The Commercial Customer

But as property owners and managers seek to simplify their complex work managing multiple properties across broad areas, a new type of service company has entered the industry. Termed National Service Providers (NSP), these companies provide virtually any array of services a property manager might need, from HVAC to plumbing and parking lot maintenance. These NSPs provide this service through a stable of contractors under contract. The NSP contracts with a company that owns or manages properties, then finds contractors among its members to perform the work.

From the contractor's standpoint, especially for the contractor who is smaller or who is less inclined to brand or otherwise market his company, the NSPs provide access to work the contractor might otherwise be unable to get. The NSP becomes a sales arm of the contractor, securing the job while the contractor does the work, receiving an agreed-upon fee.

In some instances there have been complaints of NSPs, and the system is often criticized for low-ball pricing, lack of attention to quality on the job, and slow payment to contractors. But that is not necessarily the case in all NSP/contractor relationships, and in certain markets the use of NSPs has provided work and cash flow for contractors who otherwise might not have gotten it.

Seeking More Than Price
Inevitably in these situations price plays an important role. National companies are centralizing their buying decisions partly to streamline their own operations (and better control their own costs) but also because they figure they can get a better price by providing access to work on properties throughout a state, region, or even the entire country.

But these national companies also are looking for service, quality, responsiveness, reliability, and ease of operation. By working with one contractor (or perhaps several) across the country these centralized buyers reduce the number of bidders, and simplify their work.

So the contractor who can service multiple properties and offer a variety of services for those properties offers an added value - and the sales volume resulting from dozens or more properties nationwide might make it reasonable for the bidding contractor to seek a little less per job. In many cases this has turned into a win-win situation for the bidding contractor and his national account.

Stokes says these and other types of contractor networks are valuable if they can produce a consistent, positive experience for the customer. "That's what quality chains do -promise quality and consistency, then back it up with a guarantee; think Hampton Inn. They also can encourage best practices and make everyone better," Stokes says. "Having said that, consumers are not as loyal to a network by itself. The network has to provide value.

"Contractors that provide service on a nationwide basis are both needed and vulnerable," Stokes says. "Companies continue to 'right size,' meaning property managers have less time to consult with multiple partners. Many are comfortable dealing with national providers and/or general contractors who can meet all their needs, even if that convenience comes at a premium. But for all their positives, these providers can be vulnerable in that smaller firms who make their way into larger chains on a regional basis can be perceived as the better value choice especially when 'Buy Local' is important."

Contractor Diversification
This approach to nationalizing services has inevitably led contractors to diversify their services. It does a centralized buyer little good as he seeks to streamline pavement maintenance for 30 properties in New Mexico if he still has to work with a sealcoating specialist, a paving specialist, and a pavement marking specialist. True, it does cut down on the number of contracts overall (if, for example, each of those 30 properties was working with specialists for each service), but the real advantage to a property manager buyer is if he can find a contractor who handles all those pavement maintenance services - and maybe a few more.

And this applies on the local level as well. Don't mistake the rush to contractors servicing national accounts to mean that there's no more local business. Quite the contrary. That's one area that likely hasn't changed that much from 25 years ago. Contractors who want to work locally, and only locally, can find more than enough pavement out there to keep them busy and make them profitable.