The commercial cleaning industry is a fast-growing sector with ample opportunity for growth. Forecasts project an annual compound growth rate of 5.8% from 2015 through 2022 for this $50.4 billion industry. However, it’s also an industry with significant challenges that send many business owners into a pattern of lowering costs, and retroactively managing employee turnover.
This guide will gain a closer look into the state of the commercial cleaning industry today, including its projected growth and how key players within the industry secure business. Find insights around trends shaping the future of this industry, including evolving end-user expectations. Use this guide to learn about the challenges commercial cleaning companies face and potential solutions for breaking through the cycle of low-cost, low-quality services to become an innovator able to secure and grow a significant share of available business.
Armed with this knowledge, commercial cleaning company owners will be better equipped to lead industry trends and gain confidence in adopting new, improved strategies for cleaning success.
Commercial cleaning is a big business today, and growing rapidly. One 2020 report put the commercial cleaning services industry at $50.4 billion in annual revenue. The clear forerunner here is the commercial segment, with a projected annual compound growth rate of 5.8% from 2015 through 2022. That healthy forecast was made before the global coronavirus pandemic created a higher demand, putting new emphasis on the importance of deep cleaning across a range of building environments.
The cleaning industry can be broken down into several segments, including commercial janitorial services, specialty cleaning services, and residential cleaning. As of May 2019, approximately 60,219 janitorial services companies employed 3.24 million people.
At a glance, cleaning professionals seem to provide similar services for their client bases. There is a predetermined scope of work that may involve vacuuming, sweeping and mopping; dusting; emptying trash; and scrubbing of hard surfaces.
However, cleaning companies will also find that specific industry niches have different expectations about cleaning services. For example, to serve the healthcare niche, environmental services professionals are expected to provide a higher level of surface disinfection than their counterparts cleaning other facility types. Cleaning professionals focusing on commercial offices may be pressed to schedule work late in the evening to minimize disruption during office hours. Cleaners serving airport facilities may need to address more stringent security concerns during their hiring process. Understanding the target niche’s pain points will help janitorial services companies better serve these markets—and more successfully move into new markets.
This strategic differentiation can be particularly important for smaller companies seeking a market share within the highly fragmented cleaning industry. Data indicates that the 50 top companies serving the U.S. janitorial services industry generate approximately 30% of total revenue. Those larger companies often gain a stronger foothold in the market by serving customers across multiple locations. Small companies must position themselves carefully to compete in their local markets and meet clients’ needs.
Image source: “Performance Based Service Contracting,” Facility Engineering Associates, 2012
Commercial cleaning companies also have options in the type of contract they use to secure work, and is a decision that ultimately drives the way that work is performed. There are two primary types of contracts: prescriptive or performance-based.
Prescriptive contracts outline exactly which tasks need to be performed and, in some cases, the steps necessary to perform those tasks. While prescriptive activities can be helpful in preventive maintenance type activities—such as instructions on exactly how to care for a carpet to maintain the warranty—it does not always generate the desired outcome. As a result, many cleaning companies are moving to performance-based cleaning contracts.
Performance-based contracts focus on outcomes. These contracts also provide building service contractors with a higher level of autonomy in determining which activities and tools will deliver the best outcome. This strategy focuses on reaching the client’s desired end result, while allowing the contractor flexibility in achieving that result through the most effective, efficient strategy possible. In addition to saving time and driving better results, contractors may uncover savings that can then be returned to clients or reinvested in their business.
The latter strategy is challenging because both contractor and client need to have a clear strategy for assessing results. Prescriptive contracts, on the other hand, have a list of items that can be checked off as completed industry growth drivers.
The cleaning industry is growing and is expected to reach $74.3 billion by 2022. This is in part a result of tremendous growth in square footage, which brings with it new demand and opportunities. In the United States alone, commercial building square footage is projected to grow to 126.1 billion square feet, a 36% increase from 2018 to 2050. With that growth, the Bureau of Labor Statistics forecasts a 10% increase in open janitorial jobs by 2026, placing it firmly in the top 10 fastest-growing jobs.
