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State of Remodeling: Home Improvement Stats You Need to Know for 2021
UPDATED: March 22, 2021
By all accounts, 2021 thus far has been a generally positive one for the industry. In fact, most home improvement businesses have had trouble keeping up with lead flow, booking out projects months in advance.
Will this trend continue? What do homeowners have planned? What type of advertising works best?
Preparation is built on precedent, so we tabbed five of our partners to provide statistics and a clear-cut prediction for what to expect in this new year.
In this article, I'll go over some of those stats that we found most interesting.
Table of Contents
- Messaging Trends
- Sales Trends
- Advertising Trends
- Lead Acquisition Trends
- Appointment Trends
- Financing Trends
Messaging Trends (Hatch)
With higher internet activity this year, more homeowners went online to research local remodeling pros. Homeowners went from requesting 2-3 quotes in 2019, to requesting 4-6 on average. This underscores the importance of being first to every new lead.
Research shows that if you reach out to new leads over text in less than 5 minutes, your likelihood of closing the deal increases 21x. Companies who built processes around “speed to lead” this year are enjoying the fruits of increased demand.
But the increased demand came at a cost for many remodelers in 2020: busy reps did little to no follow-up with leads that didn’t “one-call close”, leaving thousands on the kitchen table this past year. Incorporating consistent, multi-touch follow-up over text, email, and phone increased close rates by 8.5% on average.
Messaging Stats To Know For 2021
- 78% of jobs go to the first contractor to get to the lead.
- 98% of text messages are opened and read.
- 79% of remodelers have trouble following up with unsold leads.
- Home improvement companies saw an 8.5% increase in close rate with automated follow-up to unsold leads.
Our Messaging Prediction For 2021
Many of our customers are booking remodeling jobs out through mid-2021 and beyond, so that means more homeowners will be living in the “Dark Period” next year - a.k.a. the time between sale and install.
The longer the “Dark Period”, the higher likelihood your customer will back out of the project.
The trick to avoiding job cancellations during this critical time is constant communication and updates. From product delivery notifications, to helpful information on what they purchased, you can dramatically decrease your risk of cancellations.
Also, with millennials being the fastest growing homeowner segment, we expect a higher percentage of homeowners to prefer texting as their primary method of communication with contractors.
Sales Trends (improveit 360)
Our industry thrived and is still thriving heading into the end of the year. Most of our customers have done more than just defy the odds, they’ve had record breaking quarters, quarter after quarter.
Homeowners realized quickly going into this global pandemic that they finally have time to envision the possibilities, or maybe just got sick of staring at an old bathroom or kitchen.
Had that not been the case, we might be in a different situation but there’s no doubt our industry has adapted and overcome more than we thought possible this year.
Sales Stats to Know For 2021
- 130% increase in month-over-month sales from March to May.
- $12,000 average job size in 2020.
- 30% increase in close rate for leads from online advertising vs. 2019.
- 59% average close rate over the entirety of 2020.
- 4% increase in close rate in 2020 vs. 2019.
Our Sales Prediction For 2021
Many homeowners brought planned projects to life this year, but we don’t think that’s slowing down in 2021.
Homes have become the primary place to spend time with friends and family, work, and learn remotely, and homeowners will continue to make improvements to make their residences more enjoyable, comfortable, and safer.
For this reason, our customers need to prepare themselves for a surge in growth next year.
Advertising Trends (Webrunner)
We took a closer look at a series of home improvement companies spread across the US, accounting for over 100K clicks at an average cost per click (CPC) of $16.09 in 2020.
Compared to 2019, CPC’s increased by 14% (from $14.16), 1% less than the 15% increase we saw back in 2018.
Thanks to advancements made in machine learning which leverage data to make smarter decisions around bidding and conversion optimization, we were able to bump conversions up by 12% (from 7.72% to 8.64%).
So even though click costs went up across the board, lead costs saw a negligible increase of only 1.39%, resulting in an average lead cost of $186.
Advertising Stats to Know For 2021
- $16.09 average cost-per-click for home improvement ads in 2020.
- $186 average cost per lead.
- 1.4% increase in cost per lead in 2020 vs. 2019.
- 8.64% average conversion rate from ads.
- 65% of ad clicks coming from mobile.
- 12% increase in conversion rate from ads in 2020 vs. 2019.
Our Advertising Prediction For 2021
Expect your click costs to go up year over year. But that doesn’t mean getting customers has to be a whole lot more expensive.
It just means that from a marketing perspective, you’ll need to feed platforms like Google with as much relevant data as possible.
Without it, your lead volume, and more importantly, lead quality is in jeopardy.
We also expect to see Google continue to limit data available to marketers forcing us to remain flexible and ready for change.
