Clare Controls: The Most Disruptive Business Model in Home Automation?
With more than 5,000 production homes under contract, Clare Controls offers integrators a chance to earn recurring revenue on home automation without lifting a finger.
As I’ve written earlier, we don’t need disruptive technologies in home automation right now. What we need is disruptive business models and Clare Controls is giving us just that, with a DIY component and a recurring revenue (RMR) opportunity for dealers – really a first for the home-technology integrator channel.
Let’s just take as a given that Clare has a very slick smart-home system that is dead simple to configure, whether you’re a consumer or professional installer. It’s one of the few pro-centric solutions that offers native Z-Wave integration, alongside support for popular custom-oriented brands in lighting, security, temperature control and the rest of it.
It truly is an excellent system that blends the best of DIY and pro. But do-it-yourselfers can’t buy it directly from Clare or any other outlet. They have to go through an authorized dealer.
Soon, Clare will launch MyClareHome, a portal for customers to manage their systems, educate themselves and buy more stuff.
Buy more stuff? Yes, that’s where the exciting new business model comes in.
Consumers will have the opportunity to purchase supported devices directly from Clare, but the dealer gets credit for the sale. Dealers won’t get the full margin of selling directly to their customers but they’ll get a decent piece of the action without having to do a thing.
The slight margin that dealers give up goes to free shipping, active consumer marketing and technical support.
Tech support? Yes indeed, Clare will handle Tier 1 tech support for MyClareHome customers. That’s right, dealers don’t have to field calls about Z-Wave devices going offline and routers needing a reboot.
Clare is staffing up with a tech-support team at company headquarters in Sarasota, Fla., and a call center in Texas is ready for overflow. Instructional videos and home-automation tips will be available online.
Furthermore, Clare will be in regular contact with users, ensuring they are getting the most out of their systems and suggesting add-ons through the Clare store or the installing dealer.
Any interaction that Clare has with the end user – if the customer purchases something or requires tech support, for example – will be relayed to the dealer.
A Good RMR Deal for Dealers
At first glance, dealers may feel threatened by this model, but so far integrators Beta-testing the service “really like it,” says Clare VP marketing Delia Hansen. “They don’t even care what their margin is. They like that we’re following up with their customers.”
Hansen notes (rightly) that “post-occupancy purchases are really low in this industry.”
The economics don’t sit well with clients who just want to add a few things here and there, she explains: “They don’t want to pay $150 to install an $80 switch.”
What makes the business model viable is Clare’s low-cost easy-to-install solutions. Only three products in its protected online portal cost over $300, and those are partner products from Heos by Denon (that story below).
Clare has one of the simplest systems for self-installation, starting with the enrollment of products, all the way to the configuration of scenes and schedules and the personalization of the user interface.
Without that simplicity, the company would not be able to encourage, let alone support, self-installation.
There is more to this disruptive business model. Clare is going to start charging consumers $12.95 per month for MyClareHome, which includes remote access, advanced automation and the aforementioned tech support.
Clare hasn’t charged recurring fees for its cloud-based service in the past, but it was always part of the plan. Existing customers are grandfathered in for life. Free service. Forever.
Dealers get a portion of that monthly fee, again, for just sitting there and looking pretty.
“That’s their retirement plan,” Hansen says.
It takes a complete ecosystem to make this work: 1) a simple, easy-to configure solution, 2) a consistent communications program with the end user so they stay engaged and keep buying, 3) a program to let dealers earn residuals so they have the incentive to sell and install cheap hubs, and 4) a reason for consumers to pay $12.95 per month.
Clare seems to have the formula. The trickiest part will be to get consumers to pay a monthly fee, but if the company engages consistently, and the experience is positive, then they have a good shot at it, especially since hardware starts at only $99.
In another interesting twist, Clare will incentivize consumers to play with their systems -- adding scenes, creating schedules, rearranging the user interface, etc. -- by rewarding them with discounts for engaging. An engaged user, after all, continues to pay the bills.
For its part, Clare is pushing business to dealers through an aggressive builder program. So far, more than 5,000 homes are under contract. Hansen said the business is coming mostly from production homebuilders who have feared technology in the past, but are now being forced by their customer base to offer something.
They’re taking the path of least resistance with Clare since the only requirement is a Cat 5 drop and a very inexpensive piece of hardware at the premises. Clare provides the Tier 1 tech support, with dealers on the street doing any additional hand-holding.
The Next Step: Analytics
But wait there’s more. If Clare’s business model works, then a large volume of end users will be online using the service and buying more stuff. Clare can track all of that, so the company knows which sales pitches work, which “smart ideas” resonate with users, how people use their technology. All of this data can be passed along to dealers who can refine their own business practices.
Furthermore, once Clare has a lot of dealers doing a lot of homes, the company can ascertain buying habits of consumers and profit patterns of dealers. In this way, Clare can create a model of predictable income that we’ve never known in this industry.
Ultimately, says, Hansen, “We want you to know exactly how much money you should make.”
In this way, customers become fungible on an open market. Dealers can buy and sell clients and businesses as they do today in the alarm industry.
A Couple More Things
Clare has scrapped its multiroom audio and video product line. It just made sense to focus on the new business model instead. For audio, Clare is all-in for Denon’s Heos wireless multiroom system.
“I set it up in four minutes,” Hansen says. “It’s so easy to do.”
She says it’s a no-brainer for customers to add another speaker to the system … and let the dealer earn money on the deal.
At CEDIA 2016, Clare will introduce a new builder program for semi-custom dealers. Previously, the company’s builder program revolved around high-volume dealers and production home builders.
Clare will show a new builder kiosk and messaging program that allows integrators to set their own prices and insert their own logos in marketing materials and turnkey Clare exhibits.
“You email your logos and prices,” Hansen says, “and we put it into the collateral.”
Read more about Clare Controls.
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Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Email Julie at firstname.lastname@example.org
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