Build a Better Smart Home
Homeowners are looking to the security market for more than keeping the bad guys out; they want integrated access control and video packages that will help them manage their residences, even when no one is home.
Motivational writer Napoleon Hill wrote in his 1937 bestseller, Think and Grow Rich, that “You are the master of your destiny. You can influence, direct and control your own environment. You can make your life what you want it to be.” Fast-forward several decades and one could apply that same quote with a few liberties; for example, swap destiny, environment and life with the word “home” to describe what technology can do for the residential security market.
SDM spoke with three smart home dealers who have all seen positive results from offering more products and services for a bigger and better home security system.
Vivint Caters to Clientele With Whole Experience
Jeff Lyman, chief marketing officer, Vivint, Provo, Utah, says that the company took off with an access control solution around 2009. “Vivint was just beginning to really experiment by taking the 2GIG panel and then leveraging the Z-Wave capability through a lock and thermostat perspective.” Vivint was truly a pioneer of security companies offering comprehensive home automation services along with a security system, he says.
Vivint’s original name was APX Alarm, a security company founded by CEO Todd Pedersen in 1999, and evolved into Vivint in 2010. The company was SDM’s Dealer of the Year in 2011. Its name, says Lyman, came from the words “vive” (to live) and “int,” short for intelligence — fitting for the home automation giant it has become since its inception.
According to Pederson, last year, the company added more than 200,000 new security and smart home subscribers. The launch of the Vivint Sky Smart Home cloud system and proprietary Smart Home panel pushed its customer adoption rate of additional services to nearly 70 percent. “We believe in a comprehensive system,” describes Lyman. “Access control and video are part of a larger package we provide for our customers who want a total experience in home automation and security.”
The price point varies but it’s possible to do a complete package, Lyman reports, for around $50 or $60 a month. “There is a lot of value packed in our offerings. Because once you have the core hardware in place, like Z-Wave and our SkyControl, you can add incrementally the additional products.”
One of those products just hit the market this spring: Vivint Doorbell Camera. (For more information, see related article, “This Product Knows Who Is at the Door, Before You Do,” on page 102.) “What people expect from residential security goes way beyond what it was even five years ago. People expect comprehensive services all in one.”
Watching the Tide Rise in Florida
Gainesville, Fla.-based Crime Prevention Security Systems, ranked No. 79 on the 2015 SDM 100, is celebrating 40 years of providing security systems to the local communities in not only Gainesville, but also in Orlando and Ocala. It is an all-family outfit. John A. Pastore, Jr. and Randi Elrad started Crime Prevention Security Systems in 1975 and today their children continue the tradition.
Jorgia McAfee isn’t just the vice president of development for Crime Prevention Security Systems; she is also the daughter of the company’s founders. According to McAfee, the rise in residential CCTV systems started to heat up around 2004, when the company started its entertainment division, Custom Home Entertainment.
“We’ve really seen a demand from our clients for systems that can be operated by their smartphones,” McAfee says. “The access control technology is all around us now. People want and expect that they can have home automation systems, and it’s so much more affordable these days.”
McAfee says her company’s prices vary and most access control features are part of a larger security package. “The cost has really dropped for home automation systems and the technology is out there and available for dealers to sell to their clients,” she shares. “Most residential clients are general homeowners who work and don’t want to have to take time off to let in the contractor or plumber. Or they want to know what their children are doing — when they are coming and going.”
McAfee says access control is still a “relatively small part of our revenue, maybe 2 percent, but it is driving our larger systems because of integration, so really it’s making a positive and strong impact on our overall revenue.” The company currently services around 14,000 clients in total, and video surveillance continues to be a popular option for residential customers, she shares.
Crime Prevention has been actively reaching out to clients to ask them to consider upgrading their systems, and the percentage of customers asking for an upgrade has steadily climbed. “As our customers want to interact with their homes and systems, this desire is driving up our retention rates for our clients, and our rates for new clients,” she says.
McAfee says the best advice she can give to other dealers who are interested in expanding their access control segment is to “beta test any new technology on your families first.” She says her team always installs new products and services in their homes before rolling it out to customers. “These days end users expect a lot from their security dealers. If you don’t want it in your home, or the product isn’t a good fit for you, it probably won’t be for your customer.”
Access Control Has ‘Taken Off’ in Tennessee
The folks at Guardian Systems, Smyrna, Tenn., have been installing residential analog camera systems for the last 12 to 14 years, but residential access control did not become a demand in the company’s demographic until the past five years, shared Dan Jarnagin, general manager. “The idea of a ‘connected home’ that can be managed remotely via smartphone or website is still a fairly new concept for people in our area, but over the past few years it has really taken off,” he says.