These forecasts predate the global COVID-19 pandemic, which is driving cleaning demand in an entirely different way. In the past, the cleaning industry has been susceptible to damage as the economy slows down. In certain sectors, cleaning services are reviewed as a luxury and cutting those outsourced services—or switching to a lower-cost provider—has been an easy way to tighten budgets. During the Great Recession, the cleaning industry revenue fell 5.3% in 2008, followed by a 6.1% drop in 2009.
Marketdata estimates that the cleaning industry will see a dip in sales of 1.6% in 2020 related to COVID-19 shutdowns, at a value of approximately $117.3 billion. However, that dip is expected to be short-lived as businesses learn to navigate a new normal following the pandemic and heightened demand for deep cleaning. Marketdata predicts a 7.4% gain and recovery forecast for 2021, with 5.4% annual gains through 2025.
With this increasing demand for commercial cleaning comes new expectations for how clients will want these services provided. By navigating trends, commercial cleaners will be able to gain a stronger foothold in marketing.
Data indicates that facility managers of all types are increasingly outsourcing their cleaning to outside vendors. This is most common among organizations that employ fewer than 10 full-time equivalent (FTE) employees in their cleaning and maintenance departments. While in 2018, approximately 15% of facility managers outsourced their cleaning, by 2019 that number had jumped to 24%. The reasoning behind this trend? Facility managers are able to see cost savings from working with a low-price bidder, and by transferring liability and insurance costs to the outside bidder.
Cost savings are also increasingly becoming achievable by “outsourcing” certain repetitive tasks to “cobots,” or collaborative robots, and through other technology-based solutions. In addition to allowing human employees to tackle more value-added tasks, these robotic solutions are able to provide the data that helps drive facilities management funding decisions.
One expected result of the COVID-19 pandemic is greater demand for more frequent deep cleaning. Building owners and property managers predict that design of and cleaning for office buildings, in particular, will evolve in response to new expectations for social distancing. In addition to the adoption of passive solutions such as antimicrobial fabrics for chairs and UV lights for nighttime disinfection, clients are expected to demand evidence of a “cleaner clean.”
This demand isn’t just a desire for more attention to high-touch hotspots. It’s also meant to help allay workers’ fears about re-entering the workplace. Demonstrating cleanliness measures will become critical in easing concerns about the spread of germs across the workplace.
Worldwide cleaning association ISSA says that “green cleaning is arguably the No. 1 trend in our industry and is showing no signs of slowing down.”
CGS, a global provider of business applications, enterprise learning and outsourcing services, found in its 2019 Retail and Sustainability Survey that more than two-thirds of the respondents consider sustainability when making a purchase or decision to work with a company. As a result, demand for cleaning products that are non-toxic, energy-efficient, and otherwise environmentally friendly will continue to grow.
The commercial cleaning industry is ripe with opportunity, but only for those business owners willing and able to navigate the leading challenges facing this industry. There are four consistent hurdles to address, each of which tend to drive a focus on low-cost over high-quality service. This focus not only tends to drive down profit margins to negligible levels, but often comes at the expense of staff.
By confronting these hurdles head-on with a thorough business plan for your commercial cleaning company, employers can develop clear strategies for avoiding these pitfalls. The industry’s leading challenges are detailed below.
The commercial cleaning industry is plagued by intense competition, in part because it is a field where there is a relatively low barrier for entry. Required equipment is relatively inexpensive and employee training is minimal. Many cleaning companies win clients by providing the lowest cost, rather than the best service. As a result, cost is a leading differentiator for clients.
In other cases, companies in related fields see commercial cleaning as an easy way to expand their services. During the coronavirus pandemic, pest control companies used fogging machines to apply EPA-approved disinfectants to buildings. In addition, companies that started by focusing on residential buildings often see commercial work as an easy way to expand. However, the services provided have some critical differences.
Because of this fierce competition, the price often becomes a differentiator. This puts a major impact on the commercial cleaning business’ profit potential. Some estimates put the average net profit margin among top cleaning companies at as little as 4%. Business owners are constantly pressed to drive new levels of efficiency from their staff for a greater share of profit.
