COVID-19 is a significant event for us. The pandemic has had a profound impact on the global economy and, honestly, even our psyche in ways that we have yet to discover. The pandemic has devastated many businesses. Some businesses have prospered as a result. Others are going through a major shakeup and have a rare opportunity to redefine their industry and themselves.
The US$60 billion cleaning industry has experienced one of these shakeups more than others. It is bringing a spotlight to the role of cleaning as an essential piece of infrastructure and the backbone of global economies. Commercial cleaning has faced many obstacles in the last 18 months, but it also has a unique opportunity to shape the future of its industry.
Please allow me to introduce myself. I am the owner of a digital agency that specializes in cleaning services and commercial clients. As I watched this pandemic, which was a world-changing event no one could have predicted, unfold, I wanted to know how it would affect my clients. I also wanted to find out how I could help them grow and thrive after the pandemic.
Some articles have speculated on the coming boom of the commercial cleaning sector. But I still wanted to hear directly from the source and behind the scenes how COVID-19 impacts cleaning companies. I tried to listen to their opinions on the future of this industry.
I must say that I was deeply touched and impressed by their openness, enthusiasm, and transparency, as well as their genuine attitude towards teamwork, solidarité, and adaptation in the industry. I am more proud than ever after going through the process of being a part of this commercial cleaning community.
In September 2021, I interviewed close to 100 cleaning companies from more than a dozen different countries on five continents. Zoom interviews were conducted with over 20 of them. They ranged in size from mom-and-pop businesses with less than five employees to large multinationals and franchises that operate in multiple countries. I learned a great deal.
The impact
The experience was similar to being drafted into a bomb disposal squad without notice. Commercial cleaning crews were transformed from a background service to front-line workers in March 2020.
Martin Nyokolodi of Mbuti Solutions, a South African company, told me via a shaky internet connection that “we were front-line workers.” We were trying to save lives. We were trying to save lives.
Rocky Ramon, the owner of Clean Advocate in Austin, Texas, told me his experience was similar but with a more positive twist. “COVID highlighted our front-line employees and their work. It moved from cleaning the building to keeping people secure. It also strengthened our relationship with our customers because we had to go through something difficult together.”
With great power comes great responsibility. And not everyone is ready to accept the danger. John Ezzo is the CEO of New Image Building Services Inc. in Detroit, Michigan. We had a very candid conversation. He explained how the situation affected his business. He explained how this situation affected his own business.
Ezzo continued, “What used to be considered intrusive, to see cleaners working during the day, is now expected. This has created additional labor recruitment challenges beyond the safety aspect. It is much more difficult to recruit a client-facing staff member during the day who will work alongside the clients’ staff than someone who arrives at night and only empties trash, vacuums and mops, and cleans bathrooms. We’re now facing the most difficult labor hiring situation in 30 years.
Some cleaning companies faced difficulties in hiring, while others experienced the opposite. Michael Doherty from Building Maintenance Service in New York told me that BMS, which had more than 3,000 employees by the end of 2019, had to lay off almost 1,000 workers, or roughly a quarter of their workforce, at the beginning of the pandemic. This is a huge blow for an organization worth US$40m that won’t be going anywhere anytime soon. By the time we conducted our interview, approximately 60% of the BMS employees were still working for the company.
Many commercial cleaning companies felt the impact of the lockdown on their revenues. As businesses ceased to operate, buildings were left empty, both by employees and customers. Annie Ray, the marketing coordinator of Buildingstars national headquarters in St Louis, Missouri, told me that “our recurring cleaning services started to decline because offices were shutting down.” Our clients were canceling services and saying that there was no need to clean the office because they had no one in it.
The pandemic has, of course, also caused permanent casualties, with some cleaning companies going out of business. Joe Fairley, Director of Business Development at Laser Facility Management in Florida, told me that “there was a huge shift in the commercial cleansing landscape six to eight month after the pandemic.” Many businesses, including those in retail, were closing down. Facility service companies had been heavily leveraged by these clients, which led to their failure.
Results of the survey
What were the survey questions? Eight questions were asked about COVID-19 and its impact on revenue, customer base, changes in marketing strategy and budget, and shifts to services. Let’s start with the fact that close to 100 cleaning companies took part.
COVID-19: An obstacle or an opportunity for your business?
“I am very confident about our industry and the way we have responded. In my opinion, our industry has responded well. I don’t believe anyone could have been prepared for the experience we had. “I’m not aware of any other time that I can recall when we all went through the same thing at the same time,” said Glen Harris, the owner of Harris Services, Bloomington, Indiana.
COVID-19 is a great opportunity for the vast majority of companies that participated in this survey. There were still obstacles, from a drop in revenue and business to challenges with hiring and the supply chain caused by an increased demand for decontamination and disinfection services.
