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Add-on Services Can Add on Profit

Categories: Business Management, Cleaning Best Practices, Innovations, Trends & Technology

When commercial cleaning provider Mopheads was founded two years ago, the Arizona-based company’s list of services included several nontraditional options. Clients could contract customary commercial cleaning services, including dusting, sweeping and mopping—or opt for extra services, such as event cleanup, trash hauling, or electrical and plumbing services.

“Today, clients are a much more sophisticated type of buyer,” the company’s CEO Will Scholz says. “They seek out firms they can use as one-stop shopping providers.”

Mopheads isn’t the only cleaning service provider offering specialty and maintenance services. As price-based competition continues to rise in the janitorial services industry, some companies are bundling services from related industries to try to offset the impact of employee compensation increases on their profitability, according to SBDCNet, the National Information Clearinghouse for the U.S. Small Business Administration.

Several services, including duct, grout, and hard surface tile cleaning, are expected to become popular add-on items for carpet and other types of commercial cleaning providers that are looking to expand business in the next few years, according to an article called “The New Carpet Era” by Dawn Shoemaker, a researcher and writer for the professional building and cleaning industries. Some cleaning providers are incorporating other diverse selections—ranging from power sweeping to pest control—to their list of services, which can give a commercial cleaning provider a marked advantage over other companies in its market.

If your organization is thinking of adding specialized services, the following tips can help ensure your new amenities meet all your customer retention goals—without blowing your budget.

Establish Clients’ Needs
Before OpenWorks—a commercial cleaning and integrated facility services franchise—began offering landscaping, pressure washing, pest control, and other new amenities at the start of 2015, the company sent out a survey to rank customers’ top picks.

“They don’t have to look up someone for pest control in the Yellow Pages if we have those people on our roster,” says Dave Hicks, director of facility solutions. “If they see a hole in the wall, a ripped rug, or other trip hazard, we can do that—and it helps reduce their cost.”

OpenWorks, which has 330 franchises in five states, then worked to find local, independently owned companies to provide the additional services—relying heavily on industry referrals and a buyers’ guide published by ISSA, the worldwide cleaning industry association.

Several years ago, MilliCare by Commercial Flooring Solutions (CFS), a carpet care provider that operates in North Carolina, South Carolina, and Florida, began adding new services, starting with upholstery cleaning. Dan Abitol, director of operations, says, “We had clients who were maintaining large campuses, airports, skyscrapers—weird little things [came up], and they struggled to identify people to be able to repair those things.”

After fabric care, the company started offering air cleaning services, such as removing odors and improving indoor air quality, and has since spread into hard surface maintenance, grout cleaning, restoration, and other areas. Last year, MilliCare also began offering repair and construction services, via a four-person in-house team.

“It makes us a lot more valuable to the client to know that as soon as you get that ankle-biter project, you can get it taken care of,” Abitol says.

Start Slowly and Research
When Michigan-based Modernistic opened in 1973, it offered both commercial carpet and vehicle cleaning services because the two were so similar, says Timothy Lantinga, the company’s vice president.

As flooring trends changed, the company added tile and grout cleaning. Roughly a decade ago, it also started providing air duct cleaning services—work Lantinga says has grown as more companies have become aware of air quality and the cost savings involved in maintaining, instead of replacing, a system.

“You have to do your due diligence,” Lantinga says. “Find out what’s out there in the market, and explore the benefits and pros and cons, and make an informed decision.”

He advises that companies first focus on a few initial services, then move on to ones they can easily add. “If you do carpet cleaning, you can easily transition into hard surfaces, and can easily do partition cleaning; you already have the basic tools,” he says.

Considering the expenses of adding a service to your company’s roster may help you decide whether or not to proceed. MilliCare added services gradually, which let the company carefully research the latest technology, potential new equipment costs, and other important factors.

Abitol says it started out focusing on flooring before expanding to other areas. “It was a crawl before we could walk, and walk before we ran situation,” he says.

