How to Win in a New Age of Contracting + ServiceTitan 2024 Benchmark Report

Shifts in consumer spending

Amid inflation woes and economic uncertainty, last year was a rough one for consumer spending, Kawasaki says. More consumers chose maintenance/repair to extend the life of their systems, rather than spend money on replacement/new installation. They also face record levels of credit card debt, and may need financing to pay for must-have, big-ticket items.

And while we saw a slight boost in consumer sentiment in the fourth quarter of 2024, Kawasaki says the “trade-down trend” to buy cheaper, lower-priced brands for affordability reasons continues to dominate the market.

The housing market also struggled throughout 2024, with high mortgage interest rates, high home prices, and lower inventory.

“There was that nice bump around November, with regards to that drop in interest rates for new home purchases, but the market was already expecting that,” Kawasaki says. “So, you saw a little bit of a surge and then you saw it start to flatten out.

“As we look to 2025, all the macroeconomics and everything are pointing toward a better home-buying market, but there are going to be challenges,” she adds. “The biggest challenge is going to be that a lot of homeowners are going to be priced out.”

The labor market was also tough in 2024, and will continue to be in 2025, she says.

“Labor's going to be really tight this year,” Kawasaki says. “Even though everything's going to grow and the economy is set to boom, it’s going to be hard to find skilled labor. They're going to float around.”

2025: Will this be your “slingshot year”?

While times have been tough, Hunter says there’s good news on the horizon. For instance, AHRI data, which issues a monthly report of combined U.S. manufactured shipments of central air conditioning, air-source heat pump systems, gas and oil furnaces, and gas and electric tank water heaters, shows nearly an 11.5% increase on shipments in 2024, as compared to 2023.

“Here's my prediction for 2025: I think we're ready to slingshot,” Hunter says. “If you're one of the companies that listened, went back to the basics, optimized things, and streamlined your operations, now things are about to pick back up.”

Just remember, the bimodal distribution trend still exists for the trades, Kawasaki says. 

“We started to sniff out this trend in 2023, it continued much stronger in 2024, and we see this persisting in 2025,” she says. “So, good news and bad news.”

Kawasaki says bimodal distribution means some businesses are doing better than they’ve ever done before, despite all of the consumer and economic challenges. On the other side of the equation, some businesses are really struggling more than they ever have before.

Hunter found that same bimodal distribution when he visited shops of ServiceTitan customers. 

“Everyone I talked to said, ‘Man, we are absolutely crushing it.’ Or a lot of people were like, ‘Man, I don't understand. We just can't get going,’” Hunter says. “I see it all the time. That's exactly what's going on.”

Kawasaki says bimodal distribution will likely hit the commercial sector too, especially as companies require their remote employees to return to the office. This might mean they need better amenities in the office as well as refurbished or renovated office spaces to keep employees engaged.

2024 Residential Trades Report

In 2024, would you classify your business operations as thriving, surviving, or struggling? ServiceTitan’s 2024 Residential Trades Report (soon to be released) uncovered some interesting answers, Hunter says.

According to a survey of 500 ServiceTitan customers and 500 non-ServiceTitan companies, the majority, 63%, describe their business as thriving in 2024, while 19% say surviving and 18% say struggling. 

“It’s a little bit of a mix,” Hunter says. “What you'll see in the industry report is, ServiceTitan customers were doing far better than others. The good news is, 63% are still saying they're thriving. And if it's true, this is the slingshot year for 2025.”

Tightening Labor Market

If you’re doing well at recruiting and retaining your labor force, keep doing what you’re doing, Kawasaki says. But if you’re already struggling in this area, just know it’s only going to get worse.

“The technician pool is going to tighten up a lot,” Kawasaki says. “And this is not just for our industry, it’s for all industries.”

The main reason may be due to a projected increase in jobs for the oil, gas, and automotive industries, she says, which may entice your experienced, mechanically inclined field technicians to gravitate toward higher-paying jobs.

Also, with the U.S. birth rate declining since 2007, businesses must choose from a smaller pool of candidates among the 18- to 22-year-olds who apprentice for the trades.

But all hope is not lost, Hunter says. He shared two quick stories about recruiting successfully.

“One, they had a bunch of people who had been on staff, they were very entitled. Essentially, they called them ‘old dogs.’ They couldn't teach them new tricks. A couple months later, I visited with them. They're like, ‘Chris, guess what? Unfortunately, we lost all the old dogs. The good news is, we recruited the type of person we wanted to work at this place and we're thriving.’

“They said, ‘They're younger, they're a little bit greener, but we've sent them to the schools, we've implemented the right things in ServiceTitan to make them follow the process, and they're actually doing better than ever,’” Hunter says. “So, there is hope there.

“I talked to another company, their oldest technician is 23 years old. They didn't go in with a predetermined mindset of what an experienced technician looked like. They went out and just found people with great attitudes, who were willing to learn, and hired them. And they're thriving as well,” he adds.

