We are living in the golden age of technology.
Long gone are the rotary phones, answering machines, and dial-up modems that used to occupy residences. Today’s homes come equipped with smartphones, cloud storage, and Wi-Fi connectivity.
Homeowners may use their voices and/or phones to command virtual assistants to play music, dim the lights, lock the doors, increase or decrease the temperature, and more. For some, this new-fangled technology can be a bit obtrusive; though, for others, it’s become an integral part of their lives.
Smart home devices are in high demand.
According to Parks Associates’, nearly 35 million smart home devices will be sold to U.S. broadband households in 2018, including 7.8 million smart lights, 7.1 million network cameras, and 6.7 million smart thermostats.
In 2020, the number of smart home purchases is anticipated to increase to approximately 55 million. By 2020, Parks Associates estimates the average home will be equipped with nearly 30 smart home devices.
“The smart home craze continues to grow with voice control products like Alexa, Google Home, and Apple Home-Pod leading the way,” said Kenny Salzman, business development representative, Smart Automation Solutions, a full-service audio-video solutions provider based in Washington, D.C. “Smart thermostats, security systems, smart door bells, wireless keypads, and dimmers are all very popular items right now.”
‘OWN’ THE HOME
HVACR technicians are among the chosen few service professionals who are welcomed inside their customers’ homes. Such relationships offer techs a distinct advantage when it comes to offering new products and services, such as smart home upgrades and “ownership” of the customers’ technological experience.
Earlier this year, Corona, California-based Total Comfort Inc. visited the Google headquarters in Palo Alto, California, where they were introduced to Nest’s numerous smart home offerings. In the words of Albert Meza, service manager, the company “hit the ground running.”
“After our visit with Nest, our guys were pumped, motivated, and ready to run through a brick wall,” he said. “The third-generation Nest thermostat is the No. 1 product we move. We also sell a lot of CO detectors, indoor and outdoor cameras, lights, and more.”
While the profit margins in connected equipment aren’t exceptionally high, Meza said they help him better execute his job.
“My job is to make sure our customers are as comfortable as possible, and with these smart home devices, I always have something in my pocket to improve their living situations,” he said. “Offering connected devices allows us to be viewed as a technology leader and grants us access to customers’ mechanicals. Before we do any sort of smart thermostat repair or installation, a technician has to make sure each unit is safe to operate, because if we install a thermostat on a gas furnace, and the unit is faulty, there’s a short, or a gas valve opens and causes a fire or explosion, we’re responsible for that.”
All Seasons Comfort Control LLC in Warminster, Pennsylvania, began offering smart home devices via American Standard’s Nexia Home Automation system.
“Smart home items don’t offer contractors an enormous margin,” said Chris Long, owner and general manager, All Seasons. “We try to piggyback some of these items on our maintenance calls, which tend to be low-margin calls. These smart home recommendations extend trust with homeowners, as those who purchase these items tend to love them. They also offer us an additional upsell opportunity.”
Seeing that most smart home devices are widely available online and in big-box stores, price often serves as a primary objection for customers when dealing with contractors.
“A Nest thermostat costs around $200,” Meza said. “Our minimum hourly labor wage is $185. Suddenly, after the system check we require, customers are paying $500-plus for a thermostat they’ve seen advertised for $200.”
To overcome the cost objection, Long said All Seasons elects to subcontract the work out to a local technology specialist.
“This is a new arrangement for us, but it’s one that’s working out very well,” Long said. “For example, we’ll install the thermostat, and if a customer wants the security system, cameras, door locks, etc., we’ll call our technology specialist in. We’d rather not get tied up for hours installing door locks, and customers would rather not pay our rates for us to install door locks.”
Once customers purchase their first smart home device, it’s often difficult for them to stop, said Meza.
“We have a customer who is a professional chef who manages a commercial kitchen and the necessary staff from her home,” Meza said. “I asked, ‘How do you manage your staff when you’re traveling around the world?’ She didn’t have a great answer, so we sold her on the Nest camera and speaker, which allows her to monitor and communicate with her team through her phone.
“We also noticed she didn’t have the appropriate smoke or carbon detectors for an outfit of that size,” Meza continued. “Additionally, the home was positioned on a nice 3-acre lot, so we shared that a security system could help keep her valuable cooking equipment secure. Eventually, when we were done, we’d sold her nearly the entire Nest portfolio.”
While smart home equipment can be contagious, Long cautioned techs not to push too far on an initial install.
“We’ll sell the Wi-Fi thermostat during the initial purchase but tend not to push any further,” he said. “We feel that we’re pushing too far if we say, ‘Hey, you just bought an $8,000 system, how about a door lock and a camera?’ Unless the person’s really into technology, it’s often best to wait on offering those items.”
While the existing smart home market is largely built out of convenience, it’s only a matter of time before these items become needs for America’s middle class.
“The demand is there,” Long said. “As more and more people invest into the convenience provided by these technologies, they become necessities. Consider how quickly the smartphone has become a must-have. I’m excited to see where this market goes. As an HVAC contractor, if the connected home is not on your radar, it should be; embrace it now, before you miss the bus.”