One startling statistic from a ServiceTitan survey pointed out the need for commercial contractors looking to grow and expand their reach to embrace more technology.
A recent webinar about the future of commercial contracting emphasized what might not be a revolutionary concept, given the impact of technology on day-to-day life. Still, it’s an important one.
Be it via a CRM software like ServiceTitan or the applications provided within the cloud-based software for the trades, technology can solve some of the significant challenges in the commercial contracting space. The webinar, held by the Mechanical Contractors Association of America (MCAA), highlighted how ServiceTitan’s efficiencies help, and how its partnership with Convex, which provides property intelligence to ServiceTitan users, can lead to warm leads.
The reason this matters? More than 70% of commercial contractors did not increase revenue in 2023, and 64% did not increase their profit margins, according to a survey of 1,500 contracting businesses conducted by ServiceTitan.
Those numbers made the people at ServiceTitan sit up and take notice.
“I think we all live in a world where sometimes we have some of those unprofitable contracts or customers, and so sometimes you don't necessarily want to grow revenue in that segment,” Alex Kablanian, General Manager for Commercial Construction at ServiceTitan, said on the webinar. “But seeing the 64% not increasing profit margins was very, very surprising, especially in a year where construction backlogs were still quite high and commercial demand was coming back, coming out of COVID.”
ServiceTitan conducts the survey of varied contractors annually, and it includes businesses that use ServiceTitan and businesses that don’t. The aim is to help understand the challenges contracting businesses face in the here and now.
Key insights for commercial contractors
During the webinar, Kablanian listed several key insights and trends gleaned from the survey. Among them:
That 71% of commercial contractors did not increase revenue, obviously not a trend anyone in the commercial contracting business wants to see.
Kablanian called the fact that 64% did not increase profit margins “the most troublesome” insight of the survey.
Almost half—43%—want to change their approach to winning new business. “Specifically, investing more in sales tactics, marketing tactics,” Kablanian said, adding he sees increased growth in individual businesses adding or contemplating adding an inside sales team.
Surprisingly, 70% do not use a CRM like ServiceTitan. “So a lot of folks want to invest more, but are trying to figure out how technology can help them deploy that investment in the most effective way possible to have high ROI on all (sales and marketing) spend as they look for new business,” Kablanian said.
Finally, three-quarters of those who responded said that less than 25% of revenue comes from preventive maintenance agreements. “I don't think I have to spend much time preaching to this audience about how valuable those agreements are in terms of generating pull-through work and general stability around revenue,” Kablanian said. “But what was interesting from our perspective at Service Titan and Convex is understanding what we can do to help that number actually increase, because we see that as a high margin lead flow for your business for feature pull-through work.”
Kablanian said ServiceTitan is built to support new construction, and service once construction is completed.
“We are seeing that in order to actually profitably grow your business, this interplay of what you do when you finish a construction project in terms of pivoting it into service work and vice versa is very, very critical to actually changing some of the trends from a numbers perspective,” Kablanian said, “in terms of getting more commercial contractors growing their revenue and doing so in a profitable way.”
He added that deploying sales and marketing money to commercial service opportunities helps bring in more pull-through work on the construction side. Bringing the initial build of a project to a profitable service agreement to ongoing service and repairs should drive revenue and profit.
“We see that being sort of the holy grail of how can we orient technology to help you do the things that you want to do in your business in terms of growing revenue and doing so profitably,” Kablanian said.
Bringing all those activities under the umbrella of a single software makes for a consistent approach, and allows users to take best advantage of the platform and use it in a way that is best for each business.
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The Convex difference
That’s a big reason ServiceTitan partnered with Convex in the spring of 2024. Founded in 2017, Convex was built to modernize the commercial services industry with data-driven solutions that increase revenue for contractors by improving their go-to-market strategies and execution.
“You can think about (Convex) as a sales and marketing platform designed for and by mechanical contractors,” Convex co-founder and CEO Charlie Warren said on the webinar.
Convex provides property intelligence to ServiceTitan users. It identifies commercial properties that meet criteria set by the user within a geographic area. It even provides the name of the decision-maker for the business, and whether a business has been searching for specific services.
Warren cited an example as he demonstrated Convex during the webinar.
“Let me just look up health care services in California with roles like facilities management, operations, source and procurement, apply those,” he said. “I'm going to skip job title and I can get a large list of all these different types of people. And you can see facilities coordinators. Again, just another way to go to market for different types of opportunities.”
Convex turns the old concept of cold calls into warm leads.
“We have tried to pre-populate a CRM with all the third-party data you would need as a mechanical contractor to go to market,” Warren said. “And why does this matter? It allows us to do more with less, drive more of the actual recurring revenue growth amongst our customers, and … actually make individual salespeople—be they account managers, project salespeople, preventative maintenance salespeople—much more productive.”
