If you’re a homeowner, remodeler, contractor or supplier of home building and renovating materials, all signs point to 2018 being a busy year for you.

At a press conference in January, Dan Bawden, chair of the National Association of Home Builders (NAHB), projected a 4.9 percent increase in home remodeling projects this year, and an additional 0.6 percent for 2019.

In February, LightStream (the online consumer lending division of SunTrust Bank), followed the NAHB’s announcement with the release of its annual report on US home improvement trends. According to their study, 58% of US homeowners are planning home improvement projects this year, and they’re working with sizeable budgets. Roughly 45% of those undertaking a project will spend a minimum of $5,000—that’s an all-time high for the annual survey, now in its fifth year. In addition, the number of homeowners planning to spend $35,000 or more is twice that of 2017.2

The Joint Center for Housing Studies of Harvard University is in full agreement, predicting total US consumer spending on home renovations of around $340 billion.3

Factors driving the increase in spending

Tax reform

LightStream’s survey shows that among homeowners who have set a budget for home improvement projects, 25% cite the recent tax reform as a factor, with 18% planning to spend more as a result.2

“Aging in place”

Homeowners in all age groups are getting practical, planning renovations that will allow them to remain in their current homes as they age. About half as many respondents to the LightStream survey reported spending the money in order to sell—the lowest percentage since 2015.2

Reduction in the availability of new homes

The financial crisis wiped out many small- to mid-sized home builders, leaving only the big guys. And fewer builders means fewer new builds.1,4

Improvement in the US economy, resulting in wage growth3

When combined with the above, more money to spend means more spending on home repairs and renovations.

That’s good news all around, as homeowners make practical investments in their homes, and providers of home improvement products and services make money.  It won’t be easy money, though.

Contractors face tight competition, rising costs

Contractors, remodelers and manufacturers face two challenges to grabbing their share of this eager market: 1) the rising cost of both labor and materials, and 2) an increase in local competition.

According to the US Department of Labor’s March 2018 Producer Price Index, building materials prices are up, and include everything from ready-mix concrete to lumber to structural steel.

And while the economy took out most small- and mid-sized home builders during the past 10 years, for contractors, there’s been an upsurge. The IBISWorld Remodeling Research Report points the finger at what it calls a low barrier to entry for entrepreneurs interested in getting their piece of the remodeling pie. The report states that, aside from the need for a state license and registration of some type, “The capital equipment requirements for this industry are rudimentary and formal skill requirements are seldom enforceable.”5

Unfortunately for homeowners, it will take their experiences with less-than-competent service providers to ferret out the unqualified. That will take time.

So, in the interim, how can you set yourself apart from all this new (and undoubtedly low-priced) competition without reducing your value?

New research points to rebates

In February of 2018, research firm Leger conducted an online survey on behalf of Hawk Incentives to measure consumer attitudes with regard to promotional incentives.6 Respondents were asked about their shopping habits and reward preferences relative to multiple retail categories, including home-improvement-related products and services. Here’s what they told us:

  • Regardless of gender, age or income, consumers prefer rebates to other types of savings deals (e.g., discounts, BOGO, coupons)
  • When asked to rank a set of retail verticals in order of their preference for finding rebates, men and women both listed home building/remodeling as their most preferred category. For women, this was a staggering 23% over all other categories, and 11 percentage points higher than their number-two pick.
  • In looking at the same question broken down by generation, Boomers ranked home building/remodeling rebates as their most preferred type of discount.
  • When we asked which single vertical for which participants most preferred rebates to other types of promotions, the home building/remodeling category was the only one selected by all three generational categories—Millennials, Gen Xers and Boomers. In general, Millennials aren’t as interested in rebates as Gen Xers or Boomers. However, when they do look for them, they’re looking for savings in either the home building/remodeling, utilities or telecommunications categories. (Note also that their three choices include two essential bills, and just one “discretionary” category.)

Who is your target customer?

The study asked participants if they a) had made a home remodeling purchase or looked for a new service provider in the previous 12 months, b) plan to make a home improvement-related purchase or look for a new service provider in the next 12 months, or c) neither.

28% chose option A, and 27% chose option B. Those respondents were then asked to rank a set of incentive options according to preference. Here’s what they said: 
Their top two choices were rebates, and the only difference between them was the delivery format (a physical prepaid or gift card is preferred over a digital prepaid card, digital gift card, egift or ecode). In total, 81% of consumers say they prefer rebates over the other incentive options.

The benefits of offering rebates

Now that you have a clear picture of who is looking for the kinds of rebates you might offer, let’s talk about the benefits to you of offering rebates versus other types of incentives.

Rebates help you flesh out your customer database

During the rebate process, ask for additional customer information, or include brief surveys that add detail to your buyer profile. With richer data, you can better personalize each interaction you have with a customer, providing them with a better experience and deepening the relationship.

Rebates help you make additional sales

Use the data you gather during the rebate submission process to identify your customers’ preferred methods of contact, then use that detail to send them additional marketing offers based on purchase history. From our research, we learned that 90 percent of consumers are willing to give something in exchange for receiving a rebate. They are happy to make a referral, leave a service or product review, complete a short survey or even enroll in a loyalty program if a rebate is on the table. They’re okay with hearing from you. So take advantage of the opportunity!

Rebates bring customers back to your store

When you fulfill your rebate using a branded prepaid card or gift card, you give that customer a reason to come back to your store. Our own data tells us that customers using a gift or prepaid card spend as much as 50% above the card’s value. And, bonus: Your target market told us they prefer physical rewards to digital rewards, which means they’re most likely to go to a brick-and-mortar location to use the card, giving you more highly valuable face time with them.

Rebates build customer loyalty

One of our own clients, a national retailer, analyzed their customer data (see point #1) and determined that a customer acquired via a rebate has a greater lifetime value than one acquired through an instant discount.

And, if you’re not part of a big firm, retail chain or manufacturer:

Remember, you’re also the consumer

If you’re a solo contractor or work with a small- to medium-sized firm, you may not buy in large enough volume to take advantage of professional contractor rebates, but that doesn’t mean you’re excluded from saving money. Look for consumer rebates the next time you need to pick up supplies. In a competitive market, every dollar you can save helps keep you in the game.


Find out what rebates can do for you

If you’re interested in learning more about the practical application of rebates to your industry, get in touch with us, or give us a call. We can walk you through use cases, provide more details from our research, and give you a clearer picture of how a rebate-based promotion could work for you.


Download “The Indispensable Guide to Loyalty Rewards” for insights on how to match the right reward to drive long-term relationships with your audience.


1. “Residential Remodeling Spending Trending Up” NAHB Press Release, Jan. 2018.
2. Home Improvement Ramps Up in 2018.” LightStream.com, Feb 27, 2018. Refers to the 2018 LightStream Home Improvement Survey. This year's survey was conducted online by Harris Poll on behalf of LightStream from Jan. 26 – 30, 2018, among 2,055 US adults ages 18 and older (1,405 homeowners, among whom 808 plan to spend money on home improvements in 2018).
3. Faloon, Kelly, “Remodeling Market to Post Strong Gains in 2018.” ContractorFeb 2018.
4. Lahart, Justin, “Fewer Home Builders Means Happier Home Builders.” The Wall Street JournalMay 15, 2017.
5. “Remodeling – US Market Research Report.” IBISWorld, March 2018.
6. An online survey of 1515 Americans was completed between January 25 and February 5, 2018, using Leger’s online panel, LegerWeb. The margin of error for this study was +/-2.5%, 19 times out of 20.