The AI Advantage in Home Services.

The home services industry is evolving fast, with HVAC, plumbing, electrical, cleaning, and landscaping companies facing rising competition, higher ad costs, and customers who expect instant replies. AI is becoming the new operational engine, helping businesses capture leads faster, route them smarter, and convert them at a higher rate, without adding headcount.

The AI Shift: Why Home Service Marketers Can’t Wait

Local Services Ad Spend Is Surging

eMarketer forecasts that the U.S. Local Services ad spend will exceed $24B by 2026, up from roughly $18B in 2023, a nearly 34% increase in just three years. As budgets rise, so do acquisition costs:

• Local search competition has grown, with “near me” queries increasing four times since 2019.
• Cost-per-lead (CPL) for home services is now one of the highest in local advertising, averaging $45-$120 per lead depending on category.

Without AI to automate lead capture, qualification and follow-up, businesses risk burning budget while conversions stagnant.

Why Is This Important?

For marketers, AI is no longer optional. Rising CPLs require faster response times, smarter lead handling, and a focus on capturing higher-quality leads.

Most Lead Conversions Still Start With a Phone Call

While form fills remain common, customer urgency drives most conversions. According to industry benchmarks:

• 50-70% of home service leads begin with a phone call.
• Customers who call are three times more likely to book an appointment
• Phone calls convert 30-50% higher than digital form submissions.

Why is this? When a furnace breaks or a pipe bursts, customers don’t wait. They’ll call whoever answers fastest. AI fills the responsiveness gap, ensuring every inquiry receives an instant, helpful response.

Key Takeaway

Marketers should treat the phone channel as a primary revenue driver and use AI-powered follow-up to recover missed opportunities. Conversational analytics tools like Invoca or CallRail can help to refine paid search targeting, boost lead quality and strengthen long-term return on investment (ROI).

The Response Time Problem (and How AI Solves It)

Service businesses lose a significant share of potential revenue simply because they can’t respond fast enough – with 40-60% of inbound calls happening after hours (Invoca, Call Tracking Report) and nearly 50% of customers not following through with a provider if they don’t get a reply within five minutes (Forrester, 2025 Customer Experience Study).

Mid-day call spikes, busy technicians, and manual follow-up gaps make it even harder to keep up. AI chatbots and virtual assistants close this gap by responding instantly 24/7, handling up to 70% of common inquiries (IBM Global AI Adoption Study), qualifying urgency, starting schedule flows, and converting missed calls into SMS conversations. 63% of companies using AI for customer engagement see faster response times and higher conversions (Forrester, 2025).

Why This Matters

AI ensures instant, always-on responses that dramatically reduce missed leads and boost conversion rates by meeting customers the moment they reach out.

Modern Targeting is First-Party Data Enabled and AI-Led.

As privacy shifts reshape digital advertising, first-party data (1PD) has become one of the strongest levers for improving lead quality in home services. When CRM records, call transcripts, form submissions, and customer history are integrated directly into platforms like Google and Meta, AI can optimize campaigns using real conversion signals and not just clicks. This type of 1PD activation helps algorithms identify high-intent homeowners who resemble your best customers, while suppressing low-quality audiences and building more accurate lookalikes.

Industry research shows that businesses using AI-driven first-party data strategies report higher-quality leads, stronger bidding performance, and improved efficiency across channels (Think With Google; eMarketer). With richer signals to learn from, AI delivers more precise targeting, better conversion quality, and less wasted spend, creating a clearer path to profitable growth.

Key Takeaway:
Integrating first-party data into ad platforms makes AI targeting more accurate and efficient, resulting in higher-quality leads that convert at a higher rate.

Closing Guidance

As AI reshapes how home service businesses capture, route, and convert leads, the teams that win will treat it as core infrastructure. The path forward is clear: respond faster, streamline operations, and let data guide your spend. Providers that adopt AI now will enter 2026 with stronger capacity, lower CPLs, and standout customer experiences.

At Other.™, we help brands get there with strategies that turn these tools into measurable performance.

Ready to turn more calls into customers? Let’s build what’s next for smarter, AI-enabled home service operations.

Sources: eMarketer, Forrester, Think With Google, Industry Benchmarks, CallRail & Invoca, Home Services Industry Research.