Special Focus: Residential Technology & Business Trends--Stuck at 20% Installed Base?

May 1, 2012
Honeywell dealers talk about all things residential

After all these years, home security may finally get its calling. With a penetration rate hovering around 20 percent for many years, perhaps this is the time that detection and protection comes home—but through the back door if you will.

There’s nothing wrong with that. Consider security protection and detection another value-add service, and rightly so. Remember that first and foremost new customers and in particular the younger generation want convenience and automation, the likes of which have been brought to the forefront with mobile surveillance, energy management and lighting control—all through smartphone and remote connectivity. There’s so much appeal to remote control of anything and everything, and that goes for security and video surveillance.

So now that these customers crave their conveniences, they will be able to want to check in on occupants of the home or their pets with mobile apps, or find out who delivered a package, or when the cleaning or construction crew came and went. They will now value security bundled with other conveniences and that’s good news all around and perhaps the key to grabbing more market share in the residential vertical.

Give them killer apps and critical conveniences

Sell the customer or the prospect on all the conveniences first. Maybe you don’t even have to point out the fact that it’s security. Give them what they want and how they want it delivered, and they will find value from top to bottom. Perhaps they want to control system parameters with their iPads. Make sure you have your sales team and technicians iPad ready. Perhaps they love their iPhone and all it does? Show them how they can control all the parts and parcels of the services with their smartphone device.

The following Honeywell First Alert Professional Dealers seem to confirm the trends noted above. We recently went to them to find out what’s hot in the residential market and here are their insights.

Growing trend: Home automation first, security as an “add-on”

“I’ve been in the industry for 32 years and I’ve seen more change in the past two years than the previous years combined. Manufacturers are catching up and adopting the technology that’s been out there and it’s now produced more simply and affordably. The market for these services used to be small, but now there’s more awareness and mass appeal. This raises awareness of what security companies can do in addition to providing traditional systems.

As technology like the iPhone or Android becomes more commonplace we’re seeing a growing familiarity with and interest in security systems that have remote monitoring and home automation capabilities. Customers are attracted to the virtual keypad function that they can access and control from smart devices. These are basic, entry-level automation processes that can be done remotely and affordably using a simple, easy-to-operate touchscreen.

Seventy-five percent of the buyers of these types of technology are in the 20 to 45 age group. They grew up with these kinds of technologies and have been exposed to them for many years. For example, my daughter is a college student and when she was looking at housing and apartment complexes, the first thing she and her friends checked was wireless capabilities at each location. Young people are accustomed to this type of technology and it’s a natural fit for them. Often, they’re interested in home automation first, then security—or not security at all. To them, security is an add-on.

Many are concerned by the players from outside the security industry that are beginning to move into our space. However, security companies are typically more trusted than cable companies or telecomm companies in terms of providing services. The process still starts with security, with enhanced services layered onto the security system or panel. I believe end users will still look to the security industry first for services, even though other entrants will attempt to provide these types of products and services. End users have confidence in the level of service that comes from a one-on-one relationship with a local security company.”—Jim Callahan, vice president of Sales, Ackerman Security, Atlanta

Security on the move: Transition to wireless, home automation
“A major trend for the past few years has been the move to wireless for all security offerings. Two years ago, we switched to a wireless system for our residential business. As a traditional hardwire company, it was a hard decision. While it was a significant business move we made, it was well accepted with few challenges. If a customer moves, it’s easier to move their security system with them. Add-ons are also easy, as is of course the original installation.

Our customers also like our experience with Total Connect remote services and that it’s an available option. For example, one customer uses a basic security system and a Total Connect video camera system. His housekeeper comes once a week, and she is terrified of the security system, so he remotely disarms it for her. He’ll check the camera for when she leaves so he can arm the system. He can also do this from anywhere with his smartphone, which was useful during a recent vacation.

Home automation is truly a learning opportunity – not only for our customers, but as an industry. It’s why we like to be on the cutting edge of technology, with new equipment that has a modern feel to it. More customers are looking for technology based on the aesthetics in their home with touchscreen keypads like LYNX Touch that are sleeker.

We expect interest in home automation to continue. Currently, many in the industry are concerned about the market entrance of cable companies. But it’s another opportunity for further educating the public about our industry’s services. There will still be that niche for locally owned and operated businesses that provide better service, quality work and individual attention. That could actually benefit companies like ours. —Jeremy Bates, general manager, Sonitrol of Lexington Inc. & Bates Security, LLC Lexington, Kentucky

Latest and greatest in security: Comparing cell phones and security systems

“My background is in the cellular phone business, which strongly correlates with the security industry. In the early days, cell phones only made and received phone calls. Now you can’t buy a phone without a camera and ancillary features. That’s what’s happening in security. You can still get the basic system, but there’s just so much more that can be added on.

The biggest trend in the past few years has been the move from a wired system to wireless devices. Three years ago, we made a conscious decision to go with the Honeywell First Alert 168 panel and 6150RF keypad, which has the capability for adding wireless devices. We decided to install the equipment to position ourselves for future upgrades to wireless. Many people no longer have traditional phone lines and are seeking wireless security solutions.

We also decided to add Total Connect remote monitoring to our product offerings, and it has generated a lot of interest. We’re also seeing an increased demand for graphic touchscreen keypads. In fact, there’s a TV show, “One Tree Hill,” and our Wilmington location provides security for its stages and sets. They sought the latest keypads, and wanted something with good graphic quality and voice capability. More customers—especially the younger generation—are increasingly drawn to these technically enhanced systems. They’re less likely to have a landline, and they’re used to doing everything on computers or cell phones.” Dave Foster, sales and marketing manager, Holmes Security Systems Fayetteville, N.C.

Remote access is now the standard, rather than the option

“The security industry is an ever-changing landscape. Previously, the standard service involved simply installing an alarm system, connecting it to phone lines and considering the account taken care of. Now, add-ons are the norm, and customers want to be able to remotely access their home or business’s security system from anywhere via their smartphones. Traditionally, burglary has been positioned as the primary concern for customers, and it still drives what we do. But security has evolved to entail much more—primarily in the realm of home automation. And remote access is now the standard, rather than the option.

My parents are 72 years old, and both have iPhones. For them—much like what security customers today believe— as long as things are simple, it’s not about the technology. Instead, home security is about offering customers peace of mind.

As the industry transforms, Koorsen leads the way by providing customers with the ability to control their security systems, view live video feeds of their homes or businesses and control lights and even thermostats, all from the click of a button on their smartphone, tablet or computer.  

Seeing has become believing and the new systems are powerful enough to actually alter the way we live our daily lives. Instead of a 13-year-old daughter calling her dad every day at 3:40 p.m., when she gets home from school, her dad is able to actually watch her walk into the house and wave at the camera while he’s at work. Instead of a woman putting her elderly mother in an assisted living facility, she can simply install a system in her mother’s home and check in on her at the touch of a button. Buyers have many reasons and motivators for purchasing security systems and looking at home automation and remote access. By uncovering these motivators, we are able to cater our systems to the specific and unique needs of each of our customers--providing unparalleled support, security and peace of mind.” Jack Rosebrough, corporate security manager, Koorsen Fire & Security, Indianapolis