Throughout the past decade, interactive services have evolved from a concept in the minds of a handful of early adopter security dealers to an industry 'must have.' This can be attributed to the fact that interactive services are proving essential for dealers to stay competitive, meet rising customer expectations and generate vital recurring revenue.
Consumer demand for interactive services is being fueled by a number of converging market factors. For example, consumers are increasingly relying on smartphones and other Web-enabled mobile devices for day-to-day activities. The development of innovative applications for these devices, such as home energy management, integrated video and real-time mobile alerts, is helping drive the significant market enthusiasm. Consumer expectations have risen as well as a result of increased competition from nontraditional entrants into the security and 'connected home' market, such as cable and broadband Internet providers. Also significant, the price point for many interactive services, historically cost prohibitive, has come down to a level that many consumers can afford and are willing to pay for.
Security dealers must understand and prepare for interactive services or risk being left behind. In order to ensure that you are ready to effectively offer, monetize and grow your business using interactive services, consider the five key steps outlined in this article.
1. Know your market — National trends do not always equate to what is happening in your local market. Many markets have become highly competitive as entrenched players ramp up marketing for new home security offerings.
Interactive services can serve as a strategic differentiator for dealers positioning themselves against larger competitors, whether they are the long-time industry rivals or new entrants from cable and broadband networks. These services can also help to not only attract new customers, but also retain existing customers that are bombarded with special promotions and bundled services.
For dealers in markets where competition may not be as fierce, interactive services remain a proven method to retain customers and increase customer satisfaction.
At the same time, there is strong indication that security system customers have a greater level of interest in money-saving services, such as home energy management, than the average consumer. This puts the security dealer in a great position to take advantage of these new trends in service offerings.
A recent report by Dallas-based research firm Parks Associates finds that 40 percent of consumers who currently have security systems are interested in energy management, versus 25 percent of those without a security system. Also, consumers who already own a security system would be willing to pay more (a one-time fee of about $130) for a device that would shave 20 percent off their electricity bill, versus customers without a security system who are willing to only spend $100 for the same offer.
2. Understand technology and platform options — The diversity of options available to security dealers who offer interactive services also extends to the technology platforms underlying these services.
Significant differences exist between interactive services platforms that are broadband based, wireless based or a hybrid solution. Each platform has its own benefits and drawbacks depending on what is important to dealers and their customers.
With broadband-based platforms, the key benefit is to deliver a lot of data simultaneously over the channel. This is great for high-data services such as delivering live video feeds. However, using broadband requires piggybacking on a third-party broadband provider to communicate with customers. This exposes the dealer to vulnerabilities if the power goes out or broadband connectivity is lost.
Additionally, there is still a significant concern around relying on an 'infotainment' channel to have the necessary reliability to deliver a life-safety solution. At the same time, lack of ownership of the communication path limits flexibility and control to manage and secure the platform.
With a wireless GSM platform, information travels securely through a dedicated signal that is not vulnerable to power outages, line cuts or other disruptions more common with broadband-based platforms. Leveraging a GSM cellular network for interactive services ensures there is a secure, encrypted communication path. That said, dealers must realize that some high bandwidth services, such as video, will continue to rely on broadband for delivery.
With hybrid systems that incorporate elements of wireless and broadband, there are still similar downsides that exist with broadband networks and could impact the consistency of services that are provided. At a minimum it is important to have some GSM wireless communication to ensure life-safety alerts will be sent.
For dealers evaluating technology platform options and partners, it is most critical to seek out industry-leading partners that have been first to market with interactive features that enhance security and day-to-day monitoring. These include GSM-based two-way voice services; 'crash & smash' technology that detects security panel destruction during the entry delay; dialer delay and alarm dialing process; and external messaging features such as severe weather alerts that notify customers of imminent tornados, fires and tsunamis.
3. Identify service offerings to deliver — Technology providers and application developers have responded to the growth in consumer adoption of mobile devices by bringing to market a wide array of interactive services that dealers can integrate into their broader home security offering.
Dealers, however, must resist the urge to go for the "shiny object" and instead focus on applicable services that:
Security dealers must understand and prepare for interactive services or risk being left behind. In order to ensure that you are ready to effectively offer, monetize and grow your business using interactive services, consider the five key steps outlined in this article.
1. Know your market — National trends do not always equate to what is happening in your local market. Many markets have become highly competitive as entrenched players ramp up marketing for new home security offerings.
Interactive services can serve as a strategic differentiator for dealers positioning themselves against larger competitors, whether they are the long-time industry rivals or new entrants from cable and broadband networks. These services can also help to not only attract new customers, but also retain existing customers that are bombarded with special promotions and bundled services.
For dealers in markets where competition may not be as fierce, interactive services remain a proven method to retain customers and increase customer satisfaction.
At the same time, there is strong indication that security system customers have a greater level of interest in money-saving services, such as home energy management, than the average consumer. This puts the security dealer in a great position to take advantage of these new trends in service offerings.
A recent report by Dallas-based research firm Parks Associates finds that 40 percent of consumers who currently have security systems are interested in energy management, versus 25 percent of those without a security system. Also, consumers who already own a security system would be willing to pay more (a one-time fee of about $130) for a device that would shave 20 percent off their electricity bill, versus customers without a security system who are willing to only spend $100 for the same offer.
