State of Residential Security 2019: Challenges & Opportunities in the Connected Home
Industry execs share which technologies excite them, challenges that keep them awake at night and how they are pursuing success in the connected home in this exclusive roundtable.
On the flip side, what caused you the most aggravation in 2018?
CAMPAU: A pain point for us is really that this space is getting crowded. Maybe the better word for that is polluted because, for example, we have cable companies that are in our territories. Those cable companies are bundling, and they’re really misrepresenting what they’re offering. So, what we’re doing is we’re combating that with bundled technology. They bundle phone, Internet, alarm and cable. We bundle phone, alarm, access to your thermostats, your video cameras — the total app experience. That’s how we’re fighting it. It is incredible, though, how many of these competitors are out there just really polluting, giving the wrong message and misrepresenting themselves. It’s annoying at times.
We just recently saved a business where we had, actually, a longtime friend of mine who called in, canceled and went with the cable company. Then I finally just realized we’ve got to call this guy back and explain to him that he’s comparing apples with watermelons here, and that there’s no comparison from what we offer and from what he’s getting from the cable company. He was told that it would be the same system, that he’s going to save all this money every month and they were going to bundle it. Anyway, the way we got through that is we just told him if he does that he’s going to lose this, this and this. He’s not going to have access to his video cameras. He’s not going to have this app. He’s not going to have the professional support that he’s been getting from us. It turned him around. Now that’s how we’re approaching it.
ROMANELLI: I would tend to agree a lot with what John said as well. There is a lot of this pollution, noise and confusion out there in the market. Fifteen years ago, I had this theory that I really wanted to own every low-voltage wire in a client’s house. I wanted to run their cable. I wanted to run their network. I wanted to do their phone systems. We would sell them audio and the whole nine yards. That business model would be a difficult one, especially when you’ve got techs that are dedicated to one industry vs. another. We started to strip out some things. Today, for a small number of custom home-builders, we do all the low voltage in their constructions.
We will install Sonos systems, network and smart TVs and introduce some really remote access. But in all of that the fundamental for us, particularly with even our smaller clients, is owning the network. Everything we do today is all about connectivity. If the network isn’t strong in the house, if it has different WiFi points or something’s not working right on the network itself, our stuff fails. The customer gets frustrated. Today, it’s easier and easier to fix a lot of things yourself, but a lot of clients don’t even want to be bothered with that. There is still a good number of people out there who’d rather have somebody come in, strip it all out and get it working consistently. In our company, we brought on a product line where we can monitor the networks from our office.
MORTON: There are a lot of things going on in our industry right now that are extremely dangerous to the way we’ve historically done business. Adaptation and change are the new norm in our space. We’ve seen more disruption in the last five years than we’ve seen in the last 25 years. From a new competitive entrance, whether it’s retailers entering the security and monitoring space, online sales and companies, like Amazon, who are very well funded but don’t seem to have an interest in really creating a profitable arm of their security division. It is just another leg of their service offering that they can offer the customers to enhance the value of Prime memberships or delivery or whatever it is they’re going after there. If nothing else those entities are re-establishing price points for our industry, with $10-a-month monitoring and extremely low-cost equipment with no attachment on a contract or a requirement to use their service moving forward. That’s a deviation for most of our industry.
There are technology issues within our industry, in terms of the manufacturers trying to keep pace with this retail arm and create products that compete with them, but we’ve had some issues with camera products and being able to offer the same level of service at the same price points as retailers. We’re also seeing a change in what consumers see as “security.” It used to be an intrusion system. Now it’s a security system. It could be one camera at their front door, and customers see that as protection for their property. So, when someone says they’re looking for security services we understood, before, what that meant. But now what does it mean? Does it mean a door lock that you can control from your smartphone, and that’s it? Does it mean one camera on your property? Does it mean this full holistic approach to security that we’ve done in the past?
From a sales perspective, we have to be much more in tune and astute when responding to leads, trying to qualify leads or trying to determine what the opportunity to close is. Lastly and certainly not least, maybe the most important thing that has affected our industry, at least in our market, has been new alarm ordinances that are extraordinarily onerous on the security companies.
BATES : Sales is my thing; I love being a good consultant. Really, my pain points, at the risk of sounding like I’m against Amazon, if they’re listening, I’m a very good customer. I really admire what they’re doing in a lot of ways. I would say that Amazon Wardrobe, if you haven’t tried that, is one of the coolest things ever. You order three pairs of shoes. You pick the one you want, and you send the other two back. Just drop it off at the UPS. It’s amazing. They’re changing the way things happen, the way they work.
