For years, residential penetration rates for home security have been stuck around 20-25 per cent.
But this is potentially changing as more millennials are looking for home security — not necessarily through professionally installed systems, but through do it yourself (DIY) and monitor it yourself (MIY). And some key players in the industry have started to notice this trend.
In February, reports surfaced that Amazon had acquired smart doorbell company Ring for just over US$1 billion. Google also announced that it was rolling Nest into its hardware team.
More recently, Leviton announced a partnership with the Works with Nest program, and MONI Smart Security — now rebranded as Brink’s Home Security — announced it is providing professional monitoring services for Nest Secure.
Evidently, the connected home market is taking off, and millennials are a factor in this transformation.
According to Dina Abdelrazik, a research analyst at Parks Associates, 34 per cent of millennials (defined as those born between 1982 and 1998) have a security system.
Fourteen per cent have a self-installed security system, and three per cent have a self-monitored system. In comparison, only six per cent of all U.S. broadband households have a DIY system and two per cent have a MIY system.
“Security adoption is highest among young, affluent and educated consumers with children at home,” she adds. “Security providers looking to penetrate this key demographic may turn to DIY solutions as a method of expanding their customer pool.”
The challenge, then, is how to market to millennials and other population segments that have never had a home security system before, while also capitalizing on the push for DIY and MIY.
Comfort and control
The first step to successfully doing that is to understand why millennials are proponents of DIY and connected home security.
“The millennials of today approach things very differently,” says Ivan Spector, president of The Monitoring Association. “In many cases, they have nice things that others want that need protection. Obviously, they are app adopters, and want technology to make life work.”
“They’re not just following suit and saying, ‘Well, my parents had a traditional security system; it protected us while I was growing up and it worked great for me,’” adds Greg Rhoades, director of marketing for Leviton’s Energy Management Controls & Automation (EMC&A) division.
“They’re taking a look and saying…‘If my house is all lit up at night, if my doors are all locked, if my garage door shuts behind me, that’s a pretty secure property right there.’”
Generally, millennials want comfort and control over their safety and security, adds Rhoades, and they have several avenues through which they can feel safe and comfortable, whether via a hub solution or connected smart devices.
With connected home security systems, “the homeowner is gaining control over it,” he adds, which he believes is a priority for millennials.
“[Millennials are] certainly very security conscious and they want to make sure that what they’ve secured for themselves and what they continue to grow stays theirs and stays protected,” he concludes.
A definite disruption
With the influx of DIY and MIY products in the market, and the increasing demand for these solutions, “there’s a definite disruption right now,” says Tom Leonard, vice-president of marketing and product management for Leviton’s EMC&A division.
Leonard believes that new security customers, such as millennials, are redefining what security means to them.
“Folks in the millennial demographic are far more apt to take a stab at [installation] themselves, or to take action due to their higher technical propensity than many other generations,” Leonard adds.
Consequently, Leviton’s smart Wi-Fi products “have really seemed to resonate well with millennials because now [they have] the ability to use their smart device at that point to turn on the various lights in their home and interact with their home remotely.”
This has been “an entry point” to pursue a deeper understanding of what automation in safety and security means to them, he adds.
As such, Leviton highlights the customers’ needs: their desire for comfort and control over the traditional understanding of security.
The company anticipates DIY will be “a point of market growth because it’s going to open up monitored systems and expand the reach of what was traditionally available, and ultimately build a larger base of customers,” he explains.
Google and Amazon’s entry into the space suggests their prediction is correct.
Spector believes this “is a barometer of technology adoption and the new economy. They will disrupt the sales chain that many have grown comfortable with and used to. But they are not looking at the ‘traditional’ market…They are looking long and hard at the 75 per cent that have remained very infertile to security systems.
“Companies that offer low or no cost systems with a monitoring component had better sit up and notice,” he adds.
Their entry also presents an opportunity, says Leonard.
“Our belief is that it’s an overall benefit to have Google and Amazon joining the security realm because it brings a heightened awareness and brings attention to the whole spectrum of products,” he explains.
Jeff Gardner, CEO of MONI Security Systems, agrees, noting that Google’s Nest product has “really taken DIY to the next level,” because it is easy to install, easy to use, and Google already has 2.5 million embedded customers who are using their products, he says.
“It’s not just about security, it’s about really engaging the customer in a way that makes their life easier; it still affords them the protection for their family and the property they’re looking for, but there’s so much more,” he elaborates. “And I think Google really brought it into play.”