2. Understand technology and platform options — The diversity of options available to security dealers who offer interactive services also extends to the technology platforms underlying these services.
Significant differences exist between interactive services platforms that are broadband based, wireless based or a hybrid solution. Each platform has its own benefits and drawbacks depending on what is important to dealers and their customers.
With broadband-based platforms, the key benefit is to deliver a lot of data simultaneously over the channel. This is great for high-data services such as delivering live video feeds. However, using broadband requires piggybacking on a third-party broadband provider to communicate with customers. This exposes the dealer to vulnerabilities if the power goes out or broadband connectivity is lost.
Additionally, there is still a significant concern around relying on an 'infotainment' channel to have the necessary reliability to deliver a life-safety solution. At the same time, lack of ownership of the communication path limits flexibility and control to manage and secure the platform.
With a wireless GSM platform, information travels securely through a dedicated signal that is not vulnerable to power outages, line cuts or other disruptions more common with broadband-based platforms. Leveraging a GSM cellular network for interactive services ensures there is a secure, encrypted communication path. That said, dealers must realize that some high bandwidth services, such as video, will continue to rely on broadband for delivery.
With hybrid systems that incorporate elements of wireless and broadband, there are still similar downsides that exist with broadband networks and could impact the consistency of services that are provided. At a minimum it is important to have some GSM wireless communication to ensure life-safety alerts will be sent.
For dealers evaluating technology platform options and partners, it is most critical to seek out industry-leading partners that have been first to market with interactive features that enhance security and day-to-day monitoring. These include GSM-based two-way voice services; 'crash & smash' technology that detects security panel destruction during the entry delay; dialer delay and alarm dialing process; and external messaging features such as severe weather alerts that notify customers of imminent tornados, fires and tsunamis.
3. Identify service offerings to deliver — Technology providers and application developers have responded to the growth in consumer adoption of mobile devices by bringing to market a wide array of interactive services that dealers can integrate into their broader home security offering.
Dealers, however, must resist the urge to go for the "shiny object" and instead focus on applicable services that:
- Consumers will actually use in their day-to-day lives. Choose services that increase the consumer's daily usage of the system, like notifications pushed to their phone, live video feeds and the ability to instantly adjust the lights and temperature remotely.
- Consumers can afford. Five years ago some dealers attempted to roll out video monitoring solutions. Yet the price point for cameras, installation and monitoring exceeded what the average consumer could afford. While the technology was available, it could not be delivered in a cost-effective way for consumers that dealers could also generate revenue from.
- Integrate with a consumer's security system. For the security dealer, interactive services come back to the underlying security platform. This is actually a great advantage for the security dealer since the individual services are enhanced through a connected security platform. Home energy, automation and video solutions are now more tightly integrated with the security system. This means you can adopt solutions that allow consumers to set triggers based on security system actions.
4. Determine how to position and sell interactive services — As with any security system offering, marketing, pricing and positioning interactive services to consumers is critical. This once again comes down to knowing your market.
Will a complete end-to-end interactive services solution resonate in your area? Is the end-to-end approach already being offered by competitors and if so, can you deliver one at a compelling price or with superior services?
Alternatively, you might consider selling interactive services independently, allowing clients the flexibility to add only the pieces they want and adding more services over time. Another option is to focus on installing a basic wireless security system that already has the technology and interactive capabilities built in for new customers. Follow up with enhanced services a few months later.
5. Don't overlook your existing customer base — Dealers are understandably focused on generating new customers. Though with interactive services, the mindset must be adjusted to not lose sight of your existing customer base. This is important for several reasons. First, failing to communicate new interactive services to existing customers leaves them vulnerable to being poached by competitors who proactively market the services. Second, these interactive services offer new revenue opportunities that not only improve RMR, but also deliver greater value to customers using the system. Finally, consumers have become accustomed to a rapid pace of technology change, and dealers who deliver innovative services will position themselves as forward thinking in the eyes of the market.
Employing the strategies outlined above when it comes to offering interactive services can enable you to stay competitive in an increasingly crowded market, differentiate your suite of services, increase RMR, reduce customer attrition, and grow your business in a strategic and sustainable way.
Will a complete end-to-end interactive services solution resonate in your area? Is the end-to-end approach already being offered by competitors and if so, can you deliver one at a compelling price or with superior services?
Alternatively, you might consider selling interactive services independently, allowing clients the flexibility to add only the pieces they want and adding more services over time. Another option is to focus on installing a basic wireless security system that already has the technology and interactive capabilities built in for new customers. Follow up with enhanced services a few months later.
5. Don't overlook your existing customer base — Dealers are understandably focused on generating new customers. Though with interactive services, the mindset must be adjusted to not lose sight of your existing customer base. This is important for several reasons. First, failing to communicate new interactive services to existing customers leaves them vulnerable to being poached by competitors who proactively market the services. Second, these interactive services offer new revenue opportunities that not only improve RMR, but also deliver greater value to customers using the system. Finally, consumers have become accustomed to a rapid pace of technology change, and dealers who deliver innovative services will position themselves as forward thinking in the eyes of the market.
Employing the strategies outlined above when it comes to offering interactive services can enable you to stay competitive in an increasingly crowded market, differentiate your suite of services, increase RMR, reduce customer attrition, and grow your business in a strategic and sustainable way.