Professional contractors possess a unique set of characteristics, needs and preferences when it comes to purchasing building products and materials. They also bring more knowledge, experience and insight to the table than the average DIY homeowner, which influences what they’re seeking in the shopping experience.
The response to Covid caused some shifts in behaviors and attitudes in terms of how loyal contractors are to specific brands or suppliers, but we’re seeing a stabilization as we head into the new year. That being said, contractors continue to be price sensitive, while maintaining high expectations for reliability, availability, and quality.
In order to help your brand perform better in 2024, HIRI studied what drives contractor loyalty to both products and suppliers. You can use this data to identify areas where they’re currently not satisfied and adjust your own business strategies to capitalize on those opportunities.
Not all professional contractors are the same. They have different attitudes and behaviors based on their needs and preferences, as well as those of their customers. Their specific trade, as well as their size and annual revenue, influence their decision-making process and various shopping behaviors.
For example, generalists and specialists have different budgeting goals and annual project volumes, as well as slightly different priorities when it comes to selecting brands and suppliers.
According to HIRI’s 2023 Contractor Brand and Supplier Loyalty research, general contracting firms tend to have higher yearly revenue, approximately two-thirds of which comes from projects priced under $250,000 and one-third from larger projects. Professional specialists, on the other hand, rely almost primarily on small- and medium-sized projects, $250,000 or less, and complete more overall projects during the year than their generalist counterparts in order to increase revenue.
When it comes to the type of work contractors do, approximately two-thirds of projects for both generalists and specialists are focused on remodels and repairs, while about one third involve new construction. About three-fourths of projects are residential and one-fourth commercial.
While each home improvement pro differs slightly based on a variety of factors, certain patterns in loyalty and behavior have emerged.
These are the current trends influencing customer loyalty that we’re observing:
According to HIRI’s Contractor Brand and Supplier Loyalty survey, conducted in the fourth quarter of 2023, both supplier and brand loyalty are in the 30-percent range for contractors who consider themselves “extremely loyal.” This is a return to pre-covid levels for brand loyalty, which dropped significantly during 2020 and 2021.
Unsurprisingly, product quality is a top driver for brand loyalty. According to similar findings by The Farnsworth Group, nearly all pros are comfortable sticking with brands they tried in 2020 and 2021 because they were satisfied with the quality of the product.
This is why product pricing has been a top driver of both brand loyalty and brand switching in 2023, and is expected to be a strong driver in 2024. One in seven contractors say they “strongly agree” they would switch brands or suppliers to get a better price.
For 53% of contractors, reliability was the number one reason they would be willing to try a new brand or supplier. Further, pros involved in exterior trades are the most concerned with brand and supplier switching, while landscapers are the least concerned.
Generalists spend about 43 percent of their annual revenue on building materials and tools; for specialists, these items account for 41 percent of costs.
Throughout 2023, material availability was the most prevalent reason why future jobs were postponed or canceled by contractors. For example, in December 2023, it was listed as a factor for 34 percent of postponed or canceled projects, according to HIRI’s 2023 Monthly Home Improvement Tracker.
Material availability is also a big reason why contractors delay ongoing projects — or temporarily pause them. From January to December 2023, it was consistently noted as a contributing factor for about 39 percent to 51 percent of delayed projects.
This reality continues to drive contractors to switch suppliers and brands out of necessity to keep projects moving.
Price increases and inflation were a common occurrence in 2022, but now, heading into 2024, high prices are inevitability influencing the decision-making process and purchase behaviors of home improvement pros as product availability issues are less pressing.
In the fourth quarter of 2023, only 4 in 10 contractors reported that the price of building products and materials had no impact on them.
HIRI’s research shows that when prices do affect pros, they are more likely to purchase a cheaper brand or product. This was the case for a quarter of contractors in December of 2023.
Similar to brand loyalty, cost and quality are the more important drivers of supplier loyalty. In fact, pros are more likely to switch suppliers before they switch brands in order to get a better price.
When it comes to supplier loyalty, product availability is a driver for about 45 percent of contractors, compared to roughly 27 percent when it comes to brand loyalty. Contractors choose — and stick with — specific channels based in part on the ability of that supplier to have the products they want and need.
