This article originally appeared in the December 2020 issue of Security Business magazine. When sharing, don’t forget to mention @SecBusinessMag on Twitter and Security Business magazine on LinkedIn.
All you have to do is flip through the pages of this magazine over the past few years to get a sense of the turmoil that has faced the residential security industry’s integrators and vendors. First, it was the cable and telco companies invading the space; then it was the influx of DIY options; next came the looming forces of Google, Amazon and Apple.
None of these threats and challenges have really gone away, but the biggest challenge to our country in recent memory, COVID-19, may be the proverbial tide that is lifting all boats right now. As commercial projects and sales lag due to shutdowns, the major players in smart home and residential security are reporting extreme positivity in the space.
“What we're hearing from our service providers is that customers are home, they are ready to take meetings, and they want to invest in their home because they are not traveling,” Alarm.com CEO Stephen Trundle said on the company’s Q3 earnings call. “(Homeowners) have a bit more discretionary income.”
Added Resideo CEO Jay Geldmacher during his company’s Q3 earnings call: “COVID-19 dynamics have shifted from a meaningful headwind in the second quarter to a tailwind in Q3. People continue to spend more time in their homes, which we believe is creating increased attention on the home and a desire to invest, driving demand for renovation and repair projects, and home security.”
Working from home has also added a positive spin to the residential market. “With people working from home, there is this incredible reconnection with the home,” Vivint CEO Todd Pedersen said on a Nov. 5 earnings call. “(Homeowners) are (rethinking) how they live and operate in their home, and how they engage with food, grocery and package delivery. With the increased demand for all of those services, (Vivint) integrates that for the consumer, making them safe and comfortable and giving them the knowledge that they wouldn't have without our services.”
Despite an increase in job-related income decreases across the country, in residential security, customer attrition is markedly and surprisingly improved. “Our dealer performance was exceptional,” ADT CEO Jim DeVries said on a Nov. 6 earnings call. “As of Sept. 30, our trailing 12 months attrition is at a record best 12.9% – an improvement of 60 basis points vs. the prior year across our residential business.”
So, is it a trend or a mirage? “The real question is, is this a long-term trend…or are we looking at some short-term benefits here,” Trundle said. “I think that the nature of our business is one where you add a customer, and you essentially hope to keep that customer for life. It may be life across several properties, but you really do hope that you can add enough value and convenience to their lifestyle that they remain with you or with your service provider for a long period of time.”
The unfortunate truth as I write this is that the pandemic is not receding; in fact, COVID-19 cases are sharply rising as the temperatures drop. Winter, along with a potential alternative view to nationwide quarantines by the incoming administration, might mean that residential customers have several more months stuck in their homes ahead.
That said, whether it is a short-term trend or a mirage shouldn’t really matter; residential security providers need to strike while the iron is hot. Your expertise, smart home technology options, and (hopefully) great customer service, should be enough to secure a long-term customer well beyond the eventual end of the COVID pandemic.
“Hopefully (we can) create an expectation for convenience in the eyes of the subscriber that will last forever,” Trundle concluded.
Paul Rothman is Editor-in-Chief of Security Business magazine (www.securitybusinessmag.com). Email him your comments or topic suggestions at [email protected].