Mixed Housing Outlook

While mortgage interest rates came down some toward the end of 2024, and they may go down a little more, Kawasaki says data trends show they won’t likely go below 6% anytime soon. For many potential homebuyers, that means they’ll remain priced out of the market.

“Consumers still want houses, and they'll have access to them because there's going to be increased inventory. But they're just going to be priced out, because it's hard when it's at 6%, and we were used to seeing it at 4%,” she says.

Meanwhile, home prices will continue to climb, inflation costs will linger, and new construction will continue to slow down.

“With all of this, what's going to happen when regular folks are priced out of the market? How is that going to affect you, whether you're a residential or a partial commercial company?” Kawasaki asks. 

For commercial businesses, now might be the time to focus on multifamily housing and fulfilling the needs of those properties. Also, housing inventory built in 2021, 2022, and 2023, will also start flooding the market, giving residential contractors an opportunity to add new customers. 

Homeowners are also choosing to stay in their current homes a little longer, either waiting for the market to improve or continuing to save money to make a move. If they know they want to move, they may feel reluctant to shell out big bucks on new installations. Instead, they’ll pay for more service, maintenance, and repairs to extend the life of those systems.

With all of that in mind, Kawasaki says companies should redirect their marketing campaigns from one that offers customer financing to buy big-ticket replacement systems to one that helps customers gain efficiency and extend the life of their systems a little longer.

“So, it's a little bit of a different marketing play on how you're going to attract those customers, keep them in your portfolio, and build that CRM,” she adds. “Be prepared. I could see it unlocking pretty fast.”

Consumer Spending

Another trend to prepare for is consumer spending. Kawasaki says consumers are excited, positive, and upbeat about positive economic changes on the horizon, but it hasn’t changed enough yet for them to experience the change.

“My credit card debt is still high, and inflation, I'm still paying too much here. I can't quite get out of my house. I can't do the things I want, but I'm super excited that it will change,” she explains.

Because sentiment is high, they may be more willing to invest in needed replacement options because they believe the economy is going to get better.

“They have that trust factor, it's going to happen. So, they're willing to get into a little bit more debt, knowing it'll improve,” Kawasaki says. 

She also thinks consumers will be more interested in exploring delayed payment options.

“The ‘buy now, pay later’ is expected to be very huge across multiple industries. You're going to start to see ‘buy now, pay later’ in places you've never seen before,” Kawasaki says. “This is expected to be a big push this year because sentiment is high. People are very confident about the economy, but their wallets aren't quite as caught up with their sentiment yet.”

Consumer-driven economy

Even though things are tight, personal savings are low, and credit card debt remains high, consumers will continue to spend in 2025, Kawasaki says. 

“It’s going to be more where they spend,” she adds.

For instance, rather than shopping for food at a gourmet grocery store, they might shop at Kroger to find the items they need at a more affordable price. And the same goes for the trades, where consumers may opt for the good or better option when replacing their A/C unit, rather than the best option at a higher price.

Artificial Intelligence (AI) Advancements

If you haven’t already, you’re more likely to hear the buzz phrase “autonomous AI agent” in 2025, Kawasaki says. 

“It’s autonomous, basically a digital employee kind of thing. A single use that will do things automatically for you,” she explains. “Things that are time-consuming, but very repetitive.”

To grow your business, you may need to add more dispatchers, call handlers, and office personnel, but you’re going to struggle to find all of the people you need at the price point you can afford. This is where AI comes in — not to replace those employees, but to assist in streamlining your operations.

“The AI agents are going to be super helpful, because these are like digital employees. Your best employee, doing digital tasks,” Kawasaki says.

Generative AI, which uses large-language models to understand words, currently powers the chatbots or support bots we see everywhere. 

“Those are going to expand into help widgets or help agents throughout platforms and products across multiple different industries,” Kawasaki says.

2025 Strategies for the New Age of Contracting

To best prepare for this new age of contracting, start by downloading your personalized Benchmark Report from ServiceTitan. Simply click on the TitanAdvisor rocket ship icon in the upper right-hand corner, and you’ll see your Benchmark Report in blue.

“Just click it, download it, and with it, you can start to get an idea of where you are, whether you're ahead or behind other customers that are like you,” Kawasaki says.

Pay close attention to where you rank as a percentile number, rather than solely focusing on revenue growth.

“If your percentile is still pretty high, if you’re above 50%, that means that you're still doing better than 50% of businesses like yours,” Kawasaki says, even if your company’s bank account shows a 10% drop in overall revenue.

“That just means everybody's struggling. You're not losing market share, you're not losing business, per se. It's just you’re a victim of what's going on right now in the market, in the macro conditions,” she adds.

The easy-to-read gauges on the Benchmark Report help you clearly see where things stand in each particular area of your business, whether it’s call bookings, average tickets, conversions or sales, and more.

“There’s a lot to the Benchmark Report that’s super valuable,” says Hunter, encouraging customers to reach out to the ServiceTitan community for help in any particular area.

