A New Frontier for Commercial Cleaning: How COVID-19 is evolving, elevating, and empowering an industry.

NOTE: This article appears in the current (Jan/Feb) issue of ISSA Today Magazine (ISSA is the leading trade association for the cleaning industry worldwide). This is part 1 of the huge, 2-part industry study written by Jonathan Rockett, founder of?Sizzling Digital?- a marketing agency that specializes in growing B2B sales, especially within the facility services and commercial cleaning industries. (BONUS:?For reading this article, Sizzling Digital is offering a?FREE Marketing Strategy Session?comparing your company's digital marketing health against your competitors' - no obligation. See the info at the end of the article.)

"Isn’t it wild how we used to eat cake after somebody blew on it — on purpose? Let that sink in for a minute."

COVID-19 has significantly affected us. It has impacted the global economy and, honestly, our very psyche in ways we are still discovering. Many businesses have been devastated by the pandemic. In contrast, a few have thrived because of it. Still, others are experiencing a shakeup and a once-in-a-lifetime opportunity to reinvent and redefine themselves and their market.

Perhaps more than any other, the US$60 billion commercial cleaning industry is experiencing one of those shakeups, and it is shining a new spotlight on cleaning’s role as a crucial piece of the infrastructure and backbone of the global economy. While commercial cleaning has certainly seen obstacles over the last eighteen months of the pandemic, it has also been given a golden opportunity to shape its own future like never before in its history.

Let me introduce myself. I own a digital marketing agency specializing in commercial cleaning and facility service clients. As I watched the pandemic unfold into the world-changing event that no one saw coming, I wanted to learn how it affected my clients and how I could best help them continue to grow and thrive in a post-pandemic world.

I’ve seen a few articles speculating on a coming boom in the commercial cleaning industry. Still, I wanted to go straight to the source, behind the lines, and hear firsthand from cleaning companies how COVID-19 is impacting them. I wanted to know their thoughts on the future of the industry.

I have to say, I was truly touched and impressed by the openness, enthusiasm, and transparency of the cleaning professionals I spoke with, and the genuine attitude of teamwork, solidarity, and adaptation within the industry. After going through this process, I’m prouder than ever to call myself part of the commercial cleaning community.

"For this study, I surveyed close to 100 commercial cleaning companies, from over a dozen countries, across five continents. I conducted Zoom interviews with more than 20 of them, ranging in size from small mom and pop operations with fewer than five employees to large multinational companies and franchises operating in several countries. I learned a lot."

The impact

It was like being recruited into an elite bomb disposal unit with no notice. In March 2020, commercial cleaning crews found themselves thrust from their position as a silent service in the background, into the dangerous role of front-line, essential workers — virtually overnight.

As Martin Nyokolodi, owner of Mbuti Solutions in South Africa, expressed to me over a spotty internet video connection, “We were like front-line workers. We were trying to save lives. But at the end of the day, we were also putting our own lives in danger.”

Rocky Ramon, owner of Clean Advocate in Austin, Texas, told me about his similar experience, but with a positive spin. “COVID really highlighted the front-line workers and the job we do. It went from keeping the building clean, to keeping people safe. And it also strengthened our relationships with our customers because we went through something tough together.”

But with great power comes great responsibility, and sometimes not everyone is willing to answer the call of danger. I had a frank conversation with John Ezzo, CEO of New Image Building Services Inc. out of Detroit, Michigan. He shared how this situation impacted his own business. “We had this difficult labor situation, and we were having to pay more and more money to hire people, because the perception was ‘I’m taking a risk to do this work.’ While everyone was afraid and told to stay home and work remotely, if possible, if you were an essential worker, you basically had no choice and were putting yourself at risk.”

Ezzo went on to elaborate, “What was once considered obtrusive to see cleaners during the day is now expected, which has presented additional labor recruitment challenges beyond the danger aspect. A client-facing daytime staff member who works alongside a clients’ own staff is a much different recruitment than someone who comes in the dark of night and just empties the trash, vacuums, mops, and cleans the bathrooms. Because of this, we’re facing the toughest labor hiring situation I’ve ever seen in over 30 years.”

While some cleaning companies were running up against hiring difficulties, others were experiencing the problems found on the other side of that coin. Michael Doherty, president of Building Maintenance Service (BMS) based out of New York, shared with me that BMS had over 3,000 employees at the end of 2019, but they had to let go almost 1,000 employees, roughly a third of their staff, early in the pandemic. Even for a US$40 million organization that’s not likely going anywhere any time soon, that’s quite a staggering blow. It’s worth noting that by the time of our interview, about 60% of those BMS staff were back with the company.

As the lockdown brought businesses to a grinding halt, leaving buildings empty of customers and employees, many commercial cleaning companies also felt the brutal impact on their revenue. In my interview with Annie Ray, marketing coordinator at the Buildingstars’ national headquarters in St Louis, Missouri, she said, “Our recurring cleaning services began declining because offices were closing. Clients were canceling their services with us and saying, ‘We don’t have people coming into the office, so there’s no reason to clean it.’”

