Data Study: The Impact of COVID-19 on Mechanical Service Contractors and Opportunities for Faster Recovery
Since March 2020, the commercial and industrial mechanical service contracting industry has been reeling from the impacts of COVID-19. In the early days of the pandemic, when cities and states started shutting down, the uncertainty was terrifying. The fear made us all question the future of our business, for our employees, and for our livelihood.
But feelings can fool. We turned to usage data from over 550 facility service companies in ServiceTrade to measure the effects of the COVID-19 services slowdown in the US.
Figure 1. Mechanical Service Appointment Volume Recovery in 2020
Appointment Volume Drop, Recovery, and Stall
In the second half of March and into the first week of April, mechanical service, repair, and maintenance appointment volume dropped by 28% from February levels. This low point is marked with the yellow circle in Figure 1. From the first week of April until the end of May, the appointment volume recovered to about 120% – 125% of February levels with a jump after the Memorial Day holiday week, which is marked with the brown triangle in Figure 1. Appointment volume has held steady until a small dip during the July 4th holiday week which is marked with the gold star in Figure 1. After the 4th of July holiday week, appointment volume continued to climb.
20% – 25% growth in service appointment volume during a global pandemic seems like fantastic news until you compare data from 2019. This data shows that the mechanical industry typically sees a significant seasonal increase in appointment volume from February to July due to warming weather that causes system failures.
In fact, data from the first week of April 2019 (the green line in Figure 2) suggests that appointment volume in April 2020 should have been 27% more than February 2020 levels. That means that during the first week of April, with the gap between the expected appointment volume (+27% of February level) and the actual appointment volume (-28% of February level), the industry was actually 54% behind where it should have been.
Figure 2. Mechanical Service Appointment Volume Recovery 2019 vs. 2020
The Gap Between 2019 and 2020
When we graph the gap between expected and actual appointment volume as a line in Figure 3 below instead of an area as in Figure 2 above, it’s easy to see that there was a recovery as the gap closed through April and May. However, as the count of newly reported COVID-19 cases started to increase again in June (red line in Figure 3), the recovery stalled and the gap between the expected and actual appointment volume grew after the 4th of July holiday to 26%. That gap is closing again, but the spiking count of newly reported COVID-19 cases is likely leading to instability in the recovery.
Figure 3. Appointment Volume Gap with New COVID-19 Cases
This view of the data helps us better understand the timing of the appointment volume drop compared to the onset of new cases. In March, the sudden drop in appointment volume preceded the spike in new COVID-19 cases as governments proactively put in place stay at home and shelter in place orders. Initially, like the rest of the country, the mechanical service contracting industry was hit very hard by these orders.
Not only were contractors losing work and considering how to keep their business afloat but many who hadn’t adopted technology had to scramble to put systems in place so they could go paperless, enable office employees to work from home, and help technicians limit face-to-face interactions with other employees and customers. It was a big distraction during a stressful time.
As contractors adapted to the new work environment and states began reopening, the gap between expected and actual appointment volume was decreasing. The general recovery trend from the beginning of April until the end of June was heading in the right direction but at the end of June and early July, the gap fluctuated significantly. This data suggests that spiking COVID-19 cases will lead to instability in the industry regardless of new government orders.
Approved Quotes for New Work
So, what does the data suggest that you can do to speed up your company’s recovery? For that, we look to quote approval rates for over 194,000 service, maintenance, and repair quotes processed through ServiceTrade from February 2nd through July 25th, 2020. When we measure the number of ServiceTrade quotes approved in a week divided by the number of quotes submitted to customers in that same week, we can chart a normalized quote approval rate over time.
Figure 4. Quote Approval Rate February 2nd – July 25th, 2020
For all quotes, there was a dip in the normalized quote approval rate in March during the initial response to the pandemic. The normalized quote approval rate mostly returned to pre-pandemic levels in April and May. However, there is a noticeable difference between quotes above and below $5,000. Historically, quotes over $5,000 (gold line in Figure 4) are approved at a lower rate, but they are not recovering to pre-pandemic approval rates like quotes under $5,000 (purple line in Figure 4). Just like you, your customers are still recovering and likely sensitive to price.
This data suggests that you should keep sending repair quotes and focus on the smaller repairs that could prevent more costly breakdowns in the future to help replace your lost workload with planned repairs. Instead of relying on a handful of large quotes to meet your goals, you should systematically crank out smaller quotes under $5k to meet the market demand.
At ServiceTrade, we have a saying that Feelings Fool and Data Rules. As the recovery continues, mechanical service contractors must be agile to respond to the changing market conditions. The companies that respond based on data about what’s happening in their business and with their customers will make better decisions than those who have to rely on their gut feelings. We’ve focused here on appointment volume and quote approvals and if you’re not tracking these metrics every week, start now!
All of this data analysis was performed with business analytics reporting available to ServiceTrade customers. Email us at firstname.lastname@example.org 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.