Selling the smart home: how is this technology being delivered?
March 6, 2019 By Will Mazgay
As smart home security technology dominates the headlines, it is worth examining how this technology is being delivered to consumers by dealers and other solution providers — and how this process might be improved.
According to a report by Addison, Tex.-based research firm Parks Associates Inc., dealers still play a pivotal role in getting smart tech into the hands of consumers, making up nearly 50% of sales of smart door locks, garage door openers, water leak/humidity detectors and networked security cameras in the U.S. market.
As well, roughly 75% of security dealers reported to the firm that they offer security systems with at least basic interactivity and some smart home devices.
Parks Associates also says dealers selling smart tech are reaping the rewards, because security systems with smart home devices receive nearly double the upfront fees of systems without smart home devices, and higher recurring monthly revenue to boot.
For Gordie Hebb, vice-president of sales for Nova Scotia-based security dealer Wilsons Security, smart home automation is a major selling feature for his solutions. “The ease of use in the new technology has made the adoption rate skyrocket,” he says. Hebb also asserts that customers are enthusiastic about upgrading their old panels to new panels with smart features. “The adoption rate average has been eight out of every 10 systems visited.”
With that said, selling and installing smart home technology isn’t attractive to every dealer.
“A lot of really small dealers don’t even want to touch smart home devices or offer smart home devices in their package because they see it as a huge cost,” says Dina Abdelrazik, Parks Associates research analyst. “Their support costs will go up. There’s going to be a huge investment in terms of training and knowledge of staff.”
Abdelrazik continues, “Now consumers are demanding those devices so it’s kind of a Catch-22 for small dealers. If you don’t offer it you’re going to lose to your competition, but if you do offer it, it’s a huge learning curve, and also a cost suck essentially for the support costs that they might not necessarily be able to support.”
Another barrier, according to Abdelrazik, is consumer costs, as smart home capabilities attached to professionally monitored systems — both the ability to interact with the system and smart devices compatible with it — tend to jack up the price.
She says, “One of the leading factors for customers cutting or canceling their pro-monitored services is because the fees were too high. Dealers really have to educate consumers on the value of these products, and why it’s necessary to have them.”
Higher consumer costs for interactive pro-monitored services are causing another headache for dealers, pushing customers toward the do it yourself (DIY) market, which Abdelrazik says is attractive because of low costs and ease of install.
In addition to cutting into their market share, DIY presents another challenge for dealers — achieving synchronicity between existing devices in a consumer’s home, from different manufacturers.
“Now essentially if you’re installing a new security system in the home there’s a whole new challenge of, ‘How do I get all these devices to interoperate with one another?’” says Abdelrazik.
Self-installed systems that leverage professional monitoring represent a growing segment of dealer business, as do self-installed systems without professional monitoring, according to Parks Associates.
Saliq Khan is a senior vice-president of investment bank Imperial Capital LLC and a security firm researcher, and he says dealers need to stop thinking of competing with DIY as a zero-sum game and start striving to achieve interoperability between the systems they install and the devices already in consumers’ homes.
“Why can’t it be that I pick up a camera or a sensor from the store and it can still be professionally monitored if I choose for it to be by ADT or Brinks Home Security? It most certainly can be,” says Khan.
“Interoperability, either through Bluetooth, WiFi, which are the main driving forces right now, is key to that consumer experience — I don’t want five different applications to be able to make my system work.”
Consumer control of a security and home automation system that links together devices from different manufacturers can be achieved through voice control, smart phone control or other tools, but the result is the same, a system that lets consumers leverage what they already have in the home or pick and choose what hardware they like.
In addition to ease of use, ease of installation is also important. “I’m not going to call someone, take time off work, just so they can come to my house and do the install. Ship me the box, make it damn easy for me to take it out of the box, put the cameras and sensors in place quickly, and done. That’s what I’m looking for as a consumer,” says Kahn.
Dealers can satisfy the desire for a user-friendly experience through interoperability, but great service is also key. Even with self-installed systems with no monitoring, that are sold to an end user through a dealer, that dealer can assist with common problems like connectivity issues.
Dedicated service is still something dealers can hang their hats on, according to Abdelrazik. She says “They (dealers) know the security system, they come into your home, they provide you that service, while consumers who have the DIY product, they’re installing it themselves, they may not know what they’re doing, they don’t have that service from the dealer. That’s how they’re playing their advantage there.”
Providing great service is important for Hebb and Wilsons. “We work hard to ensure the security solution investment meets the potential customer’s expectations. This starts with the assessment by our security consultants to understand the potential customer’s needs, budget and expected outcomes,” he says.
Patrick Soo, director of national sales, Canada for Alarm.com, says the company sells exclusively through dealers. He believes it is the best sales channel for his firm because of the personal touch provided. “Going through dealers, you’re getting the professional installation,” he says.
“The dealer is able to provide that turnkey level of service that, according to our statistics, most consumers want. If you’re going to go to a Best Buy for example, and try to install this stuff yourself, it’s still not quite plug and play today.”
Soo continues, “You need to be very technically proficient to get these things working — you have to have the time, and you have to be able to service on your own. Whereas by going through a professional channel, our dealers install it, they service it, they program it, they make sure it’s working when they walk out that door.”
While the turnkey approach is a big part of Alarm.com’s brand, Soo says some of the firm’s dealers, providing its central station backed home monitoring software, offer it on a DIY basis.
“They will package the product, they will ship it to a costumer, they will walk the customer through the install, and provide them with the Alarm.com service,” Soo says. He cautions that this approach is not as easy as many dealers think it is. “Some dealers think that I can just ship this to a customer and the customer’s going to install it and it’s going to work great. That’s not the case. There are a lot of touch points in that professional DIY.”
Alarm.com doesn’t provide an open platform for hardware, as pieces need to be from approved manufacturers, but one of the more unique offerings is the firm’s ability to run its software on legacy systems through an LTE radio. Soo says, “You don’t have to replace any equipment … it will convert that older, legacy panel into full interactive services, full automation services, and provide that customer with modern day features and modern conveniences, with using an older panel.”
Regardless of the solutions offered, for Khan, getting the consumer experience right means squaring the desire to serve customers with the new ways security is being delivered.
“Dealers should not be just pushing product. They need to find a way to solve a problem the consumer has,” he says. “When you solve a problem for somebody else, that allows you a way to build a relationship where you can sell them more solutions. When they trust you, they’ll keep coming back to you. But for all of this to happen, we need the next generation of dealers to embrace technology and a consumer-first mentality.”
Khan says many dealers may be well-versed in the business but are reluctant to change. “They’re not embracing technology, they’re not embracing online advertising, they’re not embracing that you no longer need to sell the old, clunky panels, you can sell the new panels that are not just security but it’s pure play home automation as well.”
Hebb concurs that dealers need to keep with the times. “Security solutions have become more and more complex, and Wilsons has evolved its solution delivery process to make sure our customers achieve success,” he says.
Soo says his forward-thinking network of dealers didn’t just spring up magically; it needed to be nurtured through extensive training — a labour-intensive and expensive proposition.
For those dealers on their own, squaring the man hours and expenses necessary to educate themselves and their staff on how to sell, install and service this new technology with the potential return on investment might become a necessary exercise.
This story appeared in the March 2019 edition of SP&T News Magazine.
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