This pandemic, of course, has also created casualties of the most permanent kind, driving some cleaning companies completely out of business. Joe Fairley, director of business development at Laser Facility Management, headquartered in Florida, shared with me, “There was a giant shift in the commercial cleaning landscape about six to eight months into the pandemic. So many businesses in retail and other sectors were closing their doors, and many facility service companies were heavily leveraged with those clients who were going out of business, so then we saw facility service businesses start to fail too.”

The survey results

So, what were the questions in the survey? We posed just eight questions centered around COVID-19’s impact on revenue and customer base, shifts in services offered, and marketing budget and strategy changes. As I mentioned, close to 100 commercial cleaning companies participated, so let’s get into it…

Do you see COVID-19 as an obstacle, opportunity, or neither for growing your business?

“I feel very confident in our industry and how we responded. I think our industry, in my opinion, responded very well. I don’t think anybody could have ever been prepared for what we’ve been through. The fact that we were all going through the exact same thing at the exact same time has truly never, to my knowledge, happened before,” said Glen Harris, owner of Harris Services in Bloomington, Indiana.

The overwhelming majority of companies participating in this study see COVID-19 as an opportunity. Still, there were certainly obstacles as well, from dips in business and revenue, to hiring challenges and supply chain issues caused by the increased demand for disinfection and decontamination services.

“Before March of 2020, I saw what was going on in the news and decided to buy some electrostatic foggers and read up on disinfecting services. A few months later, electrostatic foggers were four to five times more expensive than what I paid for mine,” claimed Ramon.

Has your revenue increased, decreased, or stayed about the same through the pandemic?

While there were customers who decreased or completely paused cleaning services due to little or no staff present in their facilities, many customers began increasing their frequency of cleaning services, especially for high-touch surfaces, which naturally translated into more revenue from those customers.

“Before COVID, our customers’ main criteria was price, which created a ‘race to the bottom,’ but COVID has made people more aware of the impact that disease and infection transmission can have in their work environment, so now our customers are more and more concerned with how to limit the spread of disease and limit employees getting sick, for the future of their organization,” reported Francois Carmichael, vice president sales and marketing of JAN-PRO Canada East.

In my interviews for this study, I was curious about how pricing was affected by this shift in demand for higher levels of cleaning services and asked all the study participants whether they increased their pricing or not. To my surprise, less than half raised their pricing.

“We’re trying to be careful about raising our prices, but because the level of cleaning quality required has gone up, some of our clients would definitely say our pricing has increased from before COVID,” claimed David Grossman, CEO of Renue Systems Inc. of New York.

“Because of the difficult labor situation in 2020 needing to pay more money to hire people, we did increase our prices, and we did increase our margins, and when we priced a job, for the first time in my career, we added a line item called Risk Factor,” explained Ezzo.

On the other hand, some companies, like BMS, actually renegotiated their contracts down in price for certain customers who were hurting financially.

Have you acquired more customers, lost customers, or stayed about the same during the pandemic?

Overall, about half of the companies I spoke with have gained customers through the COVID-19 pandemic, although the feedback indicates that the bulk of those that did were larger national brands. As businesses are opening back up, Doherty and I discussed this apparent shakeup of the cleaning industry, and I asked for his thoughts on customers leaving smaller mom and pop companies and moving to more recognizable national brands. “I think that’s exactly what’s happening. What we’re seeing at BMS are a lot of requests for price quotes coming to us, almost unsolicited. We’re certainly out there, doing email blasts and other outreach, but this has been more than usual.”

It was also interesting to hear how COVID-19’s impact on other industries shifted the client base of many cleaning companies. Robert Beatty, owner of Next Level Facility Solutions in Kentucky, told me, “Before COVID, our business was about 90% schools and 10% medical facilities. Then lockdown happened, schools were closing, and medical facilities were filling up. So that 90/10 ratio flipped almost exactly to 90% medical and 10% schools.”

Has your profit margin increased, decreased, or stayed about the same during COVID?

Consistent with the study results related to revenue and customer base, right at half of the cleaning companies surveyed indicated that their profit margin increased. At the same time, about a third stated their profit margins stayed about the same, and only about 17% actually saw their profits decrease.

According to Grossman of Renue Systems, which operates in 25 cities in the United States and has a presence in several other countries, the profit margin for decontamination spraying and electrostatic fogging can actually be higher than other services because it’s quick to perform and labor is the biggest cost. “It’s expensive equipment and expensive chemicals, but once you get good at it, you can be pretty quick, which we try to do for our customers, so we can get in and get out.”

With the increase in specialty services comes higher price tags. “Our recurring cleaning services were declining, but we also found that clients were requesting more specialty services, such as electrostatic fogging, decontamination, and regular day porters focused on cleaning high-touch points, so we pivoted our focus to specialty services, which increased at least 600% for us,” says Ray.

(Stay tuned for Part 2 of this article, coming out in the March/April issue of ISSA Today Magazine, including responses from 4 more survey questions, some of which might surprise you)

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