Interactive services, smart home products, and video storage services have been driving recurring monthly revenue (RMR) growth over the past decade, but as self-installation and competition begin to drag down RMR growth, providers are evaluating their success by tracking key performance metrics such as subscriber acquisition rates, retention rates, attrition rates, and recurring monthly revenue.
A big opportunity for security service providers is to build on their core offering by addressing security-adjacent use cases that cultivate peace of mind. Parks Associates’ consumer surveys consistently find that peace of mind ranks in the top three smart home benefits that most influence purchasing.
Professionally monitored households lead in smart home device ownership at 64%. In the households where the devices are adjacencies to the security system, monitoring fees are added and bring average monitoring fees up. Security system “owners” and “intenders” have nearly parallel responses in a few categories. Differences emerge for employment conditions; in addition, security owners are more likely to follow macroeconomic indicators.
Extending Security Beyond the Home
Parks Associates research shows that security system owners and non-owning “purchase intenders” both prioritize – after personal space
Alarm.com and Ring are both entering the car security market. In fall 2020, Ring announced a lineup of car security products with two new devices, along with an API for car manufacturers. Alarm.com released its own vehicle monitoring solution, called Connected Car, in early 2021.
Other things, such as guns, vacation homes, and boats, represent more specialized interests and a lower overall incidence rate in homes. COVID-19 has also raised interest in a variety of security-adjacent use cases and products, such as monitoring vacation homes or rental properties, monitoring family members and pets, and allowing for protected package, grocery, and delivery service when no one is home.
Protecting the exterior of a home is a natural extension of an internal security system. Alarm.com’s Flex IO cellular sensor and Ring’s Outdoor Siren extend security outside of the home to include protection of the yard and outdoor items.
Market Factors in Professional Monitoring
Pro-monitored security may experience a boost in interest among consumers anxious about how economic desperation might increase crime rates. The percentage of households likely to add professional monitoring remains about the same as it has been in 2018-2019, both strong years for security providers and manufacturers.
Typically, system users are charged for false alarms after a grace period; however, collecting fines can be difficult for cities, leading to the threat of cities fining of alarm companies for false alarms. As has been extensively covered in Security Business and on SecurityInfoWatch.com, this issue was resolved in Georgia recently, with the state approving legislation that “bans counties and municipalities from fining alarm companies for false alarms that are generated through no fault of their own” (read more: www.securityinfowatch.com/21216937). This is a big win for the industry.
The likelihood of switching monitoring providers has dropped dramatically since 4Q 2019 – thanks in part to financial relief offers for customers during COVID-19. Parks Associates research reveals that one-third of professional monitoring subscribers are offered some payment relief due to COVID-19 by their provider.
Among the security households considering switching providers or canceling monitoring, the vast majority report they will continue with their current monitoring provider for even a small discount. Parks Associates research shows that those likely-to-cancel subscribers report they are highly likely to reconsider canceling for any one of these offerings. A remarkable 80% report they are likely to reconsider a cancellation decision if offered any incentive. Providers, typically held in high esteem, need to consider these responses and find a way to deliver a few of these incentive offerings.
Steady Growth to Continue
Security and, to a lesser degree, smart home devices face a mixed bag environment from COVID-19. Some householders unwilling to risk exposure to COVID-19 avoid installation and even repair technicians entering their home as much as possible. This cramps growth for traditional security systems, but heightens the willingness to acquire self-install security systems.
Countering this downward pressure for traditional security system are strong new start home sales with a higher-than-average adoption of security. With the partnership of security stalwart ADT and satellite TV service provider DISH to expand access to ADT’s smart home security products through DISH’s nationwide professional network, there seems to be a continued focus on professional installation for ADT as COVID-19 restrictions begin to lift and more Americans become vaccinated.
In recent years, adoption of security systems has experienced growth even in the face of attrition continuing at an average rate over 12%. Overall, slow and steady growth continues for adoption of home security systems and professional monitoring.
If you are interested in more information on benchmarks for providers to compare performance on key metrics to reported consumer behaviors, please visit www.parksassociates.com/marketfocus/security-acquisition-retention-rmr.
Editor’s Note: The Smart Money is a new monthly column in Security Business on trends and technologies for smart homes and related verticals from market research firm Parks Associates.Amanda Kung is a research analyst for market research firm Parks Associates (www.parksassociates.com).