Diversification is no longer an option. One out of every two ad dollars is now being invested into channels outside of search. Companies are investing heavily into developing engaging content and creatives that tell their story, entertain their audience, and drive leads altogether.
What’s more, 65% of all clicks are going to mobile. If you’re not equipped to deliver unrivaled mobile customer experiences, reconsider spending money online. Mobile friendly ads and landing pages are a definite must.
Lead Acquisition Trends (Modernize)
Winter usually brings a sharp change to homeowners’ project timelines. Cold, unpredictable weather impacts a percentage of projects— but more often than not, homeowners are simply distracted and traveling for the holidays.
But this year, COVID-19 has disrupted every sector —and most aspects— of our lives. The travel industry has suffered catastrophic damages during this somber time of social distancing.
And this winter season, homeowners will be home for the holidays.
Our surveys reveal how homeowners plan to navigate this holiday season, including travel, project plans, and how much they plan to invest in their homes.
Lead Acqusition Stats to Know For 2021
- 76% of homeowners aren't planning on traveling in 2021.
- 55% of homeowners plan to begin or continue projects this winter.
- 22% plan to spend between $5k and $15k on projects.
- 39% plan to pay for their project with cash.
Our Lead Acquisition Prediction For 2021
Here's what we know for sure: A July U.S. Census Bureau report revealed year-over-year sales have increased for home centers, hardware stores, garden centers, and building material suppliers.
The home improvement sector has been one of the few industries that has survived the catastrophic impact of COVID-19 and is expected to see more growth through 2021. It is worth noting consumers’ habits and preferences continue to adapt during the pandemic.
An April 2020 Accenture report highlighted how consumers now seek to support local businesses in their community.
Appointments Trends (Ingage)
2020 started off much like any other year for in-home sales. Homeowners booked their appointments then sales reps would come to their house to spend a couple of hours selling the job.
Then everything changed.
When the pandemic hit, we saw a drastic drop off in sales presentations. But, the industry soon began to adapt. Sales leaders and business owners recognized the need for new sales strategies to meet the customer anywhere – virtually, on the curb, in the garage, socially distanced across a kitchen table.
The options are limitless. And the results are clear: this quick pivot led to record-breaking quarters of growth.
Appointment Stats to Know For 2021
- 61% of home improvement companies use some sort of digital presentation tool, like Google Slides.
- 55% of sales reps take a laptop or tablet with them into meetings with homeowners.
Our Appointment Prediction For 2021
All indicators show that 2021 will be another record breaking year for the home improvement industry. You are going to need to meet that demand while achieving your high customer service standards.
Now is the time to put in place digital tools. Give your customers the sales experience they expect. Grow your sales force more efficiently with a repeatable, scalable, clear sales process.
Give your team the confidence to close more deals. Put together a winning sales process with technology to meet the moment– and more importantly– your customers in 2021.
Finance Trends (Hearth)
When COVID hit, and the markets felt an initial shock. Traditional home improvement financing providers either lost their funding sources and went out of business or significantly tightened up both their approval and underwriting requirements.
This resulted in contractors being dropped if they were too small or unable to approve their homeowners for financing.
It became clear that a stable financing source was only possible by leveraging a platform lender or juggling multiple traditional lenders.
In addition, the market for financing exploded. Not only were people stuck at home, staring at parts of their home they wanted to fix, but they had additional income, and wanted to hold onto cash in case of emergency. It led to financing becoming an even greater part of the sale and conversation.
Lastly, we are finding more and more businesses growing tired of high and frustrating dealer fees. Both anecdotally and with the addition of nearly 1000 unique businesses per month, dealer-fee-free and direct to consumer home improvement financing is becoming the norm.
Financing Stats to Know For 2021
- 75% of homeowners want to finance at least some part of their next project.
- 4x increase in finance applications over 2020.
- 30% decrease in customer credit utilization.
Our Appointment Prediction For 2021
We expect to see more of these same trends continue. COVID isn’t going anywhere, meaning people will still be stuck at home, analyzing their home for the things they dislike.
With expenses staying low, the homeowner's interest in doing home improvement will also continue. However, they'll also continue to want to hold onto their cash due to the uncertain economic conditions and transitioning political climate.
Homeowners are growing more accustomed to a digital buying experience. This means that offering digital estimates, multiple financing options, and even digital payment options, are going to become even more paramount.
Homeowners will also continue to be more and more informed, conducting significant research prior to securing appointments.
This more-researched buyer requires greater price transparency and their tolerance for absorbing dealer fees, which is standard in today's home improvement world, will end. Thus, dealer-fee-free financing options will become a necessity.
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