Tennant Topics: How Building Service Contractors Can Control Costs and Differentiate

With Jeremy Dieterle and Dave Yates

In the cleaning business, the demand and urgency never stops—so it can be hard to step back and assess changes, shifts, and trends impacting your business.

What are the big changes and small shifts, major challenges, and new opportunities with Business Service Contractors (BSCs)? In this post we’re chatting with Jeremy Dieterle, Director of Customer Experience and Dave Yates, Director of Strategic Accounts about the unique (and not-so-unique) issues impacting business service contractors (BSCs) right now.

Q: What are the biggest topics and challenges for BSCs?

Jeremy: The top three issues BSCs are dealing with are, “Labor, labor, and labor.” That’s not new. But the tight labor market is a huge challenge. Labor costs are rising, and finding people to do the work is something all BSCs are struggling with. BSCs are even competing against their clients for workers in many cases.

Dave: Related to labor costs, I'm seeing a lot of what I call bid degradation. Clients are switching BSCs more frequently. They get frustrated when a labor shortage means work isn’t done, so they look for a new BSC. But they’re not willing to pay more—and more frequent bids actually drive down the prices. So, we’re seeing BSCs starting with lower operating budgets. Then they’re dealing with rising labor costs. So, already-tight profit margins are getting further squeezed from both sides.

Takeaway: BSCs must focus on strategies to address labor shortages, improve retention, find innovative ways to remain competitive without compromising their service quality in today’s environment. To better manage margin pressures, it’s critical to explore ways to better manage costs and properly bid work so client turn over remains low.

Q: How are BSCs addressing labor challenges?

Jeremy: More are recognizing that their culture is in flux. There’s been so much turnover that they need to go back and retell the story of what their company stands for—to reinforce the culture and values that might keep workers engaged and keep them from leaving. Managers are key here. You need to have managers that walk the walk. When you have managers who can effectively train, engage, support, and motivate their teams, you see significant impacts: higher productivity, lower turnover, better margins.

Dave: Equipment is another way some BSCs are attracting and retaining workers. People take pride in their work, and they don’t want to work with low-quality equipment and tools that make it harder (or less safe) to do the job.

Takeaway: Successful BSCs are addressing labor challenges by focusing on two key strategies:

• Cultural reinforcement through strong managers
• Investing in quality equipment that is easy to use and performs

Q: How are successful BSCs using robotic cleaning equipment to deliver productivity benefits?

Dave: We are hearing BSCs get more pressure from their clients—clients that want innovation, and they’re asking about robotics. But some find it hard to fit robotics into an existing service contract. So, savvy BSCs are putting robotics into their upfront RFP bids—getting that expense covered right away. Or they’re using robotics as a business retention strategy—to keep clients engaged with how they’re driving innovation, sustainability, etc.

Jeremy: There’s no denying that AMRs can be expensive, but BSCs can’t dismiss them. The challenge right now is identifying the path to ROI upfront. And one of the keys is defining a cleaning scope that combines robotic cleaning with human-powered cleaning, monitoring and management—what we call the “co-bot” strategy. But figuring out how and where to redeploy labor isn’t always straightforward.

Dave: One of our biggest robotics success stories is with a BSC who deployed AMRs at an airport. They deployed Tennant AMR floor cleaning units and were able to reallocate 6,000 employee hours in under one year. In one airport, robots are cleaning more than 115,000 square feet in a six-hour period each night, giving employees valuable time to focus on detailed cleaning activities.

Takeaway: BSCs are using robotics and innovation as a retention strategy for both clients and employees. Utilizing co-bots is one successful strategy. Thoughtful integration of robotics allows for better staff optimization and consistency of cleaning.

Q: How are trends or changes in flooring types impacting BSCs?

Jeremy: Businesses have been shifting toward polished concrete for a while now because of its durability and relative ease of maintenance. It’s easy to clean, and hard to break, as they say. But they’re not investing in replacing flooring proactively—they’re doing it when they build a new facility, remodel a store, or when carpet wears out.

Dave: The biggest trend I see is resilient floor protectors starting to replace the traditional floor finish. Using a resilient floor protector eliminates how often you need to recoat, strip or refinish. But it also eliminates burnishing and allows you to use pads on the floor to keep it shiny. These changes are impacting the equipment BSCs need for each new start-up. With the increase of polished concrete, they need more automatic floor scrubbers and the right pads for the job.

