It was only a year ago in the pages of The NEWS that Butch Welsch, president, Welsch Heating and Cooling Co., St. Louis, said the evolution of home automation truly is just beginning in the HVAC market: “These home automation systems are evolving rapidly, and I believe we, as contractors, are still learning how to utilize these technologies.," he said. "Homeowners are also just learning and becoming aware of these technologies, as well. That said, I do believe home automation will soon be a part of every newly built home.”
His words are proving prophetic quicker than perhaps he, or anyone else in the HVAC contracting world, could have imagined.
From 2014-2017, connected home technologies sales in the United States rose from $98 million to $1.485 billion, per Statista. For 2020, the global smart home automation market is forecasted to reach $21 billion, compared to $4.4 billion in 2013. The predicted compound annual growth rate between 2013 and 2020 should be 26.3 percent.
Put in a simpler context away from the raw facts and figures, homeowners are clearly ready, willing, and able to accept home automation products.
This is both a great opportunity and challenge for contractors. Selling home automation products is not something that can be added to a business model without time, effort, or planning. Contractors must understand how to introduce home automation, who the target audience is for the wide array of products and services that fall under its umbrella (hint: it’s just about everyone), and perhaps most importantly, have a firm grasp of home automation themselves.
LEARNING THE AUDIENCE
Per Transparency Market Research, the home automation market is segmented on the basis of application into lighting, safety and security, HVAC, entertainment, and energy management, among others. This is obviously a broad scope, but HVAC is an important facet of that marketplace, and the recent growth of Wi-Fi enabled HVAC equipment has been critical to its rise.
“The HVAC home automation market is for everyone,” said Matthew Pillius, owner and CEO of Royal Class Service in New Windsor, New York. “Especially commuters who have both spouses working and are leaving pets at home, or empty nesters with the same type of scenario. If [homeowners] have no resistance to technology, then it’s a fit. Landlords that want to control their properties are also a good fit for these type of products.”
Landlords may be a specific example of a situation where home automation is a no-brainer, but Richard Biava, vice president and co-owner, GAC Services, Gaithersburg, Maryland, added that his team is finding that home automation products generate curiosity from all generations. There is no reason to target a specific age bracket for selling purposes, because anyone can show interest in connected features.
“Many of them are younger Gen Xers or millennials, but you do have some baby boomers who are into gadgets and want to use these devices to have more control over the home,” he said.
Steve Saunders, CEO of Tempo Air in Irving, Texas, has actually had an adverse experience with home automation to this point. He said he recognizes that there is growing interest in home automation, there is hype around these products, and they have become easier to introduce as the market has matured in recent years, but there are still difficulties to overcome.
Saunders has three automation products, connected to three different thermostats inside of his own home with one master controller. “I have security, I have all sorts of stuff … and most of it is not particularly helpful,” he said. “I think that may mean … (representing the older generation) that ‘we’ have not really become more comfortable … or it may mean that the products are not particularly useful.”
Saunders’ experience highlights the inherent challenge contractors are presented with in regards to selling smart products and home automation: Finding ways to become comfortable with a growing marketplace themselves before introducing it to a customer base with a healthy appetite for new features and controls.
A SIMPLE INTRODUCTION
For Pillius, the best way to introduce home automation is to simply begin a conversation with customers, learn how much they already know about these products and the benefits they offer, and then get into the finer details of what these products are capable of, once properly installed.
“I really think customers buy these things online thinking they can do it themselves (most find out they cannot) or they have prior knowledge of a friend, relative, etc. that did it before, but they are still shy on it until explained,” he said.
Online purchasing is a part of the home automation and larger HVAC puzzle that the industry is going to be piecing together in a major way in the years ahead. Retail e-commerce sales worldwide are forecast to nearly double between 2016 and 2020, per Statista. During an April 2017 survey, 40 percent of internet users in the U.S. stated that they purchased items online several times per month, and 20 percent said they bought items or services online even more frequently, on a weekly basis.
HVAC is not going to be the marketplace that remains forever immune to these trends, especially in the home automation segment, where smart thermostats, security systems, and smart lighting features are featured prominently online and in big box stores.
It’s in those big box stores where Biava has seen customers buy home automation products and then turn to his team for the installation process.
“To mark up the cost of the parts and then the labor to do the work, most people don’t want to spend that amount,” he said. “We have found with our electric department that we can have the customer buy the items online or at Best Buy and then we charge to install the systems for them.”
The selling points of home automation, according to most contractors, are clear. Home automation allows remote control over multiple aspects of a home, alerts and updates when things aren’t functioning properly, and detailed analysis of multiple systems.
“[A lot of times] people don’t quite know what they can achieve with home automation and they just want the basic features, it seems,” said Pillius. “Highlight how it can allow caring for the environment for pets from a long distance, or controlling the family so they can’t mess with fixed settings, and also allows alerts from devices to notify users of system issues.”
Many contractors have said home automation is something they are considering getting involved with, or are “keeping an eye on.” Data and recent successes would suggest now is the time to get fully involved with this area of the business.
For those who remain nervous or hesitant to get involved with home automation, despite its upward trajectory in both revenue and consumer interest, Pillius has a simple piece of advice:
“Cut it out and innovate, because home automation is here to stay.”
Publication date: 6/11/2018