Building Revenue thru Cleaning & Maintenance-04-11
By Jessica Chevalier
In search of new and diversified revenue streams, residential and commercial floorcovering dealers are turning (or returning) to floor cleaning and maintenance. With a reasonable investment of capital, dealers can be fully outfitted in a side venture that not only offers good potential for profit but also serves as a way to maintain contact with customers in between flooring purchases, a hard to quantify but valuable advantage. Though the commercial and residential markets differ greatly in most areas, the business of cleaning and maintenance is one area where they operate similarly. In both sectors, many of the dealers starting cleaning and maintenance businesses today are getting help as they forge into this new market. Commercial co-op Starnet offers members cleaning and maintenance programs that are, essentially, plug-and-play models, providing businesses with the structure and know-how to commence with a cleaning business in a matter of weeks. And Alliance, a buying group for residential dealers, has a similar offering for its membership.
“Shame on us as an industry if we don’t do what the automotive and appliance industries have done—making maintenance a part of the equation, ” says Brian Warren, president of Floor Care for Life, which coordinates cleaning and maintenance programs for both the residential and commercial markets. Warren notes that in vehicles, a light comes on to remind the consumer when it’s time for scheduled maintenance. With flooring, there is no light, though maintenance is just as necessary if consumers are to get the most from their flooring investment. Warren’s business, which has been in operation for nearly 12 years, offers retailers a host of options for how to turn on the maintenance light for flooring customers. And if retailers can get their programs running smoothly, cleaning and maintenance will provide a nice cushion to their bottom line.
Experts say that the cleaning business, in both the residential and commercial markets, nets 20% to 25% profit. And Ron Dunn, co-CEO of Alliance Flooring, estimates that one residential cleaning van should pull in between $150,000 and $200,000 annually. “For anyone with a customer base, it’s almost a foolproof profit center,” he says.
Floor cleaning has made great leaps since the 1970s and ’80s when Vern Montgomery, owner of Montgomery’s CarpetsPlus Color Tile in Venice, Florida, first cleaned floors in his native Ohio. Back then, he recalls, cleaners had one 55-gallon drum of product, which was used to clean everything, including floors, drapes and furniture. In addition, cleaners had only a handful of tools at their disposal.
When Montgomery reinvested in cleaning in December 2009 through Alliance’s program with Interlink Supply, he found that much had changed. Montgomery sent a company van to Interlink, and it was returned two weeks later with a top-of-the-line cleaning system installed. The outfitted van has roughly 70 different cleaning chemicals on board and is equipped with a host of job-specific wands and tools. In addition, Interlink provided training for Montgomery’s technician, a store employee.
Dunn says that quite a few Alliance dealers are now following Montgomery’s course of action. In the early days of the recession, Dunn set out to determine which of his dealers were doing well and why. Many of the successful retailers he visited had three or four cleaning vans, so Alliance created a cleaning program for its members. When the concept was unveiled, Montgomery was the first retailer to sign on. In total, 23 Alliance dealers are currently operating cleaning vans, and another 41 are in the process of starting their cleaning and maintenance businesses. “Many retailers offered cleaning in the early ’80s, but when business was good, a lot of them sold their cleaning business. Now is the time to diversify again.”
Investment in residential cleaning and maintenance is a relatively affordable endeavor. For a dealer outfitting a van that it currently owns, the investment can be as low as $20,000. At the high end, a retailer can spend $60,000. Alliance offers payment plans for members who don’t have the cash flow to pay up front. The program can be 100% financed and monthly payments are generally in the $1,500 range.
Once a van is equipped, promotion of the program is key. Montgomery runs a weekly ad to promote his cleaning and maintenance business that shows his equipment and features the phrase, “We sell it. We install it. We maintain it.” Though Montgomery has a good amount of competition in his local area from Stanley Steamer, Service Master and the like, only one other floorcovering store, of the nine around him, offers cleaning services, and it does little. Alliance’s Dunn judges that, in all, only 10% to 15% of all residential retailers offer cleaning and maintenance.
In addition to carpet, Montgomery offers tile and grout cleaning, as tile is a popular floorcovering choice in his Florida market. Tile accounts for about 20% of his business. While the majority of residential cleaning services, about 70%, do clean tile and grout, many leave hardwood, marble and stone to specialists.
A little over a year into his cleaning and maintenance business, Montgomery reports that he is very pleased and regrets only that he didn’t start offering cleaning and maintenance sooner. In fact, he is considering purchasing a second van this year. About 75% of his cleaning and maintenance business is in the residential market; his commercial business is composed mainly of retirement centers, of which there are many in Florida. Montgomery hopes to grow the commercial side of his business. Since he doesn’t have a commercial cleaning and maintenance salesperson, expansion in that market has been solely by word of mouth.
