We wanted to see if things had improved since our last survey. So, in November of 2006, we conducted a follow-up study. The survey was mailed to 1,300 property owners representing an even geographic dispersion nationally. About 94 percent of the respondents were owners of single-family homes and had purchased a replacement roof within the previous three years. What do the results of the survey indicate? In the big picture, the industry is improving. That’s the good news. The bad news is that there is still a long way to go.

Back in 2002, Roofing Contractor magazine conducted a research project to help contractors understand how consumers find out about roofing contractors, the number of estimates they receive and the primary reasons homeowners buy from one contractor versus another. The results were published in the February 2003 issue of the magazine. The results of that study were very enlightening. Essentially, it proved that, when given the option, property owners actually did not purchase on price, but rather on value. The difficulty was that few contractors were adequately presenting their case and were unable to prove they could provide superior value.

Why did we do the survey back then? Contractors, distributors and manufacturers all benefit from an improving industry. Our industry has often been viewed as a commodity, meaning that property owners often believe that the only mistake they can make is paying too much. We all know the reality is that property owners tend to be either naïve or scared. The naïve believe that almost any contractor that claims he can fasten shingles to their roof is qualified. The scared know there are many ways that they can have problems with the choice they make when choosing a new roof. If the system choices are not best, the installer workmanship is inferior, or the materials are of lower quality, the property owner is certainly not getting the best and safest investment.

The key to gradually shifting an industry from one dealing in a commodity to one that earns a fair return for value is based on two principles. These principles are earning more trust and doing a better job of educating consumers. When property owners trust the professionalism of our industry and are better educated, they purchase better systems from better contractors, resulting an a better industry.

We wanted to see if things had improved since our last survey. So, in November of 2006, we conducted a follow-up study. The survey was mailed to 1,300 property owners representing an even geographic dispersion nationally. About 94 percent of the respondents were owners of single-family homes and had purchased a replacement roof within the previous three years. What do the results of the survey indicate? In the big picture, the industry is improving. That’s the good news. The bad news is that there is still a long way to go.

Figure 1: For which of the following reasons did you call for roof estimates?

The Lead

Why Do Homeowners Call?
Most people think that leads come primarily due to a roof leak. The survey confirms what we learned in 2002, which is that fewer that one-third of calls to roofers were made because of a leak. (See Figure 1.) Most property owners call because the roof is getting old (68 percent), while 32 percent of respondents called because of a roof leak and 23 percent indicated that they wanted to improve the appearance of their home. (Respondents could check more than one answer.) On average, homeowners call three roofing contractors, according to the study - therefore, a close rate nationally of 33 percent means you’re doing about average. (See Figure 2.) If you have an average close rate, hopefully you’re doing the consumer education needed to get a higher price. If not, you’re probably not making the profits you could.

What’s the implication for roofing contractors? First, use more photos in advertising and in presentation booklets showing before and after results for many of your projects. Second, consider approaching the neighbors of clients you’ve served as potential customers. If clients made their decision because their roof was getting old or they wanted to improve the appearance, they are more likely to also purchase a roof as problem prevention and/or to upgrade the resale value of their home. Clearly, the reference of a neighbor is one of the best and most successful business building sources for any contractor. Consider sending a postcard mailing to the one hundred closest neighbors suggesting that they might check their neighbor’s house to view how a new roof system can upgrade the appearance (and resale value) and provide superior protection for their property. Some roofing manufacturers offer these types of marketing support tools to their best contractors for under $45 per hundred homes, which is a great investment.

Figure 3: How did you find out about the roofing contractors that you called for quotes?

The Phone Call

Where Do Homeowners Learn About Contractors?
The sources property owners use to get the names of contractors to call have not changed significantly since 2002. The majority of leads come from the Yellow Pages, friends, neighbors and relatives when it comes to both sources to call for quotes and the source for the contractor actually hired for the job. (See Figures 3 and 4.) The Yellow Pages was listed by 35 percent of respondents as a source used for obtaining quotes, but only 16 percent of the contractors who actually got the job received the lead through the directory. Friends, neighbors and relatives combined to represent 75 percent of all leads, and these recommendations resulted in contractors getting hired to do the work 50 percent of the time.

Figure 4: How did you find out about the contractor that you actually hired?

The lesson still is that the majority of leads are from referrals. But, most contractors have little or no marketing plan geared at generating referrals from previous clients. Further, it is interesting to see the measurements of the effectiveness of sources. The “effectiveness quotient” is a measurement of how likely a lead is to result in getting the contract. Specifically, it compares the percentage of leads from a source that result in projects versus the overall level of leads the source generated. For example, Direct Mail represented 2 percent of the projects and 6 percent of the leads, resulting in an effectiveness quotient of only 33 percent. Relatives are the most effective source (78 percent) followed by friends (68 percent). Further, since the 2002 study, the Yellow Pages and the Internet have significantly improved in their ability to attract customers who will purchase. Newspaper advertising, on the other hand, has dropped in effectiveness (25 percent in the recent study, versus 45 percent in the 2002 study).

