The smart home revolution has yet to take off despite a steady parade of connected devices entering the U.S. market. Just 27 percent of households have purchased any smart home equipment. A big reason is that products have been too costly and too hard to use. But as prices have come down and voice-activated or app-driven tech has gotten simpler, adoption is rising. As more people get into this space, it’s creating challenges and opportunities for marketers.
One challenge is that historically, “smart” products fell into at least three sales categories: security, home automation and entertainment. People traditionally have bought their audio and TV components at places like Best Buy; their locks, lighting and electrical outlets at hardware stores like Home Depot; and their home security and smoke alarms through providers like ADT. With the advent of Wi-Fi, technology startups have invented wireless home automation products that are often plug-and-play out of the box, but don’t necessarily work with other devices.
Now brands are competing to create whole-house solutions for these functions – in effect trying to create a new super-category. So far, shoppers, especially affluent ones who are driving these trends, aren’t quite on the same page. They still see home automation as three distinct product lines and are adopting each device type differently. This lack of cohesion can be hard for early-adopters and others to navigate and creates opportunity for a whole new cottage industry – the smart home consultants – rising to fill the void.
“You’ve got Amazon, Google, Apple and everybody all fighting for exclusivity and it makes it very difficult for consumers themselves to connect all the products that they can purchase in a way that they work together from one set of commands from one hub,” says Micah Rosa, founder and president of smart home automation consultant Smart Home Elves, based in Pittsburgh, Pa.
He estimates that the typical full-home installation price for an average home is between $2,500 and $3,000, including costs and materials. His customers are usually business owners or executives who may be tech-inclined but lack this specific expertise or the time required to research and install everything. They range from ages 38 to 55 with annual incomes from $150,000 to $350,000.
It’s not just small business: Luxury home builders are starting to include Apple technology as a standard feature. Amazon and Best Buy’s Geek Squad have jumped into the race.
They’re all competing for the attention of wealthy trend-setters who continue to lead other shoppers in buying internet-connected home devices. Called “affluencers,” these people have annual household incomes of at least $125,000 and are influential tastemakers who recommend products and services to their social networks, according to the latest Ipsos Affluent Survey conducted in Fall 2017 among more than 22,000 affluent Americans and a follow-up survey in December 2017.
Security and speakers: The new gateway?
With smart speakers outselling other devices, they appear to be the gateway to broader smart home adoption and affluencers are the most important smart home customer. They spend more, plan to purchase more and influence others to the movement.
Affluencers spend nearly four times as much as the typical consumer and 40% more than wealthy but less influential shoppers, according to Ipsos. “There are affluencers driving every category and the affluencers of smart home products are, perhaps unsurprisingly, a merger of tech and home affluencers,” says Michael Baer, senior vice president, team lead U.S. of Ipsos Affluent Intelligence. More than eight million make up this group.
Security shoppers are the most apt to seek smart home products. They are home owners, most likely GenXers who are early adopters and risk-takers. By contrast, smart entertainment buyers tend to be Millennials who consider themselves more likely make recommendations than take them. Connected home shoppers tend to be fit, practical and time-conscious multi-taskers.
Bob Coscarelli fits that profile and lives in the Chicago area. He is a commercial interiors and lifestyle photographer who has two smart homes; a modern townhome in Chicago and a mid-century modern pre-fab home in Michigan City, Indiana.
A self-professed technology buff, Coscarelli has a Ring doorbell, Ecobee thermostats with multiple sensors, plus smart lighting and outlets. He has monitored security with cameras and smoke and CO2 alarms, and multi-zone heating in both houses, all controllable with smartphone apps.
Coscarelli worked with Alarm.com to connect the existing and newer smart systems. One thing he hasn’t installed: smart speakers.
“We haven’t really taken it that far where there’s one device we talk to for everything,” says Coscarelli. “We want a certain amount of control versus a device that’s constantly listening to us.”