Winning a new customer is getting more expensive, and contractors are competing harder for the same homeowner attention. Meta ad pricing is up. Local Services Ads cost more. Google clicks come with a bigger price tag. More advertisers are bidding in search. The same marketing dollar simply doesn’t go as far as it used to.
At the same time, your reputation has to do more work. Homeowners are checking reviews and other online signals before they ever call, and search engines and AI tools are using many of those same signals when deciding which contractors to surface and recommend.
That makes the customers and leads you’ve already paid to acquire more valuable than ever.
Past customers can come back or refer. Unsold leads can reengage.
Repeat and referral leads close at significantly higher rates than paid leads. Among gFour clients active for 10 months or more, the median ROI on customer marketing is 15.6x.
I don’t believe the answer is to stop buying new leads. You’ll always need them. But as those leads get more expensive, getting more value from every one you acquire, even after the first sale, fortifies your business against rising costs for new lead acquisitions.
That’s what this report is about: what’s changing in the market, how homeowners are choosing contractors, and how to get more from every lead and customer you acquire.
If this report gives you a new perspective on where your marketing dollars can work hardest, it’s done its job.
Sincerely,
Felipe Ros
President, gFour Marketing
The home improvement market remains sizeable, but the environment for landing new jobs is getting more challenging.2,3,4
Industry projections anticipate continued growth at modest rates.
Homeowners are still investing heavily in their homes.4
But continued demand doesn’t necessarily mean easy growth. Only 55% of contractors expect the market to grow over the next 12 months, and broader forecasts point to decelerating growth.
The market is still large, but the rising tide is getting weaker.
Projected 2026 home improvement market, with a 3.0% compound annual growth rate (CAGR) from 2026 to 20332,4
of homeowners completed a home improvement project in the past year5
average homeowner spending in 2025—the number of homeowner projects declined, but spend per project grew over 12 months6
These are the leads that are already in your CRM, the ones you control.
Homeowner demand is still there, but converting that demand into new jobs is getting more challenging as dynamics shift.
Typical marketing playbooks focus the majority, or all, of the budget on those competitive leads. Meanwhile, the customers and prospects you’ve already paid to acquire often get a fraction of the attention.
Local Services Ads costs since 2023, as adoption grew from roughly 28% to 70% of contractors8
Meta ad prices, YoY — for two consecutive quarters7
That pressure is showing up in contractor accounts, too. In gFour’s network, one client saw paid-digital cost per conversion reach $577 in May 2026, while multiple contractors reported broader increases in cost per lead over the same period.1
Paid click-through rates (CTR) on queries where an AI overview appears (fell from 21.27% to 9.87%)10
Contractors are competing with more advertisers for a smaller share of available clicks.
Modest market growth
+
More contractors competing for that demand
=
Less available attention in
some digital searches
New-lead acquisition isn’t going away. But as paid channels become more competitive, the economics of relying entirely on the next new lead become harder to ignore.
Reviews are one of the most critical discovery tools a contractor has in their kit. Not only are they a trust signal for homeowners, but Google and AI chatbots like ChatGPT and Claude heavily rely on reviews when making recommendations.
Let’s break down how homeowners find a contractor and what matters in the buyer journey.
Homeowners may discover contractors in many places, but when it comes to trust, referrals still lead.
Homeowners trust referrals more than almost any other source — but referrals aren’t always the easiest path available to them.
That means contractors need the trust they’ve earned from past customers to show up in the places homeowners go to find a contractor: search engines, reviews, social media, and increasingly, AI.
Getting found and getting chosen are two different challenges.
Discovery gets you considered. Trust helps get you chosen.
Homeowners may find you through Google, an ad, social media, or an AI-generated recommendation. But after the initial discovery, they still need reasons to believe you’re credible.
That’s where your digital reputation becomes critical.
Use of ChatGPT and other AI tools for local recommendations.
The common theme across home improvement lead-gen is that reputation matters.
Homeowners are evaluating you before they ever call — and AI is using the same signals to make recommendations.
That makes your online reputation the single highest-leverage thing you can influence before a lead ever comes in.
The numbers stack up in one direction:
Reviews clearly still move homeowner decisions.
Home Services review volume, 2024–202515
Homeowners still rely heavily on reviews, but they’re reading them with more skepticism. Trust in ratings alone is declining.
Homeowners and AI alike are looking for more human-like review signals.
That puts more weight on the signals behind the star rating: recency, details, authenticity, and thoughtful responses are increasingly important.
As the market continues to evolve and homeowner behaviors change with it, one common theme has emerged:
Building trust with homeowners and customers is critical. That trust hinges on maintaining relationships with your customers.
A high-star rating alone isn’t enough.
To turn visibility into trust, homeowners need proof behind the rating: recent customer experiences, detailed feedback, and genuine responses from the business.
The goal isn’t just to get discovered. It’s to make sure that when homeowners find you, they have enough credible proof to choose you.