Industry studies have placed janitorial staff turnover rates anywhere between 75% to 375% annually. It’s a tremendous cost burden driven by a range of reasons: lack of job satisfaction, managing customer complaints, high risks of musculoskeletal disorders, and more. Getting to the root of this cause and calculating employee turnover is critical, because it can cost a business dearly.
Gallup conservatively estimates that the cost of replacing a single employee can range from one-half to two times the employee's annual salary. This includes the time and money spent advertising and recruiting new hires, training, and time bringing new workers up to expected levels of productivity. In addition to monetary costs, there are also emotional costs. Employees moving onto new work, managing morale for remaining staff, and providing consistent customer service in the wake of constant upheaval can also impact the bottom line.
Estimates indicate that an average cleaning company loses as much as 55% of their customer base annually. This largely is attributed to poor service, or the perception of lower quality service over time. This is an expensive problem, as the cost of servicing existing clients is approximately five times lower than the cost of acquiring new clients. Existing clients have already been sold on the benefits your company provides, which not only lowers marketing costs but increases the opportunity to upsell them on additional services. In addition, a stronger existing client base is more likely to provide marketing via referrals for your firm.
Companies are increasingly combating staffing shortages with more competitive pay and benefits. The Bureau of Labor Statistics reported in January 2020 that wages and salaries rose 2.9 percent for all workers in 2019, while benefit costs increased 2.2 percent. To remain competitive, commercial cleaning companies often find themselves in a pattern of increasing wages, which are more often swallowed by the profit margin rather than passed onto customers.
|Average Hourly Wage for Janitors and Cleaners|
|Year||Average Hourly Wage|
Source: Bureau of Labor Statistics
Pay raises alone aren’t enough to combat this chronic turnover. A critical first step is to understand the specific problems driving your turnover rates. Business owners can gain a better understanding of employees’ frustrations through employee exit interviews, training managers to ask about employees’ pain points, and specifically asking managers, “how can we improve staff efficiency.” These steps will build a more targeted retention strategy, which might include the strategies to decrease employee turnover listed below.
Providing competitive compensation for top-performing employees is a solid first step to reducing turnover. However, consider other ways to invest in cleaners who provide consistently excellent performance. This might include training opportunities, bonuses for customer compliments or efficient performance, or creative perks that speak to staff’s unique needs.
In addition, companies need to hold employees accountable. An underperformer can cost your business as much as 15 times their annual pay. In addition, bad employees can influence other workers into providing subpar quality, or push top performers to find work elsewhere.
Ongoing training is an excellent investment in both your staff and your company, and should form a key component of your strategy to decrease employee turnover. Data indicates that Millennials, in particular, value professional development as an opportunity for self-improvement. Employees who feel invested in are more likely to stay with the company that helps them expand their skill sets. Training may include learning new products and technologies or building leadership skills that will prepare them to move into managerial roles within your company someday. Consider connecting your employees with equipment manufacturers to understand how to best use the tools that support their job.
By automating certain repetitive tasks, such as vacuuming, employees can focus on more value-added work, like detail cleaning, high dusting, and customer interactions. In addition to reducing on-the-job monotony for workers, autonomous solutions can limit the physical strain and subsequent injuries workers experience from repeatedly performing the same tasks. It is critical that training is provided so that employees understand that technology is a support system, not a replacement. Workers who fear for their job are more likely to consider other employment options. Employees who see technology as an investment in them will feel more cared for at work.
BetterUp’s 2018 Meaning and Purpose at Work report found that more than 9 out of 10 employees were willing to work for lower pay in exchange for performing more meaningful work. Cleaning is an industry with a tremendous amount of meaning to offer and has always been critical to ensure public health and safety. Today, cleaning staff are frontline heroes, helping people safely return to work post COVID-19.
"People who see their work as a calling are significantly more satisfied with their jobs. They're significantly more satisfied with their lives. They're more engaged in what it is that they're doing and tend to be better performers, regardless of what the work is."
-Amy Wrzesniewski, professor, Yale School of Management
Consider an example from Amy Wrzesniewski, a professor at the Yale School of Management, who interviewed hospital cleaning staff in her research to identify a secret formula for people who loved their jobs. She discovered the majority of janitorial staff described their work as a critical part of patient care. These professionals identified not as cleaning staff, but as ambassadors for the hospitals. By emphasizing the value of your service to your team, you too can build brand ambassadors who are loyal to your company — and excellent for customer service.
