Home Automation Can Be Solid Business Strategy for Dealers

Clever businessmen are always on the lookout for changes—changes within their industry, the products and services available, their competitors, and within their organization. Change is inevitable in any business, especially in a technical one like security. As technology marches forward, demographics and market conditions change, and competitors consolidate, there is only one certainty: over time, our business will change. Our core business is being commoditized by the national competitors. For security dealers, they need to stay one step ahead.

Take home automation, for instance. Now HOLD ON there! I know, I know … you’ve heard ludicrous market projections. You’ve been promised miracle products from companies, including some that should know better, that never materialize. You’ve seen systems with prices in the stratosphere, along with stuff so cheesy that it is unbecoming of a professional installer. I’ve been promised new protocols for a decade and even I have to roll my eyes at times.

That being said, there are some good home automation companies that consider the security industry their premier channel into the market. There are products now available that support the security industry’s revenue models, installation techniques and false alarm reduction standards. These are products that can be sold instead of being given away.

There are good reasons to look at home automation. Take demographics. According to the 2000 U.S. Census, the boomers (Americans aged 35 to 45) are the largest segment of our population, and they are approaching their peak earning years. They use computers and the Internet at work and understand programming and communications. The second-largest segment? Their kids, the “echo boomers” aged 5 to 15! Boomers have family to protect. They are interested in security. These folks haven’t bought “the big house” yet, but when they do, they will want the latest systems.

Another reason is better products. Low-cost, simple systems that integrate security, heating and cooling control, and lighting control are now available. Most systems are accessible by phone. The best systems have Internet capability built in or as an option.

Better margins is another factor to consider. If you are in the low end of the security market and still independent, you’re at a crossroads: you either beat ‘em or join ‘em. It is better to move upscale and offer the service, expertise and systems that the big nationals can’t. Clients can see more value in a system with convenience and energy-saving features. You can make a profit on the installation as well as the monitoring.

The Internet is another good reason; however, it’s a double-edged sword. It allows good companies to provide accurate information about products that are in distribution, available for sale and successfully in use by security dealers. It also allows interested consumers to educate themselves and request the system they want, or verify the integrity of the product dealers have suggested. On the other hand, it is hard to keep dealer pricing a secret.

Don’t try to obscure the cost of the equipment. Instead, emphasize the value of your local reputation, installation, programming, repair service and warranty support. None of that is available over an Internet connection! On the product side, attend manufacturer training, talk to your distributor, a magazine editor, or find the user groups on the Internet—you can get the skinny if you try.

Home automation is a natural evolution of the security industry. Items that people are familiar with today, like security panels, thermostats and light switches are still on the wall. Security dealers can be successful in home automation—it needs to be treated like any good business strategy.

Jay McLellan is president of Home Automation Inc. (HAI) in New Orleans. He is currently a member of the Security Industry Association’s (SIA) Home Automation Interest Group (HAIG) and sits on the board of the Consumer Electronics Association’s (CEA) TechHome Division. McLellan can be reached at (800) 229-7256 or via email at jay.mclellan@homeauto.com.

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