“Before the end of March 2020, I read about disinfecting services and bought some electrostatic foggers. Ramon claimed that a few months after his purchase, the price of electrostatic foggers was four to five times more than what he paid.
Has your revenue increased or decreased?
Many customers increased their cleaning frequency, particularly for surfaces that are frequently touched. This naturally led to more revenue.
“Before COVID, our customers’ main criterion was price, which created a race to the bottom. However, COVID made people more aware that their employees can feel the impact of infection and disease transmission in the workplace. So now, our customers are increasingly concerned about how to prevent the spread of diseases and to keep their employees healthy for the future.
In my interviews, I asked the participants if they had increased their prices or not. I was surprised to find that less than half of the participants raised their prices.
David Grossman is the CEO of Renue Systems Inc. in New York. He said that although they are trying to be cautious about raising their prices, because of the increased level of cleaning required, many of our customers would say our pricing was higher than before COVID.
Ezzo explained that because of the labor shortage in 2020, they had to increase their prices and increase their margins. They also added, for the very first time in his career, a risk factor to the price.
Some companies, such as BMS, renegotiated contracts to lower the price for customers in financial distress.
Did you gain more or lose customers during the pandemic, or did your business remain the same?
The feedback I received indicated that most of the larger national brands were the ones who gained more customers as a result of the COVID-19 pandemic. Doherty, Doherty, and I talked about this apparent shakeup in the cleaning industry as businesses were opening up. I asked his opinion on why customers are leaving mom-and-pop cleaners and going to national brands. “I believe that’s what’s happening. BMS is receiving a large number of price quote requests, many of which are almost uninvited. “We’re out there doing email campaigns and other outreach, but this is more than usual.”
I found it interesting to learn how COVID-19 impacted other industries and shifted clientele for many cleaning companies. Robert Beatty, the owner of Next Level Facility Solutions in Kentucky, said, “Before we implemented COVID, 90% of our clients were schools, and 10% were medical facilities. After the lockdown, medical facilities filled up, and schools closed. The 90/10 ratio has flipped to almost 100% medical and 10% school.
Did your profit margin increase, decrease, or stay about the same over COVID?
In line with the results of the study related to revenue and the customer base, about half the cleaning companies surveyed reported that their profit margin had increased. A third of the cleaning companies surveyed said their profit margins were about the same, and only 17% reported a decrease in profits.
Grossman of Renue Systems, which has operations in 25 US cities and is present in other countries, says that the margins for electrostatic fogging and decontamination spraying are higher because they can be done quickly and the labor costs are the highest. It’s expensive equipment, and it uses costly chemicals. But once you master the technique, you become very quick. This is what we strive to achieve for our clients so that we can enter and leave quickly.
Higher prices accompany the increase in specialty cleaning services. Our recurring cleaning services declined, but clients requested more specialty services such as decontamination and electrostatic fogging. Regular day porters were also focusing on cleaning high-touch areas, so we shifted our focus to specialized services.
Has your business expanded or improved its services since COVID-19?
Some companies, such as JAN-PRO Utah, added COVID-specific packages. These included a three-tiered COVID cleaning package: COVID 1, COVID 2, and COVID 3, which is for confirmed COVID-19 infection.
Carmichael said, “We’ve noticed an increase in new players wanting to offer disinfecting service. We’ve offered this at JAN PRO for the past 10 years.”
Ramon revealed that “we created a landing page for our electrostatic fogging services and began running Google ads so we received calls almost instantly when March arrived.”
Do you expect your business to grow, shrink, or stay the same as the pandemic ends?
Nearly 90% of the companies surveyed expect growth in the future. The newfound respect and focus on health and security are creating opportunities that have never been seen before. The largest, most established, and well-known brands are best suited to driving growth.
“With all those small cleaning companies closing, a flood of talent was looking for work. This has allowed us to grow quicker because it’s easier to find quality employees. I also expect mergers and purchases to be a big part of our industry. “Some of them are simply due to the financial pressures placed on smaller facilities service businesses for a long time,” said Fairley.
Has your marketing budget increased, decreased, or remained the same?
It was fascinating to me as a marketer to learn that almost half of the companies in this study acknowledged that their marketing budget was likely insufficient to capitalize on the opportunity and shakeup presented by COVID-19.
In my more than ten years of providing marketing services and consultation to business-to-business clients, I have seen that the marketing budgets for commercial cleaning and facility service companies are often much lower than average B2B spending. My clients typically have annual revenues between US$2 and $5 million. The Small Business Administration (SBA), however, suggests that marketing should be allocated 6 to 8 percent of the gross revenue. Marketing costs $10,000 to $13,000 per month, depending on the size of the company. While that may look good on paper, I’ve yet to find a client who invested half that amount before joining us.