By Shawn Cadeau, Chief Revenue Officer, Jobber
Before a project begins, the moment of truth is usually around financing. From large renovations to unexpected repairs, most jobs fall through because the money just doesn’t work for the customer. When a potential customer likes your company, trusts your quote, but simply doesn’t have the funds on hand to move forward, it can be a hard pill to swallow. This is just one of the reasons that consumer financing, where people can pay for jobs based on monthly payments, is quickly taking hold within the plumbing industry.
Based on a Jobber survey of 1,000 U.S. adults (age 25+) exploring financing trends among consumers and homeowners, below are three factors that are accelerating the use of consumer financing and adoption of this offering by plumbing and other home service businesses.
It’s been a whirlwind of a year for the plumbing industry. Roughly a year ago when many office buildings closed, plumbers were making headlines as demand spiked due to individuals spending more time at home, resulting in clogged pipes and other issues. Fast-forward to a year into the pandemic and once again plumbers are taking center stage as they continue to help fix the damage caused by Texas’ historic winter storm that wrecked havoc on homes and buildings by freezing and bursting pipes.
While these are unique circumstances, they highlight the importance for homeowners to have funds on hand to tackle unexpected emergency repairs. Having this emergency fund to tap into isn’t a reality for many consumers. Nearly one in four homeowners in Jobber’s survey (24 percent) said they have less than $500 available for emergency home repairs and 39 percent said they have $1,000 or less. In many cases, fixing a blocked drainage system can be difficult to afford at the moment.
It’s not surprising, then, that homeowners are increasingly open to financing as some form of relief. In fact, 66 percent of respondents indicated they would be more likely to use monthly financing in situations that required emergency work, such as fixing a burst pipe. When it comes to emergency repairs in this climate, enabling customers to pay in monthly increments can be the difference between deciding to do a dodgy do-it-yourself repair over a job done by a professional.
While many people have felt the pain of this historic crisis, those who have not, are using the time to take on new home renovation projects. Others have dived into the hot real estate market to purchase homes that need updating. In both situations, existing and new homeowners are eager to get work done sooner rather than later. However, once again, having the necessary funds on hand can be the difference between homeowners settling on a bathroom remodel or pursuing their dream renovation.
A majority of homeowners (54 percent) in the Jobber survey said they have put off a home project due to a lack of funds. One in four (25 percent) have even considered borrowing against their 401k to make a home improvement project happen. Sixty-three percent (63 percent) of homeowners in the same survey indicated that they would be willing to take on a more expensive project if there was a consumer financing option available to them. There’s clearly demand for these projects and easy financing offered by plumbing companies could be the key to unlocking these opportunities.
When it comes to consumer financing, younger respondents (age 25-34) indicated the most interest in this type of offering for a variety of reasons. It’s this tech-savvy group of homeowners who are already reliant on apps and websites for banking, investing, home loans and now view consumer financing as an extension of this FinTech wave. A consumer-financing option built into a plumber’s online quote is a feature that boosts their customer experience. Combine this with an eagerness to finance projects and it opens up strong possibilities for home service providers.
According to the Jobber survey, more than half (53 percent) of respondents (age 25-34) have put a home service project on a credit card so they could pay for it over time. Their desire for more payment options does not stop there. A larger percentage expressed interest in consumer financing, with 80 percent of the age bracket saying they would pick a home service provider over another because they offered monthly financing. Millennial clients want options from their home service professionals, and they want them before the time it takes to find another contractor on the Internet.
Staying Ahead of Competition
The plumbing industry is extremely competitive and getting more so by the day. Every advantage is needed to stay ahead of new competition. Staying ahead of the consumer financing trend positions plumbing companies so that they can immediately start to win new jobs, while also meeting the expectations of a growing young population of homeowners.
If a plumbing company doesn’t want to offer installment payments due to the risk of not getting paid in full, there are easy solutions for this. With the right business management software, this offering is simply a plug-in or additional feature that can be attached to quotes. Homeowners can apply for financing without any additional work from the plumbing company or without adding any risk of not getting paid. The plumbing company will get paid when they perform the service, while customers have the benefit of paying over time. It’s a win-win that puts plumbers ahead of a trend that will soon become commonplace.
Shawn Cadeau is the Chief Revenue Officer at Jobber, the leading provider of business management software that has helped small businesses deliver more than $15B in services, and growing, to over 12 million households. Cadeau is responsible for the company’s global growth strategy and leads the sales, marketing, business operations, and customer success teams. He has 15 years of experience holding C-level positions at high-growth technology companies