Bread-and-butter clients. They could be two-income households making at least $150,000 per year combined. Or single professionals. Or retired couples. Whoever it is, you know how to describe your best clients, the ones you seek out, the ones whose jobs are most profitable for you. Even if you don't have a sophisticated method of tracking that description, you're tuned into it, and it informs the jobs you choose.
This business tool is called “demographics,” and there's no disputing its utility. However, industry researchers have begun delving deeper, with interesting results.
SIMILAR BUT DIFFERENT The fundamental flaw with the common use of demographic data is that it assumes that all people within a given demographic group behave similarly. That's obviously not the case — even people who get along socially and who agree politically can have vastly different spending habits.
That's where market segmentation — grouping consumers based on their attitudes, needs, and behaviors — comes in. “It's usually employed by larger companies,” says A. Turner Price, vice president of International Communications Research (ICR), in Media, Pa. However, he continues, market segmentation is really just “finding the right target, and knowing how to communicate with that target. That's certainly something that any small company can do.”
In its 2006 “Product Purchase and Project Activity Tracking Study,” the Home Improvement Research Institute (HIRI), in Tampa, Fla., divided the 1,550 homeowners it surveyed into five groups. Some of the names of the segments — Upscale Researcher Boomers; DIY Enthusiasts; Economizer DIYers; Pro-Inclined “Matures”; and Hire-It-Done Minimalists — don't exactly roll off the tongue, but otherwise do a good job of describing the members of each group. DIY Enthusiasts, as you may have already guessed, “love to do home improvement and repair projects” and do most of the work themselves, while Hire-It-Done Minimalists are nearly the exact opposite, completing few projects and being much more inclined to hire a professional to do the work they need.
Although HIRI researchers came up with the names of the groups, the five categories of homeowners were established by Synovate, the market research firm that conducted the study on their behalf. Homeowners surveyed were evaluated and grouped together based on their agreement (on a scale of one to five) with 33 attitudinal statements.
Remodeling salespeople use a similar process informally every time they meet with a potential customer. Price says that some people purchase home improvements to gain or maintain status, while others are “driven by a desire to feel safe and cocooned.” Knowing homeowners' impetuses for wanting to undertake a project will help you to sell them on hiring you to do that project.
Digging a bit deeper into the psychology of home remodeling, Price says that independent people generally don't like to do business with people they know personally, while others would prefer to work only with those with whom they've already established a relationship. A good salesperson will tune into the prospect's personality, then craft a sales pitch around it.
The attitudinal statements in the HIRI survey are separate from the meatier questions that aim to capture respondents' spending habits and preferences as they pertain to home improvement projects. With homeowners clustered together attitudinally, their answers to those more quantifiable questions reveal the tendencies of each group. For example, the 2006 study found that DIY Enthusiasts accounted for more than one-third of the “heavy and medium project-doers” in the survey, despite accounting for just more than one-quarter of all survey respondents.
Richard Johnston, senior research analyst at HIRI, says that the organization has “been doing [market segmentation] for quite some time,” and that the groups may change over time. However, he says, “we've had the same scheme for the last two years.” A recently released HIRI report, “The Role of Women in Home Improvement,” is another study that used these groupings. That report revealed, among many other findings, that the largest segment of female home-owners were Hire-It-Done Minimalists, compared with DIY Enthusiasts among male homeowners.