Relying too heavily on competitive channels generally works to generate new business, but it’s largely out of your control. Google can change how much visibility you get. Meta can raise prices. Lead aggregators can change how leads are priced, distributed, or qualified. Any one of those changes can affect your pipeline fast.
Using those channels is inevitable for any company in the current market. The risk is depending on them for too much of your growth.
Proprietary leads — your customer database and the unsold leads in your CRM — give you another place to grow through repeat business, referrals, or rehashing the leads that never turned into jobs. You’ve already paid to acquire those relationships. The opportunity is to get more from them instead of always starting over with the next new lead.
Anecdotal evidence reveals that proprietary leads also have a lower overall customer acquisition cost.1
So why aren’t businesses generating more revenue from their customer database?
The short answer: most of them don’t have a way to maintain and nurture relationships with their customers. gFour has coined the solution to this challenge as relationship marketing.
gFour defines relationship marketing using these four pillars:
Saying thank you after every job activates the Law of Reciprocity. Customers are more likely to leave you 5-Star reviews & refer you.
Referral programs should incentivize, reward, and track referrals.
Online reviews are trust signals for prospective customers. Generating them is a critical part of relationship marketing.
Good relationship marketing programs nurture customers to stay top-of-mind.
One internal benchmark estimates that a contractor may lose roughly 10% of a customer segment’s future engagement or referral potential for each month of silence, with the odds of reactivating that relationship falling sharply after several months.1
The opportunity is already in your database. The challenge is having a system that consistently turns those relationships into more referrals, repeat business, and reviews.
The data points to a clear opportunity. Contractors have already earned trust with past customers, but capturing the full value of those relationships requires consistent follow-through.
This section analyzes the results a top-notch relationship marketing system can yield for contractors and the strategies implemented to get there: nurture, reactivation, and customer appreciation.
Timing is key here—referrals often happen well after the original job is complete.
A one-time referral ask at the end of the job is too early (and too short-lived) to capture most of the opportunity.
The bigger opportunity is staying remembered long enough to be referred when the right conversation finally happens.
The goal isn’t simply to ask for more referrals. It’s to make referring easy when the opportunity naturally occurs.
Referral activity doesn’t end when the project does.
Across gFour clients, the median referral rate is 10.1%, meaning roughly 1 in every 10 clients refers a customer.1
Data Note
These rates reflect referrals registered through gFour tracking. Referrals that arrive through phone calls, direct word of mouth, or other untracked paths are not included, so the measured rate should be treated as a floor rather than a complete estimate of referral activity.
Those are customers that our contractor could have lost touch with without a system in place—and those are just customers captured in the system. While the exact number may vary across subindustries, the number for contractors with repeat business potential is likely higher, because some customers chose to call the contractor directly rather than replying to emails.
Strategically timed to make sure your customers never forget your name.
Repeat-business potential varies by subindustry — a bathroom remodeler and a full-exterior contractor won’t see identical repeat rates, simply because the work itself repeats on different cycles.
Great work is the foundation of a strong reputation. But great work alone doesn’t guarantee a steady flow of reviews.
after implementing a customer appreciation program
Referrals, repeat business, consistent review generation, and lead reactivation don’t happen by accident. They’re real results that contractors can see when they implement a relationship marketing system.
After every job a contractor completes, saying thank-you is critical. Not just because it’s the right thing to do, but also because it can help generate reviews, referrals, and repeat business.
That’s the Law of Reciprocity in action. You give your customer a gift, appreciation, or a genuine thank you, and they’re more likely to reciprocate with reviews, referrals, and repeat business.
Every homeowner a contractor activates into the gFour program receives a thank-you gift directly from the contractor.
That small appreciation gift drives review volume and makes the business memorable.
median Google star rating across gFour clients
Reputation management doesn’t stop once a contractor reaches a certain number of reviews.
The goal is to maintain a reputation that continues to give future homeowners confidence in what they see.
A referral program has to do more than offer a reward.
The contractor’s main decision is simple: choose the referral reward amount.
Among gFour contractors, referral rewards typically range from $50 to $500, averaging around $125, with reward amounts generally scaled to the contractor’s average ticket.1
Referrals and repeat jobs often happen months or even years after the original project is complete.
One follow-up isn’t enough to keep you top of mind that long. A strong nurture program stays in touch through multiple channels, including email, direct mail, phone calls, and text messaging.
You want your company to still be familiar when a customer needs another project or has someone to refer.
Email nurtures are one of the best ways to keep in touch with homeowners after the job is completed. These campaigns keep your business top of mind for review requests, referrals, and when it’s time for homeowners to book the next job.
A pattern that reinforces the idea that personal, human-toned communication consistently outperforms transactional messaging.
Direct mail gives you another way to stay in front of customers without competing for attention in an inbox or social feed.
Rehashing unsold leads to convert them into new jobs is one of the fastest, highest-ROI campaigns a contractor can run. You already paid for these leads, so there’s no new acquisition cost to recover before you start seeing profit.
gFour’s rehash program:
898 Unsold leads entered into rehash campaign
$6.25 Cost per lead
11% converted into sales
$10K Average ticket cost
Reactivating your past customer list to generate repeat jobs and referrals is one of the fastest, lowest-cost ways to grow revenue. These are homeowners who already know your work and already trust you.
