Would bundled tech services spur the sales of smart home devices?
Cost, complexity, perceived value and interoperability may be among the reasons purchases of connected home products have been slower than expected, according to a study from insurance company Assurant. However, enhanced post-purchase service could lessen many of the barriers.
While consumers have become more tech-savvy over the past four years, intent to buy has continued to exceed ownership in a majority of connected product categories.
“The consumer experience before and after the sale has not matched expectations,” wrote Jeff Unterreiner, Assurant’s president of U.S. Connected Living, in the study published by Dealerscope.
The report found 85 percent of consumers saying they would buy if the purchase came with complementary services, such as technical support, extended warranties and identity protection. That figure was only 61 percent in 2016.
Thirty-six percent stated their connected devices develop issues that require third-party assistance to solve. The percent of consumers experiencing installation challenges also hasn’t changed over those four years, neither have the number of consumers saying they experience problems connecting their product to a mobile phone or Wi-Fi.
The report also finds that increasing awareness of 5G could be a tipping point for connected home purchases as the technology rolls out over the next decade.
Other recent studies have shown increasing intent to purchase smart home devices being driven by convenience and security. A recent study from Mordor Intelligence found connected cameras seeing the highest demand, followed by video doorbells, connected light bulbs, smart locks and smart speakers.
Yet a 2018 survey from cybersecurity firm CUJO AI found 87 percent of consumers concerned about the loss of personal data and contact information in using smart home devices, 77.5 percent worried about unauthorized remote access and 74.6 percent about the loss of financial data. Many agreed managing multiple devices was not user-friendly.
An extensive Gartner survey of consumers in the U.S., U.K. and Australia from 2016 found 75 percent indicating they are happy to manually set temperature and lighting controls versus only one-quarter who expressed an interest in having devices anticipate their needs in the home.
- Eye on the Consumer: Moving Customers from Consideration to Purchase – Dealerscope
- Majority of American Consumers Feel Comfortable With Smart Home – TraQline
- Smart Homes Market Expected to Grow at a CAGR of 25% – Mordor Intelligence
- The next generation of connected experience – Precision, protection and personalization – CUJO AI
- Survey reveals smart ovens and hobs as ‘least desirable’ appliances – Pinnacle Consulting
- Why Consumer Expectations for Smart Home Technology Are on the Rise – Security Sales & Integration
- Gartner Survey Shows Connected Home Solutions Adoption Remains Limited to Early Adopters – Gartner
DISCUSSION QUESTIONS: What do you think are the obvious and less obvious factors holding back purchases of smart home products? Can retailers do more to reduce those barriers or is there less opportunity than hyped?
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12 Comments on "Would bundled tech services spur the sales of smart home devices?"
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Founder & Chairman, International TCG Retail Summit
So far I have not seen any retailer who has really inspired the consumer to dig into smart home devices. And I have seen many tech stores. From the U.S. to the Middle East, all attempts have not worked. Some even created a smart home concept inside the store. The problem always was that when the consumer went to this “smart home area,” the section of the store was mostly abandoned by the staff and the consumer did not get professional advice. Putting together a smart home just by picking different products from the shelves does not work.
There are already companies that offer installation and training of smart devices including home devices. The personal data issue is a warranted one, and must be thought through clearly and rationally before making the investment.
Chief Amazement Officer, Shepard Presentations, LLC
The question consumers have is if different devices will work together. The set-up can often be difficult. When manufacturers can create products that, similar to computers, “plug and play,” we’ll see an increase in sales and usage. Make it easy, and they (customers) will buy.
Senior Vice President, Dechert-Hampe (retired)
There is a cultural and generational experience shift that must occur for smart home technology to become the norm and it will take time. Early adopters of technology are typically driven more by novelty and cachet than functionality. But as a technology becomes ubiquitous we gradually find it “indispensable.” Take a simple example like keyless vehicle entry and remote start. That was a luxury item — for about five years. Now it is the norm on even the least expensive vehicles. The same will happen with smart homes as they become the norm for homebuilders and new developments. But some of us will still need that technical assistance. (Imagine “raised hand” emoji not available on RetailWire inserted here.)
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
Complexity and a lack of understanding of the value of smart home products are the key obstacles to adoption. I don’t think cost is a big barrier, as most companies will install the products for free in hopes that they will get recurring revenues on the monthly fees.
Enhanced and free post-purchase services may help drive more adoption, but that is not enough. I think smart product companies need to provide more compelling reasons for why consumers “need” these smart home products.
Chief Executive Officer, The TSi Company
Director of Partnerships, Operations, and Legal, MarketDial
The combination of data security issues and difficulty of use creates an enormous barrier for somebody trying to solve a minor problem like having to manually set a thermostat. But as smart home technologies become easier to use and install, these are overcome. It reminds me of early-day computer installation. To take a computer from a box to personal use required almost an expert-level installation. Now you take it out of the box, log in, and all of your information is immediately downloaded from the cloud. Rest assured, smart home appliances will reach this level of ease at some point.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
The consumer tech industry has grown by developing more and more intuitive user interfaces. It doesn’t matter if it’s a phone, computer, or a tablet, one can pick it up and quickly figure out how to use it. Part of that intuitive response has come with years and years of using products and transferring that knowledge to intuitive implementation on new products.
Home connectivity is something entirely new and quite complex. Imagination about what it does must move from science fiction to reality. I say “imagination” because people don’t really comprehend the value and the interconnection it provides. So what you need is better messaging. Followed by offers of training, “We’ll show you how to get the most out of your system.” Followed by hands-on training. Then as some home owners adopt it and others see what they are doing (those early adopters will show off their new toy) more and more people will see the reality.
Senior Vice President Marketing, PDI
There’s a huge market opportunity for this right now. Bundles that include security devices can help drive smart home products. Security products are frequently sold out and hard to come by in this moment. Retailers who bundle their wireless home automation products with security elements are providing a more comprehensive solution and they can capitalize on current market trends in a way that is not predatory. People are more open to online education than ever. There is a curve with home automation: comprehensive bundle and easily accessible education = a productive, beneficial activity for consumers who are cooped up.
Global Retail & CPG Sales Strategist, IBM
As tech gets simpler, more intuitive, relevant to critical needs (e.g., do I really need to stay on the couch to turn off the lights?) and affordable, widespread adoption will occur.
Google advertised their smart home devices by turning the lights blue or with an intrepid arctic explorer scaring his daughter at Christmas. Consumers aren’t buying it — there isn’t enough value to adopt smart home devices.
Note especially how dependent they are on security. That’s bad. Home security has been stuck at around 20 percent of homes since the 1970s. Why? As a woman in a focus group around smart homes once observed “We’ve been in our home 26 years and never been broken into. Why do I need a security system now?”
There IS opportunity — but the device manufacturers haven’t developed a vision for valuable devices beyond security. Over the past 20+ years I’ve worked with the issue often. What I’ve never seen is a manufacturer commit to move beyond security and into true value.
CEO, President- American Retail Consultants
Connected, smart home devices are a solution searching for a problem. This is why they have not been successful. Bundling tech services with these will not change the perceived value and need for these.