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ServiceTitan Research Finds One Quarter of Commercial Service Contractors Are Implementing AI

New report reveals that Commercial Service providers remain resilient and agile in business operations despite recent revenue challenges

  • 66% of contractors consider digital transformation important to their operations
  • 24% of businesses have incorporated AI technology, with 80% of those businesses seeing performance improvement from automation
  • In 2022, repeat customers generated the highest volume of work (69%) and revenue (44%) for contractors
  • Only 30% of contractors saw an increase in revenue in 2022, and only 37% saw an increase in profits

ServiceTitan, a software platform built to power the trades, today released its first Commercial Service Report, providing insight into the challenges and opportunities facing the Commercial Services industry, as well as the strategies that businesses are employing by leveraging digital tools to stay competitive. These results highlight survey responses from more than 1,000 Commercial Service contractors around the U.S.

“Instead of looking to multiple disjointed software solutions, Commercial providers need tools that can adapt and grow with their needs,” said Vahe Kuzoyan, president and co-founder at ServiceTitan. “By embracing digital transformation, Commercial businesses can stay competitive by leveraging software to become more efficient and reduce costs, increase revenue, and provide a meaningfully better customer experience. As technology plays a larger role in business management, finding the right solution is more important than ever.”

Weathering the Storm from 2022

Macroeconomic events in 2022 created a challenging year for the industry, leaving Commercial Service contractors with a mixed outlook for 2023. According to the survey, 70% of contractors did not see an increase in revenue in 2022 — 31% of respondents reported no revenue change and 39% suffered a decrease in their revenue. With only 37% of contractors seeing an increase in margins, it’s no surprise there’s some uncertainty around expectations for 2023. 56% have neutral expectations for business in 2023, while 22% feel positive and 22% have negative views.

Commercial contractors cited a variety of risks impacting the sector; from economic recession (59%) and labor shortages (52%), to growing competition (18%) and lagging digital transformation (18%). Persistent supply chain issues still present challenges in securing materials, with 65% of respondents saying lead times for equipment have increased, and 52% reporting that material lead times for some items have increased anywhere from one week to more than two months. In terms of costs, most contractors (66%) stated that material prices have stabilized or decreased, while pricing for equipment increased (73%). As the delay in the “return to office” continues to reduce building maintenance needs, 53% of contractors have experienced an increase in cancellations or holds for their service agreements.

Focusing business goals around the customer

Even with new and continued challenges for the sector, contractors remain resilient by focusing activities on top revenue drivers like maintaining their existing customer base. The survey found that repeat customers generated the highest volume of work (69%) and revenue (44%) for Commercial contractors during this economic downturn, versus other ways of finding new customers like marketing and SEO or facilities and property management solutions. In response to this trend, owners are focusing business goals on customer retention (49%) and revenue growth (46%), whilst also putting emphasis on increasing margins (38%) and modernizing the customer experience (34%).

AI presents an opportunity for growth

The industry continues to explore artificial intelligence (AI) as a solution to streamline operations, maximize profit, and enhance the customer experience by providing time-saving tools that boost human talent. Early adopters of AI will have a competitive advantage, helping business leaders make better decisions based on AI predictions. 24% of businesses surveyed have already incorporated AI into their processes, with 80% of those businesses experiencing performance improvements from automation. Respondents see AI having an impact on a variety of Commercial use cases such as call booking (40%), invoicing (38%), dispatching (32%), and customer experience (27%).

"Finding an all-in-one software solution has eased the burden of tedious office tasks, and allowed us to focus more on our customers and business growth," said Gary Cosmer, Partner, President & CEO of Lovett Services, a Commercial Services provider in Portland, Oregon. "For us, ServiceTitan continues to be the best solution on the market with tools like Titan Intelligence, which uses AI to deliver valuable data-driven insights and maximize efficiencies. We went from doing $16 million in revenue in 2021, to just under $20 million in 2022, and now are on track for $30 million in 2023."

Technology is a vital tool to stay ahead of a rapidly evolving economy and competitive landscape, and the majority of contractors surveyed (66%) see digital transformation as a critical component of their operations. However, many of the businesses surveyed (59%) use more than four distinct software solutions to manage their operations, which could contribute to application overload or redundant software. This may be the reason why 16% of contractors surveyed still hesitate to adopt any technology whatsoever.

To view the full findings and key takeaways, download ServiceTitan’s Commercial Service Report here.

About the research

The survey was conducted on behalf of ServiceTitan by Thrive Analytics, an independent third-party research provider and a leading digital marketing research firm, polling more than 1,000 Commercial Service contractors representing a variety of geographical regions, business growth stages, and revenue levels. For the purposes of this survey, a “commercial service contractor” is defined as any business generating 75% or more of their revenue from commercial services. This research is for informational purposes only and ServiceTitan provides no assurances (express or implied) with respect to the accuracy of the survey data.

About ServiceTitan

ServiceTitan is a cloud-based software platform built to power trades businesses. The company’s end-to-end solution gives contractors the tools they need to run and grow their business, manage their back office, and provide a stellar customer experience. By bringing an integrated SaaS platform to an industry historically underserved by technology, ServiceTitan is equipping tradespeople with the technology they need to keep the world running. ServiceTitan is backed by world-class investors including Battery Ventures, Bessemer Venture Partners, ICONIQ Growth, Index Ventures, Sequoia Capital, Thoma Bravo, Tiger Global Management, TPG, and T. Rowe Price.

© 2023 ServiceTitan, Inc. All rights reserved. ServiceTitan, the ServiceTitan logo, and all ServiceTitan product and service names mentioned herein are registered trademarks or unregistered trademarks of ServiceTitan, Inc. in the United States and other countries. Other brand names and marks mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).

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