Understanding your customers is essential to growing your business. Although many business owners think they understand who their customers are, many have misconceived ideas because of wrong or dated information.
EnerBank USA set out to discover how much contractors actually knew about the people they work for (homeowners), and the results were surprising. Look over what we found, or take the quiz for yourself and find out where you stand.
1. You Might Not Know as Much as You Think
This quiz, although it asked simple questions about the demographics and the processes of average home improvement customers, proved difficult for many quiz takers.
The average score was 34 percent, which means the average quiz taker only got 2.7 questions correct out of eight. Although the questions in the quiz were quite specific, they also should become common knowledge in your data repertoire.
The low numbers for correct answers doesn’t mean those who took the quiz aren’t experts in their industry, but it does mean that their information isn’t up-to-date. The home improvement industry is shifting, and this quiz points out a few of those changes.
2. The Majority of Homeowners Are Seniors
The question that quiz takers missed most was the question asking about which age group had the most homeowners in their age bracket. Only 15 percent of quiz takers got this question correct.
Almost half of the quiz takers guessed age group 55 through 64. Although this answer was close, it wasn’t correct. In fact, the age group with the most homeowners was 65 and up, according to the 2014 data from Housing Vacancy Survey (HVS).
Those who missed the question were perhaps more focused on the future than the present. One of the largest generations ever, the baby boomers, are aging, and they make up the majority of homeowners. Homeowners over age 65 accounted for just 13 percent of the market in 2005, but jumped 10 percent in only eight years.
That said, the next generation is even larger than them, the millennials, are growing into the age group with the most buying power, and they aren’t just buying homes for themselves: they’re buying rental properties.
3. The Rise of the Rentals
The second most missed question on the quiz asked how much money the rental and repair market earned in 2013. The majority of quiz takers guessed it was $46 billion, but the correct answer was a whopping $54 billion.
Millennials have been late to the game in terms of homeownership. For a while, many assumed that millennials would crash the housing market because they weren’t running out and buying homes as young adults.
In fact, millennials are expected to eventually engage in the home improvement market just as much as previous generations. But their interest is in renting until then, as well as managing rental properties to house future generations, is piqued. Rental improvement and repair niches are smart markets in which to get involved.
4. Home Improvement Projects Are Going Green
The market’s need for environmentally-friendly home improvement projects is steadily growing, but only 28 percent of quiz takers realized that full-service remodeling firms were making 30 percent of their revenue off green projects.
Additionally, around 20 percent of homeowners reported that at least one of their home improvement projects between 2012 and 2013 were for energy-efficient purposes.
As millennials will grow into the majority of homeowners, their prioritizing green efforts will become more apparent in the home improvement industry. Cutting-edge contractors and home remodeling businesses should take note of this and capitalize on it.
5. Homeowners Turn to Financing
While a bank or credit union was the right answer to our question, it may not be the right answer for your customer. Historically, homeowners have turned to traditional banks or credit unions to fund their remodeling projects. These equity-based loans limit the amount and time frame that money can be borrowed. They also require lengthy application and approval processes, and frequently involve out-of-pocket costs.
Unsecured installment financing through a reputable bank is a viable alternative to equity-based financing for a variety of reasons:
By offering financing to your customers through a reputable bank, you boost your bottom line by giving customers the buying power to achieve their home improvement dreams.
To be a leader in any industry, it’s important to understand your customers and their needs. Contractors that understand the needs of the market are better poised to capitalize on it and grow.