Changes in Contractor Loyalty Impacting Brand Performance in 2024

9 Ways Changes in Contractor Loyalty Will Impact Your Brand’s Performance in 2024

Jan 16, 2024

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.

What Characteristics Shape Pro Attitudes?

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. 

Contractors Type of Work

How will Key Drivers and Contractor Attitudes Impact Your Brand in 2024?

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:

1. Brand and Supplier Loyalty Among Pros Has Bounced Back to Pre-Covid Levels

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.

Contractor Brand and Supplier Shift Rates in 2023

2. Product Cost and Availability Continue to Challenge Contractors

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. 

Pro Home Improvement Monthly Tracker CTA Preview

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.

Biggest Challenges to Contractor Businesses in 2023

3. Contractor Firms are Still Price Sensitive in 2024

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. 

Contractor Reasons for Brand and Supplier Loyalty

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.

4. Pros will Switch Suppliers Based Cost — but Only at a Certain Discount

Top Reasons to Try a New Brand or Supplier

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.

5. Loyalty Programs are More Important for Large Contractor Firms

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:

  • Every­day dis­counts on prod­ucts they purchase
  • Dis­counts for their customers
  • Cash rebates
  • Reward points to a cred­it card rewards program

6. Brick-and-Mortar Stores Are Still The Main Channel Pros Use to Purchase Building Supplies

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. 

Contractor Building Material Purchase Channel Frequency in 2023

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.

7. Contractors are Looking for an Excellent Shopper Experience When Selecting Suppliers

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.

8. Big Box Stores Aren’t Always Meeting Contractors’ Expectations

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. 

9. Brand Loyalty is Not Equal Among Product Categories

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.

Addressing the Key Drivers of Channel and Product Selection and Loyalty

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.

Learn More About HIRI Research