The Rising Tide of Online Home Services

Grant Farnsworth
The Farnsworth Group

The swell of young homeowners and the rapid evolution of the online home services market could lead to a big wave of growth in this sector over the coming years. But how aware are consumers of the availability of these services, and how is the industry responding to this new wave of offerings?

Guest post by Grant Farnsworth of The Farnsworth Group, a member of the Joint Center Remodeling Futures Steering Committee. The blog is based on a recent presentation to the Remodeling Futures group.

GM investing $500M in Lyft, Google investing in Uber, The Home Depot buying Red Beacon, the launch of Amazon Home Services… these large players know something is in the water when it comes to online services. We appear to be witnessing “Uber-ization” of the home services market.

As the platform matures, important questions are beginning to take shape.

• What exactly are online home services? How is this space being defined?
• Who is using these services?
• Are the users’ needs being met?

Early evidence suggests that while millennials are beginning to latch onto these services, older owners are less engaged, and home improvement contractors generally aren’t viewing these service delivery models either as potential partners or as competition to their current business models.

To gain insights on the use and perceptions of online home services, The Farnsworth Group completed a study that surveyed homeowners who had recently hired a service professional. Also surveyed were remodelers and specialty contractors, to better understand their awareness of – and potential integration with – these service delivery models. For this survey, online home services were defined as “websites or apps that are intended to help homeowners and service professionals with home design, home improvement, and/or home repair and maintenance projects”.

Given their relatively recent introduction, much of the population is largely unaware of these services. Both homeowners and professionals view these platforms to best fit with modest improvement and repair projects in the under $5,000 range. Both groups also indicate similar features that are important to them when working with a service pro or client. However, that is where many similarities end. Results show dramatic differences in the adoption of online home services by younger homeowners, older homeowners, and contractors.

Homeowners who hired a service professional within the last 12 months were asked which of the following services they have ever used, or currently use: Angie’s List, HomeAdvisor, Houzz, Porch, TaskRabbit, Thumbtack, and Pro.com. Homeowners between the ages of 21-34 are much more likely to have consulted these home services, and used them in their selection process. Nearly 75% of those using online home services end up hiring a service professional from one of the services.

Online Service	21-34 N=187	35-49 N=284	50-64 N=291	65+ N=192
Angie’s List	36.4%	31.3%	22.0%	16.1%
Home Advisor	27.3%	20.4%	14.1%	10.9%
Houzz	17.1%	13.4%	6.5%	2.6%
Porch	12.3%	2.8%	1.0%	0.5%
TaskRabbit	12.8%	4.6%	1.0%	0.5%
Thumbtack	10.2%	4.2%	4.8%	1.6%
Pro.com	15.5%	3.2%	1.7%	0.0%

However, when remodelers and the trades were asked what apps and websites they have used or are currently using, they are often not as engaged with online home services as homeowners, and certainly not as engaged as younger homeowners.

Online Service	Remodeler N=473	Specialty Tradesmen N=206
Angie’s List	27.1%	26.7%
Home Advisor	18.2%	22.3%
Houzz	25.2%	9.2%
Porch	8.0%	4.4%
TaskRabbit	3.0%	0.5%
Thumbtack	6.6%	5.8%
Pro.com	2.3%	5.8%

Younger homeowners in the study were also generally more willing to engage home service sites. Over three-quarters of millennials are somewhat to extremely willing to do business online, a figure that drops closer to 50% for boomers.

So what is driving homeowners and professionals alike to utilize these new online home services platforms? Homeowners that have used online service sites use them for a variety of reasons, but three stood out in the survey:

• Getting project estimates/costs
• Information on the home services provider
• Being matched with a home services provider

However “being matched with a service pro” is low on their list of importance when it comes to homeowners hiring a service professional. The majority use “word of mouth” for getting a few contractor names.

Remodelers and trades professionals, on the other hand, use online home service sites to generate leads, get design ideas, and market their company. Unfortunately, these features also do not align with what the survey showed was most important to them:

• Communicating with clients
• Managing projects
• Providing estimates

Getting leads via an online service is of little importance because, like homeowners, nearly all contractors get leads from “word of mouth”.

It is clear that the features of online home service sites do not always align with what’s most important to the users. The gap between what’s important and how online service sites are being used indicates either a lack of understanding as to what the platforms provide, OR a failure for the platform to provide appropriate services.

Regardless of the needs for knowledge, education, and platform development that this study illuminates, young homeowners are extremely likely to utilize these online home services sites. They also perceive these sites to be “more beneficial” and “easier to use” than traditional “offline” methods. In contrast, the professionals we surveyed, while willing to test the waters, do not share as much enthusiasm as younger homeowners.

Those who utilize online service sites may see it pay off given the increasing use and high conversion rates. Millennials are the largest generation in our history, and as such are the generation with the most future buying power. As they continue to enter the homeowner market, awareness and use of online home services seems inevitable. With that will come more informed and educated consumers, which should propel a modest swell in online home services to something much, much more significant.

So home improvement professionals are well advised to grab a surfboard, paddle out, and be prepared, because they may catch a killer wave to ride with the new generation of home buyers.

For the complete study results contact The Farnsworth Group at info@thefarnsworthgroup.com or 317-241-5600 x.301.