Montgomery, who powers his store with solar power, is perhaps most proud of the fact that his cleaning business supports his commitment to the environment. He notes that every chemical on the truck is safe for human consumption, and the wastewater from cleaning serves as a plant fertilizer. Montgomery disposes of the water on his store lawn, and he brags that he has the greenest grass in town.
For homeowners who purchase flooring with a manufacturer’s warranty, it makes sense to buy from a retailer who operates a full service business like Montgomery’s, since warranties are voided if cleaning isn’t done or if it’s done incorrectly. To encourage customers to begin a regular maintenance program, some Alliance retailers offer the first cleaning free, and many report that they usually manage to recoup that expense immediately, since customers, impressed with the quality of the floor cleaning, often hire them on the spot to clean furniture or draperies.
There are ways for retailers to benefit from cleaning and maintenance without creating any additional work for themselves. The most basic of Floor Care for Life’s offerings asks retailers to simply have consumers register their newly purchased floor in the Floor Care for Life system. That way, the company can send maintenance reminder cards to educate the consumer and drive them back to the retailer—who then connects the client to an approved cleaning and maintenance partner. Floor Care for Life has 1,200 such partners across the country.
For the residential retailer who desires the image of being full service, Floor Care for Life has both “programs that enable retailers to get into floor maintenance and others that help retailers provide the impression that they have an after-sales department.” Regardless of which program the retailer chooses, all correspondence and marketing materials sent to the customer bear the brand of the flooring retailer, which helps reinforce the retail store’s brand in the customer’s mind. Currently, Floor Care for Life has around 500 residential flooring retail partners.
Stephen Lewis, technical director of MilliCare, Milliken’s commercial floor cleaning franchise, reports that every segment connected with building has become interested in cleaning and maintenance during the recession because it can add revenue to the bottom line. MilliCare has 85 franchisees across the world; less than 50% of these are contract flooring dealers.
“Cleaning is typically small invoicing comparatively,” Lewis says. “You may get $1,000 from a customer every six months. But the margin is better than installation.” He estimates that there are 45% to 60% gross margins on commercial cleaning, compared to 10% margins on installation. In addition, cleaning services bring repeat business and, therefore, consistent revenue, which adds profit to the bottom line. There are also significant benefits for the commercial customer: MilliCare estimates that the life of a commercial flooring installation can be doubled with a proper maintenance program.
Stan Hulin, spokesman for The Institute of Inspection, Cleaning, and Restoration Certification (IICRC) and owner of Future Floor Technology, jokes that the floor bug bit him early in his career. Hulin started cleaning floors in 1975, owned several cleaning and maintenance businesses, and served as DuPont’s national hard floor maintenance manager. Today, he is a consultant, educator and trainer dedicated to developing programs for the floor cleaning industry. And one of the most important programs on his docket is an IICRC floor cleaning and maintenance technician certification.
“Every layer of the lifecycle of a floor has a segment of education and training, except maintenance. The life of a floor is in the hands of a cleaning technician for more than 98% of its life, yet they get the least amount of training,” explains Hulin. For the commercial dealers that he works with, initiating or restarting a commercial cleaning and maintenance program has been the biggest trend in the recession.
Hulin estimates that 80% to 90% of the contract dealers that offer cleaning and maintenance programs work in both hard and soft surfaces; however, among those who offer both types, soft surface cleaning and maintenance accounts for between 80% and 90% of business. He expects the hard surface side of the business to grow, since many of the large carpet mills, whose warranties require professional cleaning on their soft surface products, are diversifying into hard surface flooring and will likely follow suit on that side of the business.
“The organization that sold the floor has a vested interest in having the floor look good,” reminds Hulin. Most contract dealers with cleaning services take a cradle to cradle approach: selling the flooring, installing the floor, and offering initial maintenance, periodic maintenance and restorative maintenance—as well as removal service at the end of the floor’s life. Daily maintenance is generally left in the hands of an in-house or hired janitorial service.
Lewis says that the investment for starting a commercial cleaning and maintenance program through MilliCare is around $100,000 in equipment and chemicals. The MilliCare system is a dry cleaning method that uses no water and has third-party certified green chemicals. When they start a job with a new client, MilliCare franchisees build a customized program for the job: outlining which areas will need cleaning monthly, quarterly, bi-annually or annually based on traffic and soiling load, and building an annual budget for the customer. Franchisees generally offer linoleum, vinyl, laminate and tile and grout cleaning as well. Many defer hardwood, stone and marble maintenance to specialists in those areas.
Starnet members who operate cleaning programs implement a similar “big picture” system when they approach a new commercial job, studying the flooring needs and putting together a program that considers appearance, warranty requirements and the consumer’s desires. Floor Care for Life, which runs Starnet’s cleaning and maintenance program, offers Starnet’s 170 members the same options that it does to residential dealers: the means to create a cleaning and maintenance division or to give the appearance that they offer these services. Warren says, “We make sure that dealers have the right products and reminders to be a single source point for customer needs.”
Copyright 2011 Floor Focus