Happy New Year and welcome to 2018. Starting out the new year with some good news, the results of our 2018 SDM Industry Forecast Study show that total annual revenue for security dealers and security integrators rose 8.5 percent last year, and is expected to increase 39 percent this year according to the study’s respondents. “We’ve been growing, I would say, beyond measure for the last few years,” described Tommy Smith of Atlanta-based KMT Systems, a Honeywell dealer who is featured on the front cover.
Smith was part of a panel of security dealers who responded to the SDM Industry Forecast questions in a roundtable interview format, conducted by phone in December. One of the other panelists, Steve Sopkin of Los Angeles-based Mijac Alarm, said something during the panel interview that has been on my mind since then:
“I think that anybody under 30 will never have somebody else do their own alarm system.”
Perhaps it was his use of the word “never” that made me stop and worry. We all know that the explosion in do-it-yourself security products has everything to do with the millennial generation. But could Sopkin be correct in his assessment of the next generation of buyers, that they will never be interested in a professionally installed alarm system?
Here’s what Sopkin said in context: “…our average age of a customer is probably 45 to 65. The under-45 market for us is rapidly going away. I think that anybody under 30 will never have somebody else do their own alarm system. These systems are becoming easier and easier to put in themselves. And they’re a little bit more tech-savvy, so I don’t foresee a future for residential alarm systems. It’s just going to be a really, really small section as time goes on.”
It’s extremely important that security dealers and the industry as a whole understand how to reach different generations of buyers, but especially up-and-coming buyers. Don’t just dump all of your current product lines and start selling only DIY until you have a firm grasp of what’s going on in the market. Do your homework; there are plenty of studies about millennials that tell you, for example, their strength in numbers, where they live and work, their ethnic backgrounds, and their buying habits, and more.
According to the U.S. Census Bureau, millennials (born between 1982 and 2000) number 83.1 million and represent more than one-fourth of the nation’s population. Overall, millennials are more diverse than the generations that preceded them, with 44 percent being part of a minority race or ethnic group.
They spend more freely and on luxury items and services than other generations. For example, a 2017 Charles Schwab report, “How Americans define and manage their wealth,” shows that 53 percent of millennials spend money on taxis and Ubers, compared with 29 percent of Generation Xers and 15 percent of baby boomers. When it comes to buying “the latest electronic gadget,” 76 percent of millennials said they would spend money on it, versus 66 percent of Gen X and 49 percent of baby boomers.
Once you’ve gotten a grasp on buying habits such as these, learn how and where to reach younger buyers. For example, an obvious media buy is video advertising in taxis or Ubers, or sponsored posts on social media. According to the Pew Research Center’s report, “Social Media Update 2016,” 88 percent of online adults between the ages of 18 and 29 use Facebook.
But even more interesting is millennials’ use of Instagram: “To a greater extent than the other social platforms measured in this survey, Instagram use is especially high among younger adults. Roughly six in 10 online adults ages 18 to 29 (59 percent) use Instagram, nearly double the share among 30- to 49-year-olds (33 percent) and more than seven times the share among those 65 and older (8 percent),” the report stated. If there is one thing your company should do in 2018 to reach young buyers, it’s to start an Instagram profile.
This is just the tip of the iceberg when it comes to understanding new buyers and gearing your services towards them. Keep on reading and keep on developing your offerings — don’t let your business become archaic.