The Value-Add Moneymaker

Energy management promises to glue security customers to their providers


As the trend toward the "connected" or "smart" home grows, security dealers have a chance to cash in on the boom. By integrating systems to control lighting, heating and similar energy consumption, security dealers can up-sell customers to everyone's gratification.

"There will be a real growth opportunity for best-in-class, turnkey systems for the residential market over the next several years," predicted Rich Matthews, residential sales director, Lutron Electronics, Coopersburg, Pa.

The downside is that many security dealers seem unwilling to embrace the new technology and take advantage of the opportunity to up-sell existing customers, according to Bill Ablondi, director of Home Systems Research, Parks Associates, Dallas.

Paul Machacek, international sales manager for Environmental Security Products at Winland Electronics, Mankato, Minn., added, "a lot of security dealers are so focused on traditional security services that they do not want to venture into other systems in the building." However, there are simple computer languages like BacNet that make connectivity with HVAC systems easy to install.

"The installer has a great value proposition," Matthews added. "Instead of the customers buying a system that they hope they never have to use, they have a system that will save them money, allow them to control settings, interact with elements in their home and is fun to use from their iPad or Android."

In addition, Matthews noted, "these energy management systems create a much 'stickier' customer," one who has more of a propensity to stay with the service provider for the long haul.

Take the right sales approach and tact

Instead of marketing simply a home security system, a dealer can offer a customer a money-saving investment that will help keep energy costs under control. Meantime, the proposition earns more recurring monthly revenue (RMR), taking a typical $20 monthly security bill to $40 and upwards for the added benefit of light and temperature control.

"People who have a security system in their home are more willing to acquire an energy management system much moreso than those without security systems," said Ablondi.

Research from Parks Associates (see chart) shows that those who already own a security system would pay a one-time fee of nearly $130 to install a device that would cut 20 percent off their electricity bill per year-versus only $100 for those who do not subscribe to a security system. On top of that, 40 percent of those with security systems are interested in energy management versus 25 percent of those without.

The opportunity exists for commercial customers too. "There is a great chance to increase RMR by providing this kind of service," said Machacek. "It can take a business to providing another level of RMR by monitoring computer rooms to inform alarm systems of extreme conditions." This includes heat, humidity, airflow and CO2 levels.

The average U.S. household spends more than $2,200 a year on energy bills-almost half of which goes to heating and cooling the home. Additionally, 95.8 million households (86.2 percent of U.S. households) have a thermostat, according to the U.S. Energy Information Administration (EIA).

"Everyone with a thermostat can benefit from an energy management system that helps them heat and cool their home more efficiently, as well as enables them to reduce the energy consumed unnecessarily by lights and appliances," said Alison Slavin, vice present of Product Management, Alarm.com, Vienna, Va.

Some security firms already are trying to educate consumers about how value-added energy monitoring services can save them money. And they still have to deal with only one service provider-their trustworthy security firm.

Educating customers and dealers is key

"The challenging part is the education of consumers," said Farhan Abid, research analyst with Parks Associates, Dallas. "It is a new and alien concept to them."

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