The smart home in the mass market is relatively new. In the early stages of the market, it is believed a vertically integrated strategy is more effective.
Safety and security are the leading value propositions for the smart home, and yet security companies are not fully grasping the opportunities the smart home has opened up. The following is what security providers could do to leverage emerging smart home technologies to grow their business:
- Listen to your clients: Clients have questions and concerns. Do your due diligence so that you can provide answers.
- Understand client needs: Once they ask the questions, it is your responsibility to be able to answer those questions.
- Look for opportunities: Look for opportunities locally. Get involved in your local builder associations and consumer advocacy associations.
- Education: Leverage your knowledge of security. You are the experts. Privacy will be a concern. Use that knowledge to educate users.
- Take advantage of new recurring-monthly-revenue (RMR) opportunities: For example, in-home warranties. The largest home warranty company in the world is now offering a smart home warranty.
The smart home in the mass market is relatively new. In the early stages of the market, it is believed a vertically integrated strategy is more effective. Most companies when they started off were vertically integrated. That is, a single company controlled all aspects. However, over time, as new products are introduced to the market and are being adopted in bigger numbers, users will want these products to work with their other systems, such as security.
People are moving from those vertically integrated approaches to a more curated approach where they have allowed the integration of more products into their ecosystem.
Companies not in the security space but in the smart home space that have tried to go to the end market are challenged in terms of being able to execute and provide a solid user experience. These companies are open to apps and products, but are not there yet when it comes to user experience. Furthermore, as product adoption grows, and interactive services grows with it, customer overlap will continue to increase, making movement away from a vertically integrated model a critical aspect of business growth.
Overcoming growing pains
In order to grow a security business by utilizing smart home technologies, businesses must overcome three main factors — the laziness factor, the smart factor, and then the referral factor.
The easier a product is to use, the more likely it is to be used. The easier it is to use a particular feature, the more often people will use it. The more complex it is – if it requires users to go online, register, create rules, etc., it's going to be harder for them to adopt it.
Part of this involves security providers deciding between having installers install and set up systems or getting installers in and out as quick as possible. The former will provide the customer with a better
user experience; however, the installer will be in the home for a longer of time. The latter, will make the business more money.
It is in the best interest to do it the right way. Instead of just setting it all up, companies should show users how to work the platform, so that later on when users need to make any adjustments, they can. The laziness factor is very critical for customers.
There are also the smart and referral factor. A connected device has an app, but a smart device is part of an intelligent ecosystem; there is an important differentiation there.
Changing the referral program is another way to drive usage and system growth. For instance, offering free upgrades instead of a month of free service as an incentive. Upgrades get customers excited again about services and introduces them to new products, increasing the chances that they will refer.
Getting in on the next round of early adoption
New technology is much more affordable now than it was 20 years ago. This means that new technologies are also being adopted at a much faster rate. Take natural language processing device, such as Amazon Alexa, as an example. Amazon has sold 8 million Alexa units in three years — ease of use is a major part of why the technology has sold so well.
Technologies such as this are an opportunity for security sellers. Security providers cannot have the mentality of, “If I can't sell it, why should I support it.” Instead, they should see these emerging technologies as opportunities.
Growing your business
Currently, around 85% of people do not know what smart home is. This is why it is believed the security channel is the leading channel to introduce users to it, because security has the ability to size up the individual and understand the use cases that are the most appropriate for them.
It is also important to remember that 99% of customers do not buy everything they want at the time of installation. They make equipment and service choices based on their budget and priority; however, three to six months later they may be ready for more.