On the opposite end of this spectrum, the leading complaint of many line-level cleaners is about a lack of respect. Cleaning is meant to happen in the background, with minimal disruption to clients’ daily services. As a result, cleaners are often seen as “nonentities,” an observation that can leave your employees feeling devalued. It falls on employers to provide recognition for work well done. This recognition can be a public celebration of a compliment or monetary, such as a gift card or bonus.
Commercial cleaning companies plagued with low profit margins have a few options to drive up profit. Some demand more of their staff, which drives up employee turnover. Others ask a critical question: How can we improve staff efficiency?
There are a number of staff efficiency measures a business can adopt, but they take advance planning, time to implement, and a commitment to ongoing tracking. If you’re ready to better support your staff and clients, consider the following proposed ways to reduce labor costs.
Do you know how much time your employees spend on any given cleaning task? As the saying goes, “You can’t improve what you can’t measure.” Establishing a baseline of performance means understanding what tasks take the longest amount of time for your staff to complete and which staff members may be struggling. This understanding can help you determine where to implement additional training or upgrade your equipment to speed your processes without taxing employee productivity.
In the manufacturing and corporate worlds, Lean principles have become a go-to solution for driving up staff efficiency. By definition, the first goal of Lean is to eliminate waste. This may include wasted time, effort, or materials. The second goal is to help workers perform jobs more easily. When Lean principles are employed correctly, the targeted task is easier to complete.
To start getting Lean, try asking employees for input on their pain points. Break down tasks to identify simple solutions for saving time. For example, cleaners may find a wheeled supply cart to be a cost-effective investment for speeding up the time spent cleaning offices. Performing some simple tracking of most frequently used products might help reduce the number of cleaning products employees need to have on hand. Or employers might develop a risk assessment chart to prioritize high-touch areas and allow less frequent cleaning of non-priority areas.
When was the last time you changed your scheduling process? Are you scheduling based on employees’ requests for specific days? What inefficiencies may be hidden in your current process? Take a look at your scheduling processes to identify a potentially more cost-effective way to organize schedules.
In addition, examine the benefits of moving from a zoned approach to cleaning to a team-based approach. In zone cleaning, cleaners are assigned specific tasks within their portion of a building. This can require duplication of tasks. For example, how many sets of the same tools might be needed across a single building? In team-based cleaning, cleaners focus on specific tasks throughout a building. This reduces the cost of equipment, which may lead to a level of specialization that helps cleaners to perform their work more quickly. Team-based cleaning is one of the key ways to reduce labor costs without cutting headcount.
Ongoing training will help you ensure that staff is performing cleaning activities to the level of expected performance. It also reduces the risk of staff suffering from injuries or taking shortcuts that could damage customer relationships. By making training a regular part of the workweek, staff will internalize desired ways to perform tasks and will pass those skills on to new team members and temporary workers.
Also consider training workers on higher-level tasks, such as leadership skills or managing certain new equipment. Research indicates that Millennials in particular prize professional development opportunities. An investment in your staff’s development may also help you gain stronger employee retention.
Using the lowest cost supplies and equipment can actually add to long-term costs by making work more difficult and potentially leading workers to use twice as many supplies to get the job done—or spend more time (and frustration) getting the job done. Low-quality supplies can also reduce the level of quality you provide, leading to more customer complaints. Reach out to equipment manufacturer representatives to learn more about how their products can help you save time, improve quality and increase customer satisfaction.
Automating simple, repetitive tasks speeds the time spent on any one job. It also allows employees to perform more value-added work, reducing monotony and musculoskeletal strain caused by repeatedly performing repetitive manual tasks. Outsourcing these tasks to robotic coworkers can reduce injuries and lower turnover rates. Autonomous robotic sweepers are one such solution. Some sweepers can clean up to 30,000 square feet per shift while nearby employees focus on more detailed tasks.