Build a Reliable Workforce
Taking the time to find responsible, qualified subcontractors, if you don’t have the available help in-house, can mean the difference between your new amenity thriving or tanking. Research the local market, check references, and look at vendors’ work, if possible, to determine the best partner for your business.

Scholz from Mopheads warns about the importance of having the right network. “You don’t want to add services until you become confident networking with the vendors you extend to clients,” he says. “You don’t want to put someone in a building who will do more harm than good.”

With careful negotiation, you may also be able to score a price break for clients. For example, OpenWorks provides subcontractor estimates to clients and then bills the client for the work, adding a slight process management fee to the bill. The company has found the promise of steady work—and steady payment—has encouraged some of its affiliates to reduce their fees.

However, Hicks from OpenWorks says he does get some pushback from subcontractors who have worked with bigger facility companies and claim they were never paid for their work. “It’s a tough business out there in the subcontracting world,” Hicks says, “but we pay in 30 days.”

Market Additional Items Separately
Clients may be used to seeing you in only one light: as a commercial cleaning provider. Challenging that perception can be the first hurdle to get over, but proper marketing techniques can help.

Mopheads, for example, promotes its services during on-site appointments, and a company representative may suggest a new service, based on what comes up during a facility walk-through. Scholz says, “We walk to the parking lot and say, ‘Hey, this is looking a little bit shabby; we offer power washing services that we’d love to provide.’”

If customers already have a service provider for ongoing maintenance tasks, OpenWorks approaches the client and offers to get an estimate for comparison’s sake. They also offer to manage the service for them, Hicks says. “Consolidated billing saves money—they don’t have to take the time to pay somebody to do it.”

Consider Adding a Sales Team
Modernistic, which started out more than 40 years ago as an owner-operator business, has had a sales force for 25 years—which has helped it anticipate market trends. However, you will need to run the numbers to make sure you can afford the extra expense.

“[Hiring a salesperson] is going to cost you money for a year or two,” Modernistic’s Lantinga says. “Don’t underestimate how long it will take to pay you back—and make sure you have the funds to get there.”

Don’t Expect an Immediate Return
For many, additional services function more as a client satisfaction and retention tool than a moneymaker. And according to Lantinga, the additional services may come with additional costs.

“When [a new service is] first added, it never helps profits—you may have a large outlay of equipment that can be really expensive,” Lantinga says. “You’ve got to look at it in the long-term. You build a reputation for it as it gets out there, and that definitely helps the bottom line.”

Scholz attributes Mophead’s 90 percent client retention rate in large part to its additional service offerings. “We do make a little money, but it’s a resource to the client,” he says. “We’re building an even stronger relationship.”

New Work That Works
Making clients’ lives generally easier can have an overwhelmingly positive effect on your business relationship. Offering extra services helps strengthen your value proposition—and, if handled correctly, it can have the same effect on clients.

“We know we can take something off their plate and put time back in their day, which is probably their most precious resource,” Abitol says. “Getting repairs done and fixing things really isn’t their core business; when they have someone they can use [who] does that for them, they absolutely love it.”

How to Find Super Subcontractors
Here are three tips for selecting the right vendors to help expand your contracting services.

Conduct a smart search. Engage someone with relevant experience at your organization to sort through the sea of subcontractors—or, if you don’t have the time, consider hiring someone to do it. MilliCare used a construction professional, who created a process for vetting potential subcontractors. The process included checking references, checking qualifications with the Better Business Bureau, and looking at their work.

Get personal. Dave Hicks, director of facility solutions for OpenWorks, likes to meet potential affiliates in person and potentially check out their work if he’s scoping out a landscaping or other type of company. “The Internet is a wonderful thing, but face-to-face just gives you a better idea of what they’re about,” he says.

Ask for references. Don’t automatically assume a flashy online presence means a company is legit. “Everybody has a nice website nowadays,” Hicks says. “Do your research.”

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