The most popular in 2016 among cleaning contractors were measures to reduce the cost for equipment, tools and chemicals for cleaning. Anna Plesovskikh, managing partner at HIPO Expert, shares the results of the marketing research at the III International Conference “Cleaning in the effective management of real estate objects” organized last autumn by infor-media Russia in partnership with the company “Karcher”.
In September 2016, HIPO Expert interviewed 571 companies via e-mail. The respondents were both providers of cleaning services, and their customers. The survey geography covered 17 largest cities in Russia.
Marketing specialists found that during the period 2014-2016 cleaning business has undergone significant changes. The deepening economical recession led to a change in the capacity of market segments for the provision of services, with increased demands from customers for the quality of the work of professional cleaners, cleaning budgets reduction, and a review of working conditions.
Ekaterina Chernyshova, CEO of the FACILICOM group of companies, shared her vision of the cost of staff in cleaning at the conference: “The main cost item is labour cost, no matter which way you look at it. We, of course, can improve technology, logistics, management, control thoroughly consumable and cleaning materials. But a very important point is a review of the motivation system. Bonuses, a comfortable environment, an opportunity for further training – all this is good, but the most important for the line staff is the level of pay equal to the market. The employee does not care where to run the scrubber machine: on your site or across the road – on the site of your competitor”.
Among the anti-crisis measures, costs optimization in order to reduce the cost of the service is of a vital importance. Respondents to a survey mentioned the most popular measures to reduce costs; they are consumables and cleaning equipment. According to the survey results, 67% of companies decided to change-over to cheaper analogues of such products. Among them a third part (33%) save on consumables (mops, dusters, cleaning rags, brushes and rubbers for scrubbing machines), nearly as much (28%) chose to use less expensive cleaning chemistry in their work, 22% reduced the budget for buying of cleaning facilities and only 17% decided to find economy-options for cleaning machinery and equipment. At the same time, during the crisis, about half of the respondents to a survey did not buy large machines, but leased or rent at all.
In the opinion of Alexander Doroshenkov, the Head of the Product Management Department at Karcher’s Professional Equipment in Russia, the cleaners will increasingly rent cleaning machines during the crisis. “The cleaning contractors are rotating sites. Some companies leave the site, and another companies starts to work on this site. And for a new site, cleaning contractors are looking for the best conditions for equipment: they try to take everything for rent, leasing, or with a long grace period.” – Alexander Doroshenkov commented.
32% of the surveyed cleaners thought about the need to review the working conditions with the current suppliers of cleaning products, and 41% started looking for new contractors. However, respondents to a survey admit that cost-cutting measures do not contribute to improving the quality of provided services.
At the same time, against the negative trends in the market of professional cleaning services, the competition between players has become tougher. And this is not surprising, since 19% of the customers interviewed expressed their readiness to change cleaning providers at their sites, and another 22% decided to cut cleaning budgets and / or revise the terms under the current contracts. However, the majority (59%) are ready to give the cleaners a chance, but with the condition of increasing the requirements for the quality of the provided services. In this situation, professional cleaners often resort to a price decision for solution of a question with the customer. Thus, 42% of the responding cleaners reduce the profit of contracts to stay at the site, while 37% confess using dumping to take an order.
Victor Nayshuller, the founder and the President of the OMC Company, during the discussion at the September conference confirmed that the average budgets of contracts fell by 10-15%. “We have the approach: we earn and we cannot afford not to earn. If the customer wants to reduce the price, then we are discussing any price-cut for the service that we provide. We are ready to make concessions for the service, we are ready to move a little in profitability, but we are not ready to work at zero, and even less so. – Viktor Nayshuller said. – Our company works in the segment of “big”, which do not hold competitions for the price today. Most of our customers consult, invite groups of experts and ask how to hold competitive tendering properly to avoid dumping. Everyone understands that it results in a low quality of service, and customers need quite the contrary”.
Staff is another tool in the fight against competitors. The overwhelming majority (85%) of respondents to a survey admitted that they do not shy away from line staff pirating. Supervisors headhunting are engaged in slightly less than half (42%). They do this not only to solve the employment issue – about 60% of companies noted that they faced at least 1 time the situation when the employee took away the customers / site after the dismissal.
Anna Plesovskikh has explained that in addition to price and staff wars, market participants also use less rigid survival tools, including internal reserves, including automation of processes, the rate of new technologies to increase labor productivity, the abandonment of low-profitable contracts and restructuring in favor of larger segment. Companies are also strengthening their sales and marketing departments, without depriving the attention of the Internet. Thus, 33% of respondents to a survey intensified in the direction of direct sales of their services, and 25% became more actively involved in tenders.
However, in the opinion of respondents to a survey, tough competition contributes to the development of the cleaning market in general.