One of the most pressing issues we face as an industry in 2023 is a looming economic recession. With slow GDP growth, a labor shortage, building material shortages, and declining inflation due to aggressive federal interest rate increases, contractors are evaluating their current processes, headcount, and planned spend for 2023 and thinking about how they are going to sustain and grow their businesses.
There are several steps home improvement professionals can take to recession-proof their businesses and come out stronger on the other side. Industry leaders including James Freeman, CEO of P.J. Fitzpatrick, Paul Trautmann, president and CEO of Timberland Exteriors, and Marc Setty, director of the North America Remodeling Segment at James Hardie share insights on what contractors can prioritize during this time of uncertainty.
Double Down on Supporting Current Employees
By investing in employees’ career growth and development, and creating a supportive work environment, contractors can keep teams motivated and guarantee a steady stream of talent for years to come. If employees feel taken care of, they will better serve their customers.
“There are a tremendous amount of challenges that we’re going to face out in the industry that we really have no control over,” said Freeman. “But what we do have control of is the way we develop our people. They are our greatest assets. We are leaning into education and developing our own talent, whether it be people to perform the work or people to guide those people in the future.”
“We’re doing this through our very own P.J. University. We have multitrack programs, including leadership, technical, and corporate programs, with a mindset for content based on three tenets," Freeman elaborated. “We want it to be informational, we want it to be foundational, and we want it to be developmental, allowing us to be able to put people in the right positions who are prepared for what those positions are going to require from them.”
Be Laser Focused on Customer Experience
It’s important to train employees on how to care for customers in an authentic way because, “ultimately, that human-to-human interaction is going to be what’s remembered the most by that customer,” Freeman added. “We’ve introduced meet the team introductions via Zoom before we arrive at the home. It allows the customer to feel connected to the project and a successful outcome. It starts from when we’re coming out for a sales appointment, all the way through a final installation appointment.”
Setting clear expectations with the customer is another sure way to boost their overall experience and confidence in the work that is being done.
“We don’t want to over-promise anything. I’d rather be ahead of schedule and have the customer excited that we’re early, rather than disappointed that we’re behind schedule” said Trautmann. “We want to set the expectations right from the beginning so customers know what they’re going to get and when they’re going to get it.”
Building a personal and professional support network with peers, industry experts, and even competitors can have a tremendous impact on the success of a business.
Prioritizing customer feedback can be used by contractors as a learning opportunity to take their customer service to the next level.
“We’ve really ramped up our feedback cycle both internally and from our customers,” Freeman said. “First, we want to know when we win because it’s important to celebrate the good things that we do as a company, especially when we take care of a customer well. Second, we focus on the lessons we learn. That’s the fuel that is going to drive our business into the future."
By focusing on the customer experience and teaching employees how to care for them in an authentic way, contractors can improve conversion rates and maximize team capacity to make sure customers' needs are being met.
Invest in the Right Technology
Using the right technology and tools to simplify processes can increase profits by reducing costs and enabling contractors to provide a more tailored and personal customer experience. It’s not easy to raise prices in a down market, but companies can still cut costs and increase efficiencies by leveraging emerging technologies to streamline operations.
“The more you can integrate repeatable systems and good foundational building blocks in technology, the more it can help accelerate your business up the growth curve,” said Setty. “Not only will companies free up time for their employees and potentially lower costs, but it can point them toward the higher value activities that they should be prioritizing, like providing an excellent customer experience and building those meaningful connections.”
Have a Support Network
Building a personal and professional support network with peers, industry experts, and even competitors can have a tremendous impact on the success of a business. Contractors can lean on each other when they are strapped for labor and other resources.
“Like everybody, we face challenges with labor and materials,” Trautmann added. “We're fortunate that in our industry we're friends, and to some degree partners, with some of our local competition. So, if we do run into a labor shortage, we have resources we are able to pull extra labor from."
Establishing these partnerships can also help companies stay better informed about market trends and best practices while gaining access to new customers and opportunities.
The entire home improvement industry is facing new challenges in 2023, but contractors can take these immediate steps to recession-proof their businesses and protect growth in the face of adversity. With determination, flexibility, and a focus on core values, contractors can weather the storm and build a brighter future for their businesses.
Kevin Sturm got his start in the construction industry by digging ditches as a teenager. He then became an electrical journeyman, which eventually resulted in him evangelizing technology innovation. Kevin is now the head of product & customer marketing at HOVER.