Industry Analysis

The Home Services Industry

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We were able to carefully curate and provide the information revolving around key players, current trends, market drivers, and constraints in the United States’ home services industry below.

An Overview of the US Home Services Industry

  • The home services industry provides residential homes with intangible assets in terms of services such as repairs and maintenance, installations, plumbing, and home improvement among others. As a result, as the services that can be provided by the home services industry increases, so does the market size. The increase in the adoption of technology is also one of the major factors contributing to the growth of the industry.
  • According to a recent report by the HomeAdvisor, while it is difficult to estimate the exact market size of the US home services industry, it is estimated to be generating approximately $506 billion in direct spending and is employing around 5 million service professionals.
  • Out of the $506 billion, $420.8 billion comes from home improvement and renovation spending while $61.9 billion comes from home maintenance spending and $23.3 billion from home emergency spending.

US home services industry market share

  • A report by Research and Markets stated that home service companies in the United States operate in two modes; online and offline modes. Additionally, when dealing with consumers, the country’s home service industry employs various models such as the commission model, accepted lead model, lead-based model, and homeowner subscription among others.
  • According to Verified Market Research, the offline home service mode accounted for the largest market share in 2018 and is expected to grow at a CAGR of 33.4% by 2026. However, when compared to the online mode, offline home services companies are not able to offer clients two different services, thus giving a chance for the online mode to catch up.

Online and Offline Modes

  • In addition to the offline and online modes, the US home services industry is also segmented according to services offered. The segments include;

HVACSourcePlumbingElectriciansPest Control

Home Services Industry Market Trends

  • Several credible sources such as Verified Market Research, GlobeNewswire, and Business Wire named the spike in M&A activity as one of the major market trends in the US home services industry.
  • Companies operating in the home services industry are jumping on the M&A train to broaden the services they offer, as well as to gain a wider customer base and increase their market share. Additionally, some of the major companies in the industry also use or view mergers and partnerships as key development strategies.
  • Some of the notable M&A activities in the industry include Home Depot acquiring The Company Store, IAC’s HomeAdvisor partnering with Angie’s List, and Househappy partnering with GruntWorks.
  • In the case of Home Depot acquiring The Company Store, Home Depot saw an opportunity to appeal and attract consumers who tend to shop at Bed, Bath & Beyond because “The Company Store had great online sales success and industry-leading capabilities in resourcing high-quality products in bedding, bath, and related categories.”
  • Craig Menear of Home Depot said the acquisition deal included “product development and sourcing capabilities to help us (Home Depot) expand our online decor business into broader categories across the entire home.”
  • Another major market trend in the US home services industry is developing technology. When asked how they use technology to run their businesses, 70% of professionals in the industry stated that they use it to create and send invoices, 63% said they use it to create and send quotes, and a further 63% said they use it to schedule jobs in the calendars.

Developing Technology

  • However, other than helping with administrative tasks, businesses in the home services industry are now using technology to appeal to their customers by looking more professional. It is expected that more companies operating in this industry will implement customer-facing technology in the years to come.
  • For instance, a recent article by NIR Plumbing stated that “consumers today use technology to control everything from their smartphones, from regulating their home’s indoor air temperature to creating a grocery list based on their smart refrigerator’s notifications” and it is because of this that plumbers are now relying more on developing technology to become more efficient and attract customers.
  • Chris Senger of Mow Town Edmonton said, “We can have a new customer completely set up in our system before we are off the phone with them. Customers have been impressed by this because the organization on our side translates to assurance for them that we are professionals.”
  • Henry Sanchez of Valor Plumbing also said, “When somebody sees automated texts when you’re on the way, it looks like you’re running a serious operation, even if you’re running out of your home. We’ve had customers comment on that, especially the younger ones. The more professional you appear, the more people will be inclined to want to use your service and want to refer you.”
  • The present generation is big on technology and the internet and also constitutes the largest consumers of online on-demand home services. The fact that the consumers in this generation have busy lifestyles and prefer services right on demand makes online on-demand home services the future of the country’s home services industry.
  • According to a report by the New York Times, the US online on-demand home services sector is currently worth $600 billion and is expected to grow at a CAGR of 49% by 2021.
  • Yelo stated that on-demand home services can include “handyman on-demand, cleaning service app, chores app, home maintenance services, and on-demand cleaning services.”
  • Craig Smith of ANGI Homeservices said that the convenience of on-demand services is crossing over into the home services industry because “people wonder, can I do that if I want to schedule and book an estimate for a remodel or schedule somebody to clean my gutters? And they’re able to find that experience through HomeAdvisor, Handy, and Angie’s List.”

Home Services Industry Growth Drivers

  • A recent article by Forbes stated that “marketing is about connecting the right customers to the right product” and is one of the key drivers of any business. In addition to engaging and informing customers, marketing also helps businesses to boost their sales as well as build and/or maintain their reputations.
  • According to Marketing Week, amid the pandemic, the overall US companies’ marketing budgets increased to 12.6% in May from 11.3% in January, setting a record in efforts to retain customers and build brand value.
  • Seeing how important marketing is to businesses, it is not surprising that sources such as Verified Market Research and GlobeNewswire named increased marketing by home services platforms as one of the major driving factors in the country’s home services industry.
  • According to Statista, the US is “one of the leading countries in the world with respect to the adoption of smartphone technology.” As of 2018, 69.6% of the country’s population was using a smartphone, a figure that is projected to reach 72.7% by 2021.
  • On the other hand, the US had around 284 million internet users in 2020 and this figure is projected to grow to 296.7 million by 2025.
  • According to Verified Market Research, the increase in adoption of smartphones as well as the rise in internet penetration have in turn boosted the growth of the US home services industry as companies are able to effectively communicate with customers and advertise products.

Home Services Industry Constraints

  • When asked how and where they get most of their clients, 75% of home services entrepreneurs revealed that they get most of their new customers through word of mouth.

Word-of-Mouth

  • For some time now, referrals and personal recommendations have been one of the ways that have enabled businesses operating in the home services to build strong and loyal customer bases. However, the worth of word-of-mouth has been diminishing over time and is “no longer king in terms of driving leads and referrals.”
  • Craig Smith of ANGI Homeservices said, “more and more homeowners are turning to digital mediums to find a reliable pro. The thing they like about that experience is that there’s trust through the screenings and ratings.”
  • Smith also stated that with companies such as Uber and OpenTable having set the expectation for on-demand scheduling, more and more homeowners are turning away from word-of-mouth and are looking for more convenient ways to book their home services. Locus.sh further revealed that with the on-demand home service market experiencing growth especially amid the pandemic, around “46% of US consumers prefer to schedule appointments via email, an online platform, or a mobile app, but only 38% of home service SMEs are offering digital self-scheduling.”

Digital Sel-Scheduling

Hiring, Scheduling, and Attracting New Clients Obstacles

  • Stanley Genadek, a landscaping and construction expert, said that the difference comes from the fact that “those who are in the non-tech stage are in the infancy of their business, they feel so confused over everything that just getting their next customer is their biggest concern. They haven’t had the challenge yet of trying to actually hire their very first person.
  • When asked about efficient scheduling, Ryaan Tuttle of Best Handyman Boston said, “I’m not surprised that scheduling is still an issue. I think we can tack that up to most small business owners being too busy, understaffed, or having fear of technology. With all of today’s simple, intuitive apps, software and smart notebooks, it should not be that hard to utilize something that works.”
GLENN TREVOR
Glenn is the Lead Operations Research Analyst at Simple Manifestation with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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