HIRI’s study also found out the exact % discount Pros stated they needed for it to feel worth it to try a new brand or supplier. Until that discount threshold is met, contractors will tend to remain loyal to known brands.
Almost 50 percent of contractors are currently part of at least one loyalty program with a supplier of building and construction products. This number rises to 63 percent of larger contractor firms, while only 39 percent of smaller firms are involved in a loyalty program. These numbers show that the structure of current loyalty programs are not necessarily providing smaller contractor firms with enough incentive to participate.
Some of the top incentives for home improvement pros to stay loyal to a specific Contractor Loyalty Program include:
For contractors, physical stores and suppliers — from national big-box retailers like Home Depot and Lowe’s to regional retailers and distributors — are still by far the most significant channel for purchasing building materials and supplies.
As of December 2023, 91 percent of professional contractors made a purchase in a physical retail store or from a physical supplier location. In contrast, only 29 percent made an online purchase to be delivered at home, while 25 percent made an online purchase to pick up in a store.
This underscores the stickiness of physical outlets to satisfy the multifaceted shopping behaviors of modern contractors. Across the board — from remodelers and finish contractors to mechanical, exterior and landscape contractors — pros seek to make in-store purchases at similar rates as before the response to Covid drove greater adoption of online channels.
So we know brick-and-mortar locations are important, but what would drive a contractor to switch suppliers? We have data on that too.
The main motivations behind channel selection for home improvement pros include the pursuit of better prices, enhanced customer service, and a more extensive product selection. Additionally, a majority of contractors are concerned with their shopping experience, such as convenience, variety, and the availability of resources like product and project literature and information.
According to HIRI’s Contractor Channel Study, having a wide variety of products and one-stop shopping are the two highest drivers behind channel selection, with about 90 percent of contractors describing them as “important” or “very important.” Other key drivers include sales reps who know the industry well; being treated as a value customer; the availability of product returns; on-time delivery; and a knowledge and understanding of needs.
It is for those reasons that some pros prefer to make purchases from specific dealers and distributors as opposed to big-box retailers.
Although big-box stores still see the highest shopping frequency among pro contractors, they’re not always meeting Pros’ expectations. In fact, specialty suppliers rate the highest when it comes to levels of satisfaction surrounding personal experiences; for contractors, these retailers excel when it comes to knowing the industry well, making sure sales help is available when needed, and understanding the unique needs of home improvement professionals.
On the other hand, Menards and The Home Depot score higher when it comes to the shopping experience, or factors like providing a wide variety of products and one-stop shopping; competitive prices; keeping products in stock; and easy and fast checkout.
Also important to note: While features like warranty claims, convenient product returns, and fast checkout used to be drivers of channel selection, those aspects of the customer experience are now considered minimum expectations among both generalists and specialist pros in the home improvement industry.
There are nuances in these findings depending on the product category and certain product categories have brands that resonate more with professionals. Based on HIRI findings, categories where specialists might have more insight into brand performance (like electrical/lighting) have a higher level of brand loyalty for certain products among specialists relative to generalists. Hand/power tools and roofing, siding, and insulation products have a higher average in terms of product and brand loyalty than building materials, hardware, and floor, wall, and ceiling finish products. Contractors are more particular about the products they choose when it comes to the former categories.
In a nuanced marketplace, manufacturers and retailers in the home improvement industry need to balance broad expectations with the specialized needs of pro customers. With a variety of factors influencing contractor loyalty, it is imperative to have the right data and insights to understand their decision-marketing process and shopping behaviors amid the current landscape.
That’s why the Home Improvement Research Institute was founded. What started in 1981 as a cooperative between six of the largest home improvement manufacturers and retailers to provide investor education has evolved into the leading market research organization for over one-hundred of the biggest names within the home improvement industry.
HIRI’s goal has always been to provide companies of all sizes with actionable resources ranging from raw data to digestible executive summaries to shape their business decisions.
When you join as a member of HIRI, you will be able to inform your business strategies using the latest home improvement market, customer, and channel insights from about 50 home improvement specific studies annually.