Moreover, Amazon has brought an additional opportunity with voice command.
“I think voice is going to really play a big role in the future in terms of simplifying the user interface,” says Gardner. “A lot of customers are still perplexed by the complexity of the Internet of Things, and the more you can use voice technology to simplify that, I think the better off we’re going to be.”
Rhoades believes the industry is beginning to capitalize on this trend.
ADT, for example, recently began leveraging some of the partners of Samsung SmartThings, “to make their system more approachable, more affordable and more in line with what consumers are really looking for these days, and that’s ultimate connectivity, not just security and safety,” he says.
Connecting the dots
However, Gardner argues not everyone is reacting fast enough to these changes.
“I’d like to think that we’re being a lot more open minded at MONI. We want to be a part of the disruption than be the disrupted,” he says.
“That’s why we’ve been involved in DIY for a couple of years, but there are
many traditional players in our space that don’t do either [DIY or MIY].”
So what have MONI and Leviton done to adjust their marketing strategy?
Both companies recently partnered with Nest, and say this is a move to attract millennials and other groups that have never had a home security system before.
Gardner says the company has built an interface with Nest “so customers that are buying the Nest product at Best Buy or Home Depot or Lowes can really activate professional monitoring and install their system without any human intervention.”
While Nest products can be MIY, MONI believes there are shortcomings since the system is not connected to a monitoring station that can alert first responders.
“We’ve been really trying to work with Nest to make that more apparent in a different way, not just in digital marketing or television advertising, but at the point of sell in Best Buy,” he explains.
The product itself describes the benefits of professional monitoring, which Gardner says benefits both MONI and Nest.
Meanwhile, Leviton’s partnership with Nest highlights the ease of connectivity.
A homeowner can install Nest devices via the Nest app and install Leviton devices via their app, Rhoades explains. Then within the Leviton app, they can “connect the dots,” integrating Leviton devices with motion detectors, cameras, etc.
“It’s a mechanism to go after the safety and security concerns that we all [have], and to connect these pieces and parts and ultimately make it more seamless for the end user,” he says.
Additionally, MONI recently rebranded to Brink’s Home Security, principally to improve their marketing efficiency and brand awareness.
“I think the Brink’s brand is going to allow us to be a more credible alternative, especially if we can modernize [it] by offering DIY with that,” Gardner explains.
The company has also adopted a marketing strategy specific to millennials, focusing on simplifying their offering on the DIY side, particularly with digital and mobile ecommerce.
According to Gardner, millennials prefer to shop online with little human interaction. Consequently, mobile ecommerce presents a largely untapped opportunity for MONI, as 60-70 per cent of people prefer to do business on their phone, says Gardner.
In contrast, Leviton’s marketing strategy toward millennials has focused more on raising awareness through education.
Leviton has taken a dedicated approach to understanding how the DIY and MIY customers’ needs differ from the professional customers’, explains Leonard.
“If we see a knowledge gap appearing in comments, reviews, in our interactions, we daily assess it and determine how we can best meet them,” he says.
For example, the company provides direct one-to-one outreach to customers who have questions, updates product pages with more detail and delivers instructional video content on their YouTube page when they see demand from customers.
An insatiable appetite
The rise of DIY solutions in the past year, as evidenced by MONI and Leviton’s partnerships with Nest, signifies the push towards this market and end users’ desire for this “seamless” experience.
In fact, says Spector, “there is an insatiable appetite for lifestyle enhancing systems.”
“If I would have said 10 years ago that we would be the gateway into homes for wireless locks, audio/video doorbells, controllable thermostats…that you have all of these technological marvels — not only at the tip of your smartphone but voice controlled — you would have thought I had watched one too many episodes of the Jetsons,” he adds.
“But the future is now, and if the traditional companies do not step up they will be left far behind.”
Consequently, “your supplier relationships are important, your alarm association is important, and the information bearers can keep you in the game,” he says.
Additionally, Gardner and Rhoades believe it is key that the industry continues to evolve its thinking about the customer and assist the end user, whether by simplifying product offerings or education.
“The biggest opportunity is to open up our thinking about the broader opportunity of safety and security,” adds Leonard.
The needs and definitions of these customers are a little different, [but] their ability to incorporate the value of safety and security is still there, and likely going to increase the opportunity for our products and services,” he says. “It’s a very exciting time.”
This article originally appeared in the May 2018 issue of SP&T News.