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Smart tech, dumb channels

by Stuart Wilson, Friday 21 November 2014

We need a radical channel rethink to drive mass market adoption of smart home technologies in Europe, argues Stuart Wilson, Editor at Channel EMEA:

Mass market adoption

“Driving mass market adoption of smart home technologies in Europe will require a leap of faith from some of the traditional suppliers and service providers that now find themselves thrust into the middle of this hot new market category.

Channel EMEA spent two days earlier this week at a conference focused on monetising strategies for the connected home in Europe, hosted by research firm Parks Associates.

While the products are available now to provide smart plugs, smart thermostats, smart lighting, smart locks and smart security, the average consumer in Europe is just not taking the plunge. Why not? It’s a tough question, but it is one all the major stakeholders in the industry need to face up to sooner rather than later.

Many of the companies that now find themselves at the heart of the smart home segment are used to taking a traditional (or ‘old school’) approach to sales and marketing. For example, the burglar alarm companies that install a monitored system, or the home automation specialist that deploys a team of engineers to complete a high-end lighting and security camera installation. The assisted sales process could be long and time-consuming and involve visits to the customer’s home.

The key words here are ‘system’ and ‘installation’ – and these are the words many of the companies in this space are familiar and comfortable with. The concept that they are less comfortable with is the idea of plug and play, fully interoperable, easy to install point products that combine great packaging, cool branding, ‘must have’ features, amazing possibilities, slick advertising, competitive pricing and no recurring fees.

At times it feels like the ‘old school’ companies are sucking the life out of smart home technologies and solutions – doing the opposite to what is needed to create mass market appeal in Europe. They are not making it cool, hip or trendy for a consumer to invest in smart home technologies. These companies are more comfortable talking about standards, alliances and even interoperability issues. All important points I admit, but not something the consumer wants to know about (or should even need to know about).

Positive approach

The smart home industry needs to come up with positive sales approaches that emphasise the enjoyable benefits that these technologies offer. At present, there is an attempt to build market traction through an emphasis on factors such as security, peace of mind and cost savings. Again, these are all valid points, but are they really enough to make an impact on the mass market of consumers?

In terms of the usage scenarios, the industry needs to understand what resonates with consumers and creates mass appeal. The one example that stuck in my head from the conference was of an office worker who deployed a smart camera and smart light at home. Whenever he worked late, this simple smart home set-up allowed him to remotely check on his dog and turn the light on for his furry friend when it got dark. (Apparently the dog did not like the dark)

That’s a positive usage scenario that sticks in my mind. Or a smart camera that allows you to look in on your sleeping baby from wherever you are in the world. That’s a usage scenario that tugs on heart strings in a positive way and can maybe even persuade a consumer to open their wallet.

The negative sales approach that plays on consumers’ fears can only ever persuade a small section to splash out on these technologies. The sales pitch ‘Buy a connected smoke alarm and get automated e-mails sent to you when your house is burning down’ only goes so far. A lot of consumers would just prefer not to even think about that scenario.

The products are available and there are hundreds if not thousands of usage scenarios that can be communicated to consumers, but the industry is articulating its sales and marketing message incredibly badly at present.

Channel confusion

There is also confusion over which channels offer the most potential for opening up the mass market of consumers. Here too, the thinking at times seems muddled. We have gas and electricity companies vying to sell smart meters and thermostats, we have security firms looking to sell smart security solutions and we have service providers looking to sell a range of smart home products and services to their customer base.

Is this the best way to approach the European market and persuade customers to open their wallet? I’m not too sure. In the UK at least, it would be fair to say that utility companies, service providers and companies looking for a recurring fee each month are the ones that most consumers tolerate because they provide something they need. These are not companies that most consumers want to build an even deeper relationship with. If smart home technologies are ready for the mass market the industry might need to look more closely at how it works with the retail channels that have the necessary consumer reach.

So what would appeal to the mass market consumer? Products that are easy to install without professional help would be a start. It should be easy to add or replace a smart home product quickly and simply. Oh, and everything should work together straight out of the box. Most consumers won’t mind an upfront payment if you give them a positive usage scenario, but they will be extremely wary of service plans or recurring fees (unless there is some active third party monitoring going on).

After two days of listening to senior executives involved in the smart technologies space, I reached a fairly simple conclusion: the products are available, the technology is ready, there are consumer benefits, but the current sales and marketing approach leaves a lot to be desired.

Some of the more traditional companies coming from a home automation background need to consider their positioning and branding if they want to stay relevant and credible in the world of the smart home. If they don’t, there is a real danger that new entrants – that already have great consumer brand awareness – will move in and force them out.

The smart home industry needs to drive more emphasis on positive usage scenarios and make more investment in the mass market retail channel – especially the point-of-sales experience. To sell smart home technologies to the mass market, you need to engage the consumer at a broader level and demonstrate exactly what these solutions can do.

This could mean mock-ups of smart home systems in stores, or demonstration houses that consumers can actually visit to see the technology in action. The whole concept of the smart home needs to be made fun, affordable, simple and useful. At the moment, there is too much emphasis on practical, sensible, technical and expensive.

The industry needs to stop talking about installations and services, and start talking about cool products that can do some great stuff together. For mass market adoption, smart home technologies need to become consumer products with wider distribution, improved marketing and enhanced retail channel reach.”

Channel EMEA attended the Connections Europe conference hosted by Parks Associates in Amsterdam on 18-19th November 2014.

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