Since March, the facility service contracting industry has been reeling from the impacts of COVID-19. Appointment volume dropped 29% in March and flatlined in April across the US and Canada according to ServiceTrade usage data.
There was, however, a glimmer of hope that a recovery was on the way. Despite the severe dip in business, quote approvals were on the rise. These quote approvals turned out to be a leading indicator of a recovery. Here’s what appointment volume looks like now:
As Figure 1 shows, the recovery stalled through June around the same time that new COVID-19 cases were back on the rise. Fortunately, after the July 4th holiday week, appointment volume increased again, despite a spike in newly reported cases. By July 19 – 25, appointment volume was above pre-pandemic levels by 9%.
While this is promising news, it’s important to note that we expect a seasonal increase in appointment volume during the summer months. Also, recovery varies significantly by the type of work you do and your geographical area. For example, when we compare the trend for different industries, we see that some are recovering faster than others:
As mentioned in the previous data analysis, contractors that service restaurants, like kitchen exhaust cleaners, were especially hard-hit by the initial outbreak and are still 11% away from pre-pandemic appointment volumes. Many kitchen exhaust cleaners have pivoted to building sanitization services because demand for exhaust cleaning is still very low.
Interestingly, fire protection contractors have returned to 100% of pre-pandemic appointment volume despite restaurant facilities being an important part of their overall customer portfolio.
Mechanical, electrical, and plumbing contractors (MEP), on the other hand, are above pre-pandemic levels. However, as seen in Figure 2 above represented by the dotted blue line, mechanical contractors typically see a seasonal increase in appointment volume during this time of the year, due to temperature increases that cause HVAC and refrigeration systems to fail. This industry is still about 20% behind the appointment volume compared to last year. For a more in-depth analysis of the MEP recovery, check out this industry report.
Regionally, the initial impacts of COVID-19 and following recovery have varied. In Figure 3 below, the first value column shows the initial decline in appointment volume from 100% of the pre-pandemic levels. The second value column shows the appointment volume as of the week of July 19 – 25 as a percent of pre-pandemic levels. In other words, the second value column shows how close each area is to a complete recovery in appointment volume:
(Regions with insufficient appointment volume were excluded from this analysis so as not to draw conclusions from data that is not statistically significant)
Unsurprisingly, the US Northeast was hardest hit by the initial impacts of the pandemic as it was the biggest epicenter of the outbreak in the US. Recovery seems to be tracking closely with seasonal temperatures. Areas with warmer weather are seeing increased appointment volume, likely due to an increase in seasonal MEP work, and northern regions are experiencing less seasonal work as would be expected.
So, what does the data suggest that you can do to speed up your company’s recovery? For that, we can look to quote approval rates. When we measure, by week, the number of quotes approved divided by the number of quotes submitted to customers in that same week, we can chart a normalized quote approval rate over time:
For all quotes, we saw a dip in the normalized quote approval rate in March during the initial impacts of the pandemic. The normalized approval rate mostly returned to pre-pandemic levels in April, May, and the first half of June. However, there is a noticeable difference between quotes above and below $5k. Historically, quotes over this value are approved at a lower rate, but they are not seeing a recovery to pre-pandemic approval rates like those under that threshold. Just like you, your customers are still recovering and likely sensitive to price.
Just because we’re seeing a recovery, doesn’t mean that COVID-19 is no longer a threat to your business, your employees, or your customers. But, the service contracting industry is making a comeback and your company needs to be prepared for the recovery. Do you have operational systems in place to capitalize on the work that is becoming available? Instead of relying on a handful of large quotes to meet your goals, can you systematically crank out smaller quotes under $5k to meet the market demand? Are you ready for the recovery?
All of the data analysis in this blog post was performed with business analytics reporting available to ServiceTrade customers. Email us at email@example.com or call 919-246-9900 to learn more about how you can get the visibility you need for your service operations so you can deliver better customer outcomes.