We’ve been thinking a lot about that, internally, because you can fight the headwinds for only so long, in our opinion. Clients are wanting to do this. I see it a lot on the commercial side because that’s where I spend a lot of time with my teams, looking at how to be better consultants. It used to be the agreement, the links, some issue in the agreement, the installation amount and the monthly investment amount. These used to be the things that we were negotiating on. Now it seems like I spend most of my time, in my sales meetings anyways, on how do we just talk to the person that is asking us to provide a proposal for their fairly complex facility? I think we’re all getting trained on this phone that can order you what you want. If it has one-and-a-half stars, why do you need to talk to a human being?
I think we’re just searching for new ways to make sure that we help them understand that there are a lot of things that you can’t get done on an app, whether it’s the door hardware or the local code issues. Then there are problems you’re going to face with false alarms and poorly integrated products. I think that’s really been aggravating this last year, for sure. We just need to talk to you to understand what it is you’re trying to accomplish so that we can deliver the right solutions because we think we’re providing a service.
We have great products from our vendors, but really, we’re providing a service. That’s getting harder and harder to have conversations about, in my opinion. I think it’s blurred lines. Our competitors, more and more, are IT companies. You go to a home and patio show a few years ago, I don’t know of any electrician that also had a part of his booth set up for IP video and the connected home stuff. Now it seems like the electricians are in there against us. HVAC companies are competing with us in our market. Locksmiths, who don’t even have licenses to pull cable, are putting in video systems on the side.
What technology are you really looking forward to succeeding for you 2019?
ROMANELLI: I would say it’s got to be video right now. We need a better offering on it, easy to install, simple and competitive. I’ve walked into so many of my own clients’ homes that have picked up Nest Cams, Wink or some other stuff. Some of them are not that great but adequate and good enough for their market. Our product has not been necessarily easy to install or get online. That offering and how it’s presented needs to improve. I think that’s a huge opportunity. We did more video surveillance [in 2018] than ever before. It was a good year [overall] in CCTV systems, but that ready market is just sitting out there, and we’re losing ground on it to the retailers.
BATES: Ring has been a blessing because there are a lot of empty boxes, with the Ring sitting on top of that, they couldn’t get it. We’re kind of dinosaurs, we work on the patio shows. I can’t tell you how many people come by and are like, “Can you guys install a Ring for us? My husband cannot figure it out.”If we get in there, re-establish ourselves, take over that technology and embrace it, that’s probably what people are looking for. We can all go to Lowe’s and pretty much build a house, if we wanted to take the time, but we depend on contractors because that’s what they do. They’re better at it. They’re on the cutting edge or should be. We just need to be that guy, and I think we can do that because the technology is cool. As long as you still like using Amazon for whatever it is, then you just translate that back into your business and keep doing the new stuff. I think we’re going to be in great shape. Somebody has got to be the expert, and I think it can be us.
CAMPAU: Video cameras, definitely, for me is probably the most exciting area in the industry. It’s really an interesting question because it’s hard drives vs. Cloud. My dad passed away 10 years ago. I worked side by side with him for 22 years. I remember conversations with him. He started our business in the two-way radio business and then dabbled a little bit in security. He sold CB radios in the 1970s, and we sold Nextel phones in the 1990s. Just watching our company evolve, we’re definitely evolving now more than ever.
We’ve got new partners. In the time since my dad passed away I reflect on how, back when he was around, we were still selling different panels. We’re with Honeywell, as I mentioned. We’re selling different panels. We’re selling different video cameras, DVRs and NVRs. We’re selling Cloud more than hard drives. We’re selling access panels and cell phones. We’ve got a different carrier now than we did back then. We’re selling rate plans. We outsourced our central station. We had our central station for 57 years. Then we outsourced it to NMC. That was a move to kind of correct and move with what we believe is to partner with companies that can help us evolve the way that we want to evolve. It keeps us relevant. Choosing our partners today is more important than ever.
MORTON: I couldn’t agree with you more about selecting the vendor partners and manufacturing partners. It’s more important today than it’s ever been in the past. They’re all really good. Someone is going to win, and someone is going to lose. Selecting the right partner is crucial at the moment.
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