New ServiceTitan Research Reveals Industry Trends and Emerging Business Strategies for Residential Services
Report finds resilient businesses are adopting technology, outsourcing, and focusing on customer relationships
29% of contractors plan to invest in technology this year to increase revenue, customer retention, and customer acquisition.
27% of contractors have outsourced services as a solution to streamline their processes, scale, and grow revenue
Repeat customers accounted for 39% of revenue and 71% of business volume for contractors this year
LOS ANGELES – November 30, 2023 – ServiceTitan, a software platform built to power the trades, today released its first Residential Services Report, providing insight into the challenges and opportunities facing the industry, market outlook, business strategies, and emerging trends. These results highlight survey responses from more than 1,000 residential service contractors around the U.S.
“Residential contractors provide essential services that keep our world running, and that’s not going to change anytime soon,” said Vahe Kuzoyan, president and co-founder at ServiceTitan. “These contractors remain resilient and innovative amidst a year of diverse outcomes, using new strategies and purpose-built technology to allow them to focus on operational excellence and building lasting relationships with customers.”
Tempered sentiments reflect market uncertainty
Economic uncertainty, labor shortages, and reduced access to working capital have created a strain on businesses across the U.S., and in response, residential contractors have a mixed outlook for the current year. According to the survey, over half (67%) of contractors have neutral expectations for the future, 18% are optimistic, and 14% feel pessimistic.
Strategies to combat supply chain disruption
The tailwind effects of COVID-19, increased natural disasters across the nation, and global warehouse capacity issues are resulting in extended supply chain disruption. Contractors reported difficulty obtaining supplier parts (64%), raw materials (47%), specialty materials (44%), equipment (23%), vehicles (17%), and sustainable “green” materials (14%). Supplier diversification can increase supply chain resilience. 60% of contractors purchase directly from a supply house, 23% directly from the manufacturer, and 17% directly from the vendor.
Outsourcing is one effective strategy for contractors looking to increase stability and growth. Approximately one-third of businesses (27%) have leveraged outsourcing as a solution to streamline their processes. The three most common areas for outsourcing included call centers (76%), customer service (49%), and digital advertising/SEO (32%). Outsourcing allows businesses to centralize their operations and create a more consistent, reliable customer experience while scaling.
Developing trusted, deep customer relationships
Customer relationships, both existing and new, play a major role in business success. Repeat customers accounted for 39% of contractors’ annual revenue, and satisfied customers are also more likely to offer referrals or recommendations, which can help generate new leads. Respondents reported 71% of business volume in the last year came from word-of-mouth referrals. Growing revenue (56%) as well as customer retention (50%) and customer acquisition (46%) were all top priorities for residential contractors in 2023.
Attracting and retaining high-performing technicians and employees is also top-of-mind, as competition for talent remains fierce amidst a skilled labor shortage. In response, businesses are being very intentional with recruitment and retention practices. Over one-third of contractors surveyed (38%) will increase technician salaries between 4% or more as a strategy to attract and keep top talent, while 39% of respondents stated that they plan to increase technician pay by 1-3%.
Continued investment in technology presents new benefits across the business
Through emerging technologies like automation and AI, contractors can offload much of their administrative work and focus their time on boosting productivity, optimizing resources, and doing what they do best: serving customers and building lasting relationships in their communities. Survey results indicate that contractors are leveraging technology primarily for business management (63%), field service management (48%), accounting (42%), enterprise resource planning (38%), payroll (33%), and human resources (33%).
"AI is changing the way we work in the trades," said Jason Brady, Owner and CEO at Above & Beyond Heating & Cooling. "We're going to be able to stop focusing on the insignificant things, and really focus on the things that matter to the business. New technology isn't always perfect, but it's helping contractors tackle some of the menial tasks of the job so they can focus more on servicing customers."
Technology is not only freeing up resources, but also improving worker satisfaction, enhancing safety, and creating more attractive career paths and opportunities for professional development. With technology as a key tool to achieve business goals, 29% of residential contracting businesses plan to invest in technology this year to increase revenue (56%), customer retention (50%), and new customer acquisition (46%).
To view the full findings and key takeaways, download ServiceTitan’s Residential Service Report here.
About the research
The survey was conducted on behalf of ServiceTitan by Thrive Analytics, an independent third-party research provider and a leading digital marketing research firm, polling more than 1,000 residential service contractors representing a variety of geographical regions, business growth stages, and revenue levels. For the purposes of this survey, a “residential service contractor” is defined as any business generating 60% or more of their revenue from residential services. This research is for informational purposes only and ServiceTitan provides no assurances (express or implied) with respect to the accuracy of the survey data.
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About ServiceTitan
ServiceTitan is a cloud-based software platform built to power trades businesses. The company’s end-to-end solution gives contractors the tools they need to run and grow their business, manage their back office, and provide a stellar customer experience. By bringing an integrated SaaS platform to an industry historically underserved by technology, ServiceTitan is equipping tradespeople with the technology they need to keep the world running. ServiceTitan is backed by world-class investors including Battery Ventures, Bessemer Venture Partners, Coatue, CPP Investments, Dragoneer Investment Group, Durable Capital Partners LP, Generation Investment Management, ICONIQ Growth, Index Ventures, Sequoia Capital, Thoma Bravo, TPG, and T. Rowe Price.
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