One area that has grown for the company is the market of vacation homes and rentals. “Today we can offer the capability for the owner or property manager to remotely change the code to the lock on the door and keep an eye on his or her property by integrating the video, access, and security system under one platform that is relatively affordable,” he describes.
Jarnagin shares that in the past two to three years the company has seen an increasing take rate in its residential video and automation services. “The door lock is one of our most common upgrades in the automation packages. I wish I could say the number was higher, but we are probably only including a Z-Wave door lock or IP cameras on 25 percent of the residential installs we do annually.”
However, he adds, access control “definitely provides a steady stream of revenue.” He continues, “We get to increase the monitoring rate when the customer selects video or automation services with their monitoring. It’s a win-win because not only do we increase RMR, we also make the customer a more sticky customer, meaning someone who is likely to stay.”
The company has a unique opportunity, reports Jarnagin, in its residential division in that they do most of their work for new construction homes. “We get to meet with every customer who signs a construction contract with that builder to do a selections meeting for all of their low voltage before they break ground on the home.
“This is the perfect time to paint the picture of a connected home. We tell them: ‘Imagine getting a text message with a 10-second video clip when your kids get home from school, or being able to disarm your alarm, turn up your HVAC, and turn on lights just by pushing in a code at your front door lock.’ Like anything else, when the technology advances as rapidly as it has, the cost goes down and we see a higher take.”
The company is a Honeywell authorized security dealer, says Jarnagin. “We bleed Honeywell red,” he says. The company uses its Total Connect platform that facilitates the control of the automation, video, and security, and Honeywell provides most of the products and solutions for the company. “Except for the Z-Wave products. We use Kwikset for the locks. Kwikset works great with the Total Connect product and we get unbelievable support from them.”
What would he share with other dealers looking to gain a foothold in the residential market? “Find a trusted product line that works and gives you good support. Stick to that product line and limit the amount of manufacturers you chose to integrate with your core product,” he shares. “Keep it a simple process that you can replicate and have the confidence to consider yourself an expert.”
A New Market for the Security Sector
A-COM Protection Services Inc., Columbus Ga., ranked No. 63 on the 2015 SDM 100, is one of the largest family-owned and -operated security, home and business automation companies in the state. CEO Wayne Beck started the company in 1973 as a way to sell fire alarms. Soon, he recalls, more and more of his customers began asking for burglar alarms, and the business took off from there.
To date, the company has 20,000 monitored accounts and after four decades, Beck believes, home automation services, as part of the overall security package, are here to stay. He says his company has seen immense growth in residential video and CCTV. While he does less work in access control, he believes it will grow. “Right now, we do install DMP panels for some clients when people want it for a specific area of their house, a jewelry closet or gun closet.”
Overall Beck says the wave of the future is in home automation. “I think the advent of home automation is on us. People want to control their homes from anywhere — work, vacation spots, or even control the doors or their security systems from their phones.
Beck says one thing that has changed over the years is customer awareness of technology itself. “People now expect a lot from CCTV products. We use OpenEye on our commercial side and we would like to add it to our residential offerings in the near future,” he says.
Beck says his clients want “24/7 live-video monitoring” via their smartphones. Beck suggests that dealers should network systems through their own routers when installing systems. “People tend to use routers that are already in place from the cable or telephone company. I think you should always install your own router; it will save you trouble down the line.”
SIDEBAR: Does DIY Automation Pose Competition?
Research shows that 15 percent of Americans could own connected home systems by 2019 and it seems like everyone wants a slice of that pie, including do-it-yourself (DIY) system vendors. So, SDM asked, is DIY really competition?
McAfee: “This is a whole different market for a whole different type of customer. I think this could offer us opportunities. If ‘do-it-yourselfers’ aren’t happy with their results, they will seek us out.”
Beck: “I don’t think dealers are ever going to compete with DIY. The people who like to do it themselves are the same people who fix up their homes all by themselves. Some people hire a contractor to make sure the work is done right. We’re the contractor.”
Lyman: “With a DIY outfit you are going to be north of thousands of dollars by the time you buy everything you need to set up a home automation.”
Jarnagin: I feel like the DIY systems are a small presence now that we will see grow in the future. We are fortunate to be part of Honeywell’s authorized security dealer network. They are on top of the growing DIY market and help us in developing strategies to contend with it during our regional meetings.