Past customers are enrolled in a long-term nurture sequence:
You can manage pieces of the relationship marketing separately and ad-hoc and generate some results.
The bigger payoff comes when they operate as one coordinated system, with every customer touchpoint working toward the same goal: generating more referrals, repeat business, reviews, and long-term customer value.
That’s where relationship marketing shifts from random acts of customer marketing into an ongoing growth engine.
The system is designed to keep working long after the first project is complete.
A review generated today can influence a future homeowner. A past customer may not need another project for years. A referral may happen months after the original job. An unsold lead may reengage long after the first conversation.
The value comes from staying connected long enough for those opportunities to show up.
Results vary widely across clients, with some producing exceptionally high returns. For that reason, the median provides a more representative view of what an established gFour client typically experiences.
That revenue is concentrated among longer-tenured client relationships, reinforcing a consistent theme throughout the data: relationship marketing is best evaluated over the customer lifecycle, not as a short-term campaign.
$551.8M in total influenced revenue. Nearly all of it from relationships that lasted.
The results in this report come from a relationship marketing system being operated at scale across hundreds of contractor businesses for 17 years.
These activity numbers aren’t outcomes on their own. They show the scale behind the benchmarks and the volume of customer relationships being managed through the system.
What matters is having a consistent way to manage what happens after a customer enters your business, so appreciation, reviews, referrals, and follow-up don’t get dropped when the team gets busy.
Start with the basics.
Make sure the customer experience is worth talking about.
Don’t let the relationship end with the final invoice.
Homeowners are reading reviews closely, but they’re also becoming more skeptical of what they see.
The goal isn’t simply to collect more stars. It’s to build a credible body of evidence that gives future homeowners confidence in choosing you.
A single referral ask leaves much of the opportunity untouched; a referral system is a must for capturing past-customer revenue.
Make referring easy—and stay remembered long enough for the opportunity to occur.
This is where relationship marketing becomes a system rather than a campaign.
The relationship shouldn’t end after the job does. That’s where a system works
A relationship-marketing system only works if someone is responsible for keeping it running.
This doesn’t have to mean a larger marketing budget. Reallocate a portion of existing acquisition spend toward nurturing customers you’ve already paid to acquire.
Relationship marketing isn’t another campaign to add to the calendar.
It’s infrastructure for turning one customer into a longer-lasting source of reputation, referrals, repeat business, and future revenue.
Sources are listed in the order each is first cited in this report. Source 1 aggregates gFour’s internal program, CRM, and client data (see Methods for how each underlying dataset was built and its caveats); remaining sources are third-party research, industry associations, and published market data.
1. gFour Proprietary Data Analysis
2. https://www.jchs.harvard.edu/press-releases/remodeling-growth-slow-sharply-early-2027
3. https://www.gminsights.com/industry-analysis/home-improvement-market
4. https://www.grandviewresearch.com/industry-analysis/us-home-improvement-market-report
5. https://www.greatdayimprovements.com/wp-content/uploads/sites/2/2026/01/2026-State-of-Home-Renovation-Report.pdf
6. https://www.hiri.org/blog/home-improvement-spending-2026
7. https://investor.atmeta.com/investor-news/press-release-details/2026/Meta-Reports-Second-Quarter-2026-Results/default.aspx
8. https://www.marketingcode.com/lsa-costs-up-40-percent-contractors-easy-button-dead/
9. https://www.theedigital.com/blog/google-ads-benchmarks
10. https://www.demandlocal.com/blog/geo-impact-on-cpc-statistics/
11. https://www.leafhome.com/blog/news/leaf-home-survey-reveals-trust-gap-in-home-improvement-industry
12. https://modernize.com/homeowner-insights/contractor-selection-trends
13. https://www.improveit360.com/blog/homeowner-behavior-shifts-2026/
14. https://www.achrnews.com/articles/155206-91-of-homeowners-rely-on-online-reviews-before-picking-contractors
15. https://birdeye.com/blog/state-of-online-reviews/
16. https://www.forbes.com/councils/forbesbusinesscouncil/2026/07/15/what-2026-online-review-trends-reveal-about-consumer-buying-decisions/
17. https://blog.yelp.com/news/survey-finds-what-makes-reviews-trustworthy-consumers-want-more-than-ratings/
18. https://www.lob.com/news/marketers-cite-direct-mail-as-the-highest-roi-performing-channel-for-the-third-consecutive-year
19. https://www.lob.com/news/new-report-reveals-direct-mail-as-an-effective-channel-for-consumer-engagement-and-action
20. https://www.roofingcontractor.com/articles/102121-the-homeowners-roofing-journey-in-2026
21. https://www.brightlocal.com/research/local-consumer-review-survey/
22. https://searchengineland.com/cpc-inflation-starts-before-auction-482381