Each year, the Consumer Federation of America (CFA), National Association of Consumer Agency Administrators (NACAA) and North American Consumer Protection Investigators (NACPI) collaborate on a research initiative to assess macro-level trends in consumer opinion throughout the United States. Over the past five years, the remodeling industry has consistently ranked as one of the most problematic industries based on the volume of consumer complaints it receives.
This statistic may not come as a shock to those of us who have owned or managed a home as well as those of us who have worked in the contracting industry. At some point or another, we have endured the pain associated with missed deadlines, escalating budgets or unsatisfactory results and felt that the system was somehow broken.
For many years, consumers had a limited array of options for finding a reliable home improvement contractor and sharing their opinion after the project was complete. This limitation has been eradicated by the plethora of communication channels accompanying the Digital Age.
With all the Web directories, review sites, referral services and social media sites, consumers have a seemingly unlimited array of options at their disposal. In fact, a new challenge has emerged: the dilemma of choice.
The underlying goal of this research initiative is to better understand how today’s consumer navigates the media ecosystem when hiring a home improvement contractor and establish benchmarks that can be used to detect trends moving forward.
Key findings included the following:
- Homeowners highly valued “personal referrals” when discovering and evaluating contractors.
- Highly dissatisfied consumers were more likely to use the Yellow Pages and Craigslist during the Discovery phase.
- During the Evaluation phase, client references, work samples and license information played a significant role in shaping the final hiring decision.
- Highly satisfied consumers more likely to compartmentalize the hiring process into distinct phases and more likely to prioritize different variables in each phase.
Which Services do Consumers Use to Find Contractors?
To better understand consumer usage of various contractor discovery channels, we asked, “What methods do you use when trying to find a home improvement contractor?” Respondents were provided with a list of eight options, based off responses we received during the in-depth interview phase of the research.
The average respondent made 2.3 selections and results were as follows:
Overwhelmingly, the most popular discovery method involved “asking someone I know” (categorized in the graph above as “personal referral”). After “personal referral,” The Better Business Bureau (BBB) ranked as the most frequently used consumer service (36%), ahead of pure play services like Angie’s List (16.7%) and ServiceMagic (10%). Google (30%) trumped the Yellow Pages (18.6%) by an almost 2-to-1 ratio.
To explore differences in the outcomes associated with different discovery methods, we asked respondents to characterize their overall level of satisfaction with home improvement contractors in the past year on a four-point scale. Responses were then filtered based on reported levels of satisfaction. In the following graph, we compare the discovery methods of highly satisfied consumers with those of highly dissatisfied consumers.
There were some discrepancies in the discovery methods of highly satisfied versus highly dissatisfied respondents. The most extreme case involved a positive association between high levels of dissatisfaction and usage of the Yellow Pages. It should be noted that we did not differentiate between the online and print versions of the Yellow Pages in the survey questionnaire.
Which Services do Consumers Trust When Evaluating Contractors?
To better understand how consumers valued the various discovery channels, we asked respondents to rank them in terms of “trust.” The responses were averaged and subtracted from the total number of options (eight) for presentation purposes.
There was some consistency between the channels that consumers “use” and “trust.” Of note was the discrepancy between “usage” and “trust” associated with Angie’s List, which can be at least partially explained based off the subscription-based nature of the service.
Responses were filtered and compared based on self-reported levels of overall satisfaction.
The discrepancies were relatively minor although satisfied respondents were slightly more likely to trust personal referrals and the BBB while highly dissatisfied respondents were slightly more likely to trust ServiceMagic and Yelp.
What Considerations Influence the Final Hiring Decision?
To better understand the attributes that influence the Evaluation process and ultimate Decision to hire (or not hire) a contractor, we asked respondents to evaluate a set of six attributes based on how impactful each was to the ultimate hiring decision. Half of the respondents were asked to rate the six attributes on a four-point scale.
Each attribute received a majority of “very important” or “important” designations although it is worth noting that “license status,” “work examples” and “client references” rated higher in the Evaluation phase than considerations that shaped consumer perspectives during the Discovery phase.
The second group was asked to rank the six attributes based on their degree of impact on the final hiring decision. Responses were averaged and subtracted from the total number of options (six) for presentation purposes.
The results from the ranking version of the question generally coincided with the results from the rating version of the question with the exception of feedback on the importance of “client references” (in the rating version of the question, “client references” received a lower score than “license status”).
Our interpretation of this discrepancy was that when respondents are asked to consider the importance of a contractor’s license status in isolation, they are likely to rank it first. When asked to evaluate its importance against other key variables, they are more likely to take it for granted and score more disparate variables (e.g. client references) higher.
Responses from the ranking version of the question were filtered and compared based on self-reported levels of overall satisfaction.
During the Evaluation phase leading up to the final Decision, highly satisfied customers were more likely to trust a different information collected directly from the contractor, including work samples, active licenses and client references.
Taken in combination with our earlier findings, our conclusion is that highly satisfied consumers are more likely to compartmentalize their evaluation into distinct phases. During the Discovery phase, they are more likely to focus on personal referrals and recommendations from the BBB and Angie’s List. When they shift to the Evaluation phase, they are more likely to focus on more specific considerations such as work samples, client references and license status.
Our most compelling takeaway was the conclusion that highly satisfied consumers are not only more likely to partition the evaluation process into distinct phases but also more likely to prioritize a different set of variables in each phase.
Unlike the decision to eat at a new restaurant, buy a new phone or even hire a new dentist (for a routine procedure), hiring a remodeling or construction contractor can have a profound impact on a consumer’s quality of life.
The consequences of their hiring decision can be both far-reaching and costly. This reality compels certain homeowners to expend a greater amount of time, energy and sometimes financial resources to ensure they make the right decision and the results substantiate their approach.
It should be noted that this blueprint does not guarantee a positive hiring experience; it only increases its likelihood. What’s more, inconsistent adoption of the blueprint has kept overall consumer dissatisfaction high in the industry at large.
If the industry is to evolve and rise out of the basement, more research is needed to better understand the nature of consumer / service provider interactions and more education is needed to help the general public adopt a hiring model that will maximize their chances of having a positive hiring experience.
To help design the methodology that would frame the research initiative, we conducted a series of in-depth interviews with a limited set (20) homeowners to better understand the manner in which they find and evaluate remodeling contractors.
The feedback suggested a three-phase model for consumer decision-making that consisted of several phases and suggested a level of sophistication that helped frame the research initiative.
In the Discovery phase, consumers use a blend of channels to create a pool of prospective options. The initial research suggested that consumers place varying levels of trust in the individual channels they used, which informed their ultimate hiring decision.
Once a homeowner has assembled a pool of options, they typically engage in an Evaluation process that involves the collection of more specific information from each of the candidates such as cost estimates and client references. During the Evaluation phase, some consumers will also perform additional research with authoritative third-parties such as the local license board or Better Business Bureau (BBB).
Once a homeowner has compiled the pertinent information needed, they will make a final hiring decision.
Once we had achieved a formative understanding of the consumer decision-making process, we designed, we designed and executed the quantitative piece of the research initiative, which will be the subject of the remainder of this article.
The quantitative research initiative targeted three specific research questions:
- What methods do consumers use to find contractors during the Discovery phase?
- Are there differences in how consumers value the various Discovery methods and if so, what are they?
- What are key considerations that influence the final hiring decision?
To address these questions, we conducted an independent survey of 571 homeowners. The sample was pulled from a population of approximately 14,000 homeowners in the BuildZoom database, who had reviewed at least one contractor or submitted one service request in the past twelve months. Respondents were notified about the survey via e-mail and responses were collected from May 12 through June 5, 2012.