SVP Provides Diversification Strategy Tips and Tricks

Most building service contractors (BSCs) are familiar with the concept of diversification. It has the potential to bring in new clients and strengthen preexisting relationships. It can also serve as a safety net and make an operation flourish. Diversification can seem like a magical solution that takes a cleaning service to the next level.  

While this approach can be one of the strongest tools in the BSCs’ arsenal, it must be carefully considered. Making the decision to diversify services requires serious planning and investment in both time and money. From training staff or outsourcing labor to buying or renting equipment, introducing a new service offering doesn’t happen overnight. BSCs must have a deep understanding of their operation—its strengths and weaknesses—and know where innovation is possible.  

The benefits, however, make the work worthwhile. Diversifying keeps BSCs competitive in a growing industry, ensuring that an operation doesn’t remain stagnant. New services bring new clients, new streams of revenue, and new opportunities to grow. When done correctly, it makes for more efficient cleaning and economic boosts.  

Diversification can also protect businesses from risk during tough times. If clients pull back demand for one type of service during, say, a recession, those companies that feature various revenue streams through multiple service offerings have plenty of options to offset that loss. Maintaining a strong client portfolio also sets BSCs up for sustainable growth that doesn’t experience such hard hits from market fluctuations.  

But how does one expand into all these shiny (or not so shiny), new markets? While diversification sounds simple, implementing it can be daunting. From choosing which services to offer to figuring out new supplies and technology, diversifying is more than just adding a tab on a website. 

Sometimes it’s as simple as paying attention to current customers. Noticing that a facility has plenty of windows might be an opportunity to start offering window cleaning, for example. Or maybe the cleaning team noticed the parking lot or landscaping could use some TLC. Proposing new services to existing client programs is how most BSCs dabble in diversification.  

The benefit to the client is they continue working with a trusted partner, tackle a trouble area, and only get invoiced once. Meanwhile, it’s a new income stream for BSCs, while demonstrating good customer service by paying attention and adapting.  

To find out the basics of diversification, Contracting Profits spoke with Philippe D. Mack, Senior Vice President of Bee-Clean Building Maintenance, Winnipeg, Manitoba, Canada. Bee-Clean offers a variety of services beyond traditional cleaning tasks, including pressure washing, window cleaning, landscaping, snow removal, and parking lot maintenance. In this Q&A, Mack reflects on how Bee-Clean tackles diversification and offers some advice for BSCs looking to start moving into new markets.  

What is your strategy behind choosing which services to diversify?  

For us, it’s a balance between leveraging our team’s existing strengths and testing new markets with minimal risk. We prioritize services that naturally fit and complement our current offerings that we can self-perform.  

Leveraging our core competencies is key, using existing technical skills and our brand reputation to enter related fields. We listen attentively to our clients and analyze customer feedback, past requests, or untapped needs that our diversified service offerings can fill.  

Diversification insulates our business from industry-specific downturns or shifts in client needs—core elements of our risk mitigation strategy. 

Where does one start diversifying? What are some first steps you recommend or things to keep in mind?  

First, we ensure that our core business is financially healthy to fund new business ventures. Potential new services are then evaluated for attractiveness/profitability, cost-of-entry/profit erosion, and whether they create synergy with current service offerings.  

We typically launch new services on a limited basis. That allows us the ability to gauge responses and gather feedback before a full-scale rollout. It is crucial to identify if we have the financial, human, and technological capacity to support a new service without neglecting our core business. 

How do you market and promote diversified services to existing clients?  

We offer/upsell and cross-sell the new service as an upgrade or a relevant addition to our core service offerings. Promotion rolls out via personalized email, SMS campaigns (short message services, also known as direct marketing), desk drops, and more as clients' data is made readily available to us.  

We aim to incentivize early adoption via exclusive events, limited-time discounts, or volume rebates for current clients. 

Is it better to buy or rent equipment when starting out in a new market?  

Because of our size and scale, we typically do not rent or lease initially. Occasionally, we rent robotic equipment through the trial and testing phases until we reach expected outcomes and then make a longer-term investment.  

For smaller businesses, we recommend renting or leasing when starting out a new service offering. This will help preserve cash flow and avoid long-term commitment while assessing market demand. It also provides access to the latest technology without depreciation risks. Some companies might choose to utilize a hybrid or rental purchase option to test equipment before committing to a full purchase. 

How do you find labor for new services? Do you outsource or train current employees? 

We first determine if our current associates have the skills or "internal capacity" to handle the new service through training. Training current associates maintains cultural consistency and adherence to company protocols. That said, there may be the need, at times, to hire external resources if the new service requires expertise not present within the company. Our last resort is to outsource the work if the company lacks the expertise or wants to avoid the coordination costs of managing a larger internal team. 

How do you determine pricing?  

We typically price the work based on the key pain points the customer is trying to solve rather than just the cost of performing the work. Then, we perform the work to reflect the price and value proposition presented to the client to ensure it will generate a profit. 

Elisa Miller is an Assistant Editor for Contracting Profits, CleanLink.com, Facility Cleaning Decisions, and Sanitary Maintenance.