Home Improvement Lead Acquisition Costs Keep Climbing — Customer Database Leads Deliver a 15.6x ROI
2026 Contractor Marketing Annual Report
Letter to the Home Improvement Industry
Dear Contractor,
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
In this report:
- Why Getting New Customers Costs More Than It Used To
- Visibility & Homeowner Behavior: How to Grow Your Digital Reputation
- The Highest-Return Channel You Already Have: Your Proprietary Leads
- The gFour System in Practice: Process & Payoff
- How to Apply This: Your Action Plan
Thank-you to our clients for sharing their stories.
Why Getting New Customers Costs More Than It Used To
Market Size and Growth
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.
Demand is Still There
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.
U.S. Home Improvement Market
Adapted from Grand View Research4
$518B–$613.8B
Projected 2026 home improvement market, with a 3.0% compound annual growth rate (CAGR) from 2026 to 20332,4
65%
of homeowners completed a home improvement project in the past year5
$21,000
average homeowner spending in 2025—the number of homeowner projects declined, but spend per project grew over 12 months6
Contractors typically generate leads from two broad categories:
Competitive
These are the marketplace leads you pay for.
- Google Ads
- Local Services Ads
- Meta
- Lead Aggregators
Proprietary
These are the leads that are already in your CRM, the ones you control.
- Customer Database
- Unsold Leads
Customer Acquisition
How Contractors Land Customers & The Cost Crisis
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.
And today, the cost of generating net new leads is skyrocketing:
~40%
Local Services Ads costs since 2023, as adoption grew from roughly 28% to 70% of contractors8
12%
Meta ad prices, YoY — for two consecutive quarters7
6.11%
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
