds with fake "enemies" (plastic owls, rubber snakes, hawk cut-outs, etc.), noises (recorded alarm calls, wind chimes, etc.) or other distractions. (Often effective—keep the objects moving or changing).

• Temporarily covering affected area with burlap, hardware cloth, or other materials. (Often effective; unsightly, but usually needed for short time. Birds may move over, requiring expanding the treated area).

• Replacing wood with vinyl or aluminum siding. (Good solution, though initial investment is expensive!)

• Killing birds. (Not an option. Woodpeckers valuable birds in the ecosystem, and are protected by state and Federal laws. Permits to kill are occasionally given by authorities, but birds removed are often soon replaced by new ones. Best to find alternative solution).

We finally got rid of our pecker using multiple approaches. We bought whirly gigs (pinwheels like children use on their bike handles) and mounted them on the side of the building and put large ones in the yard around the area he was pecking. Looks funny but the motion discouraged him and we get a wind through our canyon almost daily so they were in motion a lot. We also sprayed him with the hose whenever we were home and heard him pecking away. And, we hung those very large cathedral bell sounding wind chimes right in front of his hole. If the wind didn’t make it chime he scared himself hitting it trying to get in for another round of pecking. It took a couple weeks until he got the message and moved on to my neighbor’s house.

Listen to Saaanen! Woodpeckers don’t peck holes for the fun of it, there after the bugs living in your siding. Call an exterminator.