Figure 5: How many estimates did you actually get?

The Purchase Decision

Homeowners Buy on Value - When They Understand Why<br/ >
Most respondents received three estimates. (See Figure 5.) Bid presentations are typically given in person (80 percent of the time). However, most are informal bids, with only 40 percent contained in a formal presentation folder. A significant number of proposals - 29 percent - are sent by mail. (See Figure 6.)

Property owners surveyed indicated that the range of bids received could vary widely. In this survey, the median lowest bid was $6,300 and the median highest quote was $9,000. (See Figure 7.) The median actually paid was $7,600. This figure is 28 percent higher than the figure reported in the study in 2002. The cost per foot increased from $2.98 to $3.75 ($375 per square). This means that typically property owners passed on a quote that was 17 percent lower than the amount they actually paid. Another interesting finding in the data was that the highest quote relative to what was paid has decreased; that premium dropped from 30 percent to 18 percent over the amount actually paid.<

Figure 7: This chart contains information on the most common single-family quotes recieved, median size of the homes in question and cost per square foot.


What the Winning Contractors Do Differently
We asked homeowners about the differences between the typical contractors that they received a quote from and the contractor that actually got the job. The overall results were similar to those in the 2002 study, demonstrating that contractors that invest in marketing are more successful. Specifically, that means that the contractors that invest in generating trust and educating the property owner earned more than their fair share of the business.

The data specifically shows that contractors are getting better - and homeowners are getting even smarter. Figure 8 compares the information provided by the typical contractor and the contractor who landed the job. What are some specific ways that a contractor can significantly increase the odds of earning the contract? Educate. First, share the plan for ensuring a quality job. Second, share different shingle options in performance, design and color. Third, explain the entire system, including the underlayments, ventilation, hip and ridge, and flashing. Fourth, obtain and share your special manufacturer’s certification. Fifth, offer enhanced warranties. Sixth, differentiate your services by offering financing.

Figure 8: This chart compares the information shared by the typical contractor called for a quote and the actual contractor hired to do the job.

The contractor that earned the contract shared their manufacturer certification 77 percent of the time, versus only 34 percent for the typical contractor. In 2002, only 59 percent of the winning contractors talked about their certification. The contractor that earned the contract offered a special enhanced warranty 71 percent of the time, versus 30 percent for the typical contractor. In the 2002 study, only 51 percent of the winning contractors talked about enhanced warranties.

This data demonstrates that the industry actually has changed a great deal since 2002. Overall, more contractors are doing some of the basics to educate the customer - but the numbers are still low. However, the contractors that are earning more than their fair share of the business are doing even more to educate the customer - and it is working. Their prices are up. Their volume is up. Their profitability is up. Most importantly, their clients likely received a better and safer roof system to enhance the resale value of their home and increase the protection of the assets inside.

Further, clients are pleased with the services from the roofing industry. A majority said they were “very satisfied” with their installation (75 percent, which is up 8 points versus 2002). (See Figure 9.) A vast majority of respondents - 96 percent - claimed that they received good value for the money, and 95 percent of those surveyed would recommend their contractors to others. (See Figures 10 and 11.)

Figure 9: Overall, how satisfied are you with your roof installation?

The Survey Results

The Keys to Building Your Business<br/ >
So, what might a contractor consider when reading this survey? A few simple thoughts come to mind.

First, think of every contact your customer has with your company. Consider the phone call, the arrival, the conversations, the presentation, the proposal, and the procedures and dress of the installing crew. Every contact that a client has with your company has the potential to either increase or decrease trust. Trust is essential to building a more profitable business. With more trust, you can not only help educate customers about the value of your services, but you are also more likely to get quality referrals.

Second, look at your lead generation process. Look at your marketing programs. Are there specific efforts to help ensure that prior customers are referring you to their friends and family? Look at your post-close procedure. Are you talking with your customers’ neighbors and letting them know you’re in the neighborhood.

Third, focus on your processes. Most contractors don’t write them down. You can’t build a great high school football team without plays, and you can’t build a world-class roofing company - large or small - without processes, either. Just like a football team, you’ve got to sit down every Monday and discuss two key things. First, examine what didn’t go right last week. If something went wrong, it was because (a) you need to change the play (the process doesn’t work), (b) somebody needs to understand the play or (c) you need to replace somebody that is not getting the job done. Second, take a look at your upcoming projects and discuss the areas where issues are most likely to come up. Then, create action plans to help prevent the problems before they happen.

Roofing can be a great industry. It can be a profitable industry. It can be a rewarding industry. But it is critical to know what your customers want and how they buy - and then educate them on those key factors while earning their trust. Then, after the project is completed to their satisfaction, ask them for a favor: “Do you have any neighbors or friends that might want our service?”

To purchase a copy of the "2006 Roofing Contractor Consumer Survey Report," contact Kelley Trost attrostk@clearseasresearch.com.