Companies looking to address the pain points discussed above can only improve so far using traditional methods. To truly innovate, an organization must move to an entirely new way of achieving results.
Many industries are turning to automation to transform how they do business and achieve previously unattainable levels of efficiency. Automation is now beginning to take hold in the labor-intensive cleaning industry and presents tremendous opportunity for transformation.
Automation is simply the use of machines to enable a process to occur automatically, without human labor. There are a number of ways automation is taking hold in the cleaning industry today.
Many companies are already employing some level of service automation to simplify touchpoints between a service provider and customers. Service automation is simply the process of using technology-based tools to streamline service delivery. Examples include:
Service automation helps create a more consistent experience for the end-user and potentially simplifies the work direct laborers must perform.
Cleaning companies use automation to manage processes end-to-end and are discovering how effective it is at saving time and money across employee groups.
Nothing damages customer service faster than missed or incomplete cleaning. You can offer apologies or you can offer data that demonstrates a complete and consistent clean. The cleaning industry has not had opportunities to provide data-based cleaning in the past. Powered by technology, it too is now moving into the era of the Internet of Things, with robotics leading the way.
Robotic cleaning solutions ranging from autonomous carpet sweepers to ultraviolet disinfection robots can often be programmed to clean along preset routes without human intervention. In some cases, a robot gathers data along its route about when, where, and how long it operated. Cleaning and status reports provide solid proof that this essential cleaning is performed consistently.
Having data on hand can help cleaning companies more effectively enforce the terms of performance-based commercial cleaning contracts. Because the terms of these increasingly popular contracts can be subjective, success depends upon having predetermined metrics in place that contractor and client can use to assess compliance with the contract. Clear data that demonstrates when, where, and the level to which cleaning was performed provides an excellent metric for measurement.
Your people are your most powerful asset. As discussed above, investing in staff can reduce costly employee turnover and improve employee loyalty. But going beyond simple incentives can also help you develop a team of problem-solving innovators who can transform your customer service and approach to cleaning as you know it. Consider the following steps for innovating your management practices.
Provide your staff with the skills needed and the level of responsibility required to independently address challenges on the job. Consider applying a Lean framework to empower team members to take initiative in solving problems rather than waiting for managerial direction. As employees take more responsibility for decision-making and how they perform quality work, companies tend to see higher levels of customer service and greater employee engagement.
An employee brand ambassador is someone who promotes your company and its services to their personal network. This is an excellent way to recruit new employees and customers. Encouraging employees to become brand ambassadors means rewarding client and employee referrals they bring to you, encouraging sharing of branded content, and providing resources on how to promote your brand. It also means communicating a clear vision of your company’s values and offerings, and embracing a level of transparency that breeds trust.
Disruptive innovation isn’t just about doing your current job better—it’s about entirely reinventing the way you work to make it more efficient and cost-effective. Disruptive innovation means transforming the way you serve a market or creating a completely new market segment.
You don’t just stumble onto this level of innovation. You must make it second nature to look for tools and strategies to help you reinvent the way you clean, train, market and overall perform. Start by watching innovators—subscribe to trade publications and business papers that highlight examples of innovation or disruptive technologies. Looking to other innovative industries is another excellent way to find strategies for improvement that your competition may not yet know about.
The commercial cleaning industry offers a tremendous opportunity for business owners who are willing to move apart from the traditional business model. That includes prioritizing solution-building around customer needs, reexamining processes to identify opportunities for more cost-effective procedures, and focusing on building in new levels of efficiency that support staff. Reinventing the way your business responds to these challenges can lead to changes in how to bid on commercial cleaning jobs and the level of success you will achieve.
Whiz, the autonomous vacuum sweeper from SoftBank Robotics developed and distributed in partnership with Brain OS and ICE Robotics, is a leading example of how technology can help cleaning companies solve each of these challenges. Using a trusted AI platform, Whiz is proven to deliver a higher-quality, more efficient clean, with proof of performance. Whiz is available with a subscription model that allows cleaning companies to cost-effectively pilot the solution in their facilities.
To learn why automation is the key to modernizing cleaning, and all the ways it can benefit your business, reach out to us by clicking here or email our team directly at firstname.lastname@example.org.