Again, you may think you’re doing well with a 15% to 20% growth in revenue, but you may have dropped from a 60th percentile last quarter to 50th percentile this quarter, which means you lost 10% share and somebody got in front of you, Kawasaki says. To determine the cause, start looking at your average install and service tickets.

“Where are you in regard to those ticket values? Are you priced high? Are you priced low? Are you priced in between? Are you priced where you want to be?” Kawasaki asks. “And then also, what is your install-to-service ratio? Has that changed? Are you seeing and feeling that repair versus replace?

“That’s what's partly driving a lower revenue number, despite a higher percentile,” she says.

The Benchmark Report also offers TitanAdvisor recommendations to help improve your business. Hunter offers a preview of action items to take.

1. Optimize and automate your workflows

Start by checking out the Weekly Dispatch Board to help your dispatchers optimize scheduling for your technicians based on a weekly view, in addition to the daily view.

“It'll make your productivity so much more effective in the office,” Hunter says. “They can see the seven-day view, all the technician schedules, strategically handle job appointments, and ensure that you get the optimal utilization of your tech.”

Next, if you’re looking to add a ServiceTitan Pro Product to your lineup, Hunter highly recommends Dispatch Pro.

“I think it's probably one of the most optimal ways you can optimize and maximize your revenue with ServiceTitan,” Hunter says. “I mean, how could you not? It takes the opportunity, matches the right tech at the right time, and delivers on that thing.”

But persuading dispatchers to give up control over their dispatch board and let Dispatch Pro do the work became a fight over whether to take a “hands-off” or “all-in” approach, Hunter says. To help resolve this, ServiceTitan created Dispatch Assist.

“This is the middle step. Dispatch Pro will recommend the tech assignment and then you manually accept or deny that,” Hunter explains.

You can also automate your payment processes with Automated Refund Workflow.

“It automates your refunds. It's easy. It's a no-brainer. It saves your office a lot of time. You don't have to manually do it, and it automatically reduces the risks and mistakes,” Hunter says.

Similarly, Auto Apply Deposits automatically applies customer deposits to the right accounts.

2. Lead with financing

Do you know how many of your techs lead with financing when presenting estimates to customers? Are you tracking it? Remember, Hunter says, what gets measured and recognized gets repeated and improved.

With ServiceTitan Integrated Financing, your customers can choose from multiple lenders and offers to find the best one.

“We found that if you lead with financing on every job, it's built right there into the sales process,” Hunter says. “Our customers who are doing that see a 12% higher close rate. And bonus — when we looked at customers implementing multiple good-better-best options with financing, their technicians closed the most expensive option 32% of the time.”

The new Financing Dashboard also shows you how often your team is using customer financing as part of your total sales.

“Do yourself a favor. Go to the Financing Dashboard, see how well your technicians are offering multiple options, see how well they're offering the financing, and see how well they’re actually hitting ‘present’ on the screen. It may blow your mind,” Hunter says.

For those who offer financing versus those who don’t, the difference in revenue and ticket sizes is large, Kawasaki says. 

“And it’s immediate,” she says. “The smallest difference, I think, is 18%, all the way up to 80%.”

3. Leverage products and features powered by Titan Intelligence

It’s more important than ever to leverage AI in this new age of contracting, Hunter says. ServiceTitan announced its efforts to grow Titan Intelligence three years ago.

“That's how far ahead we are with this stuff. We're building Titan Intelligence into everything we do here now,” Hunter says.

For example, the new Adaptive Capacity tool can give you a customizable view of your capacity at a high level, synchronize your team to strategically fill capacity with efficiency, and help you maximize your revenue with greater visibility into job progress.

Coming soon, Adaptive Capacity replaces Adjustable Capacity Planning, providing a dynamic solution tailored to your specific business.

FieldAssist, also due for release in 2025, is “all things TI [Titan Intelligence],” Hunter says. The TI will be able to answer all of those questions techs have when they’re out in the field, freeing up your CSRs, dispatchers, and managers to focus on other important matters.

“This is going to access all things data inside ServiceTitan to give you very accurate answers,” Hunter says.

Finally, Contact Center Pro captures every job from multiple locations with only one contact center solution built for the trades. 

“It’s got a universal inbox to access all of your customer interactions for all your locations in one place, giving your CSRs and managers the power to do more with their day,” Hunter says. 

“It's got manager assist. You can elevate your teams with Titan Intelligence-powered performance metrics like call scoring, sentiment analysis, and second-chance leads for effective feedback and boosted revenue,” he adds. “It also has virtual agents. So, never miss an opportunity with overflow or after-hours support, powered by human-level AI that'll book your jobs, answer common questions, and take messages automatically.”

By utilizing new technology, such as combining Dispatch Pro with Contact Center Pro, even smaller operations can compete on a bigger playing field.

“Very large operations have a lot of resources. They can do a lot of things with that,” Hunter says. “My heart is for the midsize, smaller guy as well. This is the great equalizer. You can utilize these types of tools, be able to compete with anybody, and provide a superior customer experience.”