The Smart Money: How AI Can Better Serve the Residential Customer

Smart home providers aim to make the installation and ongoing user experience as simple as possible; however, customers often report challenges throughout the installation, setup, and ownership lifecycle. To combat these issues, these providers are turning to AI to make customer service smarter and proactively anticipate customer needs.

The next era of the smart home technology market will be infused with AI, which stands to greatly benefit both DIY and professional alarm companies in areas such as installation support, enhanced customer interaction with systems and devices, troubleshooting, and more.

Here are the top areas where we anticipate AI to make the greatest impact in the smart home market:

Residential network management for devices:

The selling and set-up process must be clear, simple to read/watch, and accurate, explaining how device features work and how to enable them. This quality of information will better set buyer expectations and reduce returns. Parks Associates research shows that difficulty with physical installation and issues configuring device settings are two of the top three reasons for smart home device returns.

AI can help by detecting and identifying devices on the network, configuration errors or issues, and automatically applying corrections or adjustments. In addition, if support for the home is needed, AI can help field agents plan better routes to serve more customers more quickly.

Predictive and proactive capabilities of AI in network management are transformative for the connected home ecosystem. By automating network optimization and preemptively addressing potential problems, AI enhances reliability, reduces downtime, and ensures seamless connectivity for consumers. It also creates all sorts of new ways to engage with the customer and provide support across many important lifestyle areas.

Troubleshooting:

Consumers typically try to fix problems themselves before engaging tech support channels. Device owners experiencing technical issues with smart home devices most commonly visit the manufacturer’s or their alarm company’s service website. Owners value clear product manuals and self-help videos. AI can proactively monitor issues and provide smarter and even automated troubleshooting when something goes wrong.

Expanding device usage:

Parks Associates’ research finds that 41% of consumers who returned a smart home device had difficulty learning to use the device features. AI can identify the extent to which device features are used and can recommend new actions or offer tutorials to help users get the most out of their products. This is highlighted in our research, with 56% of smart home device owners rating a smart home device support service that teaches them how to use various features of the device “highly valuable,” and 51% of smart home device owners rate a smart home device support service that monitors devices and how they use them for personalized suggestions “highly valuable.”

Customer support:

A standard use of AI in customer support is a chatbot that isn’t helpful or is too focused on deflection. A better support experience involves a human leveraging AI to build a better relationship with a customer. For example, the customer service agent can use keyword sentiment analysis tools or data like where the customer lives to foster more personalized conversations.

Integrating AI into customer service transforms it from a traditional "cost center" into a strategic revenue driver by fostering stronger customer relationships and enhancing brand loyalty. This approach increases customer satisfaction while encouraging repeat purchases and longer subscription commitments, driving higher NPS and lifetime customer value.

Tailored bundles and warranties:

Consumers have concerns about devices that are new to the market or even just new to the customer themself. Extended warranties and available technical support provide that nervous buyer with peace of mind. Nearly half of internet households report that all things being equal, they will buy the brand that bundles in support or provides extended warranties. Further, nearly 50% report that the existence of a technical support service to accompany the smart home device can be the trigger pushing interest to a sale. 

Here’s how AI can modernize support bundle and warranty programs by personalizing offers and streamlining warranty operations:

• It analyzes customer behavior, product usage, and purchase history to recommend tailored support and warranty bundles that fit customer needs.
• It simplifies warranty claims by verifying and approving requests automatically, improving customer satisfaction, and centralizing and automating follow-ups and reminders about support or warranty services.
• It monitors customer sentiment through feedback and complaints, triggering retention campaigns that include warranty extensions or additional support.
• It anticipates product lifecycle events (e.g., nearing warranty expiry) and proactively offers extensions or upgrades.

The Caveat – AI and Trust

Trust is critical when it comes to AI, and it will become more so as consumers have heightened awareness and concern about their data security vulnerabilities and how their data is used.

Consumer trust in companies’ appropriate use of their data is already strained, such that some brands, such as Apple, have staked out consumers’ trust as a method of brand differentiation.

Trust has become a differentiator; in fact, smart home users who would prefer an internet service provider or security service provider to offer whole-home control select these providers because they trust them with their data over smart home device manufacturers. Earning and keeping consumer trust will only become more important as the AI evolution carries onward.

This is an excerpt from Parks Associates' research, AI in the Smart Home: Applications and Consumer Perceptions. Learn more at www.parksassociates.com.