With an expected growth rate of 31 percent in 2018, the global smart home market will soon reach total sales of 643.9 million devices, per a recent study by market research company IDC. By 2022, the company estimates as many as 1.3 billion smart devices will have made their way into households. That factors out to one smart home device for every sixth person (babies and children included).
Still, nonconnected homes are projected to outnumber smart homes in 2021 by more than a 2-to-1 margin, according to S&P Global Market Intelligence. In other words, the market is there for those who can get out and make the sales.
Colleen Keyworth is sales and training coordinator for Contractor’s Online-Access, an HVAC-focused marketing company located in Port Huron, Michigan.
“I think it’s coming, I really do, but I think the implementation is a little harder than it’s advertised,” she said. “In theory, we do want to do it. It’s just, we had a hard time getting off the ground because there are a lot more hurdles: licensing’s different in every state … and then there’s finding the disposable income that is your target market. I think with all the Amazon Home stuff, it’s going to be there, but there are some milestones to get through first.”
The NEWS spoke with Carol Longacre, connected home program manager at Service Nation Alliance and a former remodeling contractor, for her thoughts on what those challenges are, how to address them, and what’s coming down the road for HVAC contractors working in the smart home industry.
The NEWS: What’s changed in the smart home market in the past five years?
Longacre: I think it’s just becoming more and more prevalent. People are embracing it more; there’s less fear of the unknown. From what my industry research is saying, there’s been advancement since five years ago, but I think in the next five years, it’s set to grow exponentially.
The NEWS: What’s the hang-up that’s keeping everyone from running out and buying smart homes now?
Longacre: I think it’s between our ears, so to speak. It’s just so new that I think people have a lingering fear of “Big Brother” listening in on them. But I think the fact is that with so many households bringing Alexa into the house, people are becoming more comfortable with the idea of voice-activated technology.
The NEWS: What does that mean for HVAC contractors looking to add smart home to their portfolio of services?
Longacre: I think it’s a wide-open field for them if they embrace it. But it’s not the same way they’ve done business in the past. It’s a whole new protocol to business, a whole new way to look at revenue. The sale of traditional HVAC equipment is different from the sale of smart home equipment.
The fact is that they won’t make the same margins [from smart home equipment sales], so they have to have the financial ability to start the jobs. It’s a long-run investment, and it takes a change in mindset.
The NEWS: Should HVAC contractors get into the market now, versus waiting around to see how much it really takes hold?
Longacre: It depends on how strong their business is, really. If they enter thinking “This will save my business,” it will end up doing more harm than good, because there are a lot of things you need to do before you can start. Which is what we’re trying to do at Service Nation: We’re trying to put together that package for our contractors. There’s marketing strategies, licensing … Finding that information can be tricky because each state, each municipality may be different in terms of the licensing that they require in order to do smart home installation.
The NEWS: What should HVAC contractors be aware of when they start working on their selling strategy?
Longacre: Contractors shouldn’t really look at the big security companies as competition.
Those companies may have the money to be able to give away “free” equipment, but contractors are better than the competition because they’re already in the home, and they’re trusted advisors already. They can be a source for the homeowner, and that’s an advantage others don’t have.
They’re already there, they’re already in control of the home, and they have products that can tell you things like what the system’s producing, what the energy usage is. So they need to go to market a little differently and come up with a strategy that builds on that strength. They’re not having to spend the marketing dollars in the same ways that security people have to.
The NEWS: What strategies should contractors be considering in terms of training their employees for smart home sales and installation?
Longacre: There’s two ways to approach sales. Some of our contractors use a technician with a marketing piece. There’s some who hire a salesperson just to sell the connected home. And then there’s a combination approach: a salesperson just for connected home, using the technician to get in the door.
In terms of techs, we’re finding that some of the guys are not as open to it as they could be. They’re having a hard time selling it because it’s different from what they’ve been selling, and they just aren’t as familiar with it yet. We’ve seen businesses give equipment, give the kits to technicians so they can install them in their homes. That’s probably the best approach to get them comfortable with the technology. We’ve found they like to show it off, demonstrate it to customers on their phones, the same way you’d say “Hey, look at my dog, look at my cat.”
The NEWS: What do you think is the biggest trend that contractors should be paying attention to?
Longacre: Probably voice automation and the simplicity of having everything in one place: one app, or one automated voice command system. So when contractors are choosing what products to offer, they’ll want to make sure the product line they choose is well-backed; find a company that’s going to give you customer support and is forward-thinking.
Publication date: 12/10/2018