Takeaway: With the shift to polished concrete and hard floors, BSCs need the proper equipment and price the cost of equipment into the job if needed. The larger the equipment the less portable it is and needs to stay at a single location.

Q: What are BSCs’ biggest opportunities for growing their business?

Jeremy: The one thing I can say for sure is that a challenging labor market isn’t going anywhere. BSCs that can crack the code on attracting and retaining good people--and driving productivity-- will have a major advantage in their ability to get work done, and do it profitably.

Dave: One of the biggest opportunities I see is the shift toward outsourcing among businesses that traditionally have kept cleaning in-house: large warehousing, light distribution, industrial businesses, etc. I think there’s a tremendous untapped market there, with huge potential expansion into verticals and organizations that traditionally haven’t been in-scope for BSCs.

Takeaway: As businesses are looking to outsource non-core tasks/responsibilities BSCs will see a larger market size. To win new deals and remain profitable they must look internally at their culture and how to better train, manage and retain employees.

Q: How can BSCs differentiate themselves from the competition?

Dave: I think the best way for a BSC to differentiate is through innovation. They need to show their clients they’re continuously leveraging new and better technology to drive cleaning performance and to support sustainability.

I also think going after the right clients is an important strategy. If a client is only buying a clean building, they don’t necessarily care how it gets clean. But we’re seeing a generational shift where people in positions of power do care more about innovation, sustainability, how workers are treated, etc. We’re hearing from BSC customers that their clients are asking about this stuff in monthly review meetings: are you cleaning the floor this way? Are you using XYZ chemical? Are you using environmentally friendly cleaning procedures? So, going after clients that already care about these things will make it a lot easier to differentiate and sell on your ability to deliver more innovative, sustainable, worker- and environmentally-friendly cleaning programs.

Jeremy: BSCs need to sell themselves as premium offerings, though not necessarily with a premium price. Innovation and sustainability are part of that. But there are other things that sell a premium offering:

• Vertical-specific expertise: Be a specialist and know the vertical (healthcare, retail, education, etc.).
• Culture: Showcase your people-centric culture and values. Companies working with BSCs recognize that they’re outsourcing labor, so they want to see that you treat your people well. Aramark for example focused on ergonomics into its cleaning processes and procedures. They saw immediate benefits, including improved worker comfort, safety and happiness as well as improved efficiency, productivity and customer satisfaction.
• Urgency/responsiveness: Companies are contracting BSCs because they’ve identified a need or a problem. Your ability to react quickly is very important. Another successful BSC was able to react quickly to a brand new floor type with the correct equipment that improved productivity and lowered costs. The ability to work fast can win you new business and help you keep the business you do have.

Takeaway: Position your BSC as a partner in helping organizations improve sustainability so they see how working with your company can improve their image. Being an expert in the field and treating your people well can reduce turnover and improve the service you deliver.

Q: How can Tennant help BSCs meet these rising challenges and differentiate their business?

Dave: One way we’re helping BSCs differentiate is through exclusive partnerships, where they can directly tell their clients, “When you partner with us, you’re also partnering with Tennant.” Then we can help them show how our innovative technology sets them apart. We bring in AMR cleaners, detergent-free cleaning, etc.

Tennant’s reliability from a service standpoint is also more valuable than ever to our BSC clients. With ongoing supply chain and parts availability issues, BSCs are looking more closely at this aspect of the partnership and the value it adds to the overall solution they’re buying when they purchase Tennant equipment.

Jeremy: Innovative technology is a big way we’re helping BSCs. But we know that not every BSC can afford to invest in innovation right now. So, we’ve been introducing a broader range of machines and equipment with different feature sets (and different price points) to suit specific cleaning demands. We’re helping BSCs get the right machine for the right application—based on volume, heavy vs. lighter-duty applications, etc.—and still get the same Tennant performance and reliability.

We’re also directly supporting the people within our BSC customers’ businesses. We’re training the trainers, helping managers to engage and support workers. And we’re helping BSCs develop that specialized vertical expertise.

As you look to control costs and differentiate your services, it is important to know that the right tools and equipment play a significant role. It not only maximizes cleaning efficiency but also promotes the highest standards of clean, safety, and environmental responsibility.

Our team of experts can help create a tailored solution and product mix to meet your specific needs, We're here to support you and together, we'll ensure that your BSC business not only survives but thrives in today's dynamic and evolving industry.

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