How to Sell Smart Homes to the Middle Market
Why integrators should work closely with middle market homeowners to help them choose their smart home technology.
Integrators have to do more than just hang a sign outside their front door to garner middle-market customers.
During a recent CE Pro webinar, Greg Simmons, vice president at CE Pro 100 Eagle Sentry, said integrators need to work closely with homebuilders to help them select the correct technology to offer in their standards and options.
“But more importantly, we need to explain why an integrator can install a system that controls everything, including audio video, as opposed to the security system,” he said in the webinar, which also included David Weinstein, vice president of residential sales for Lutron Electronics and Fred Napolitano II, senior vice president of Napolitano Homes. “Right now, there is a clear separation between security-based automation and whole-house control. I’d rather control all the low-voltage systems versus just a few.”
Eagle Sentry works with quite a few production builders so it has created packages. The sales team is able to turn around the question from a builder asking, “What should we automate?” to a discussion about commonly used items in the home that can be controlled, such as the garage door or thermostat, and replace that idea of just having a smart thermostat, for instance, with a touchscreen, controller and a remote at a reasonable price.
“From there, we can build on that, whether it is right away or over years of time,” noted Simmons. “We believe that up to 10 percent of the construction cost of a new home could potentially be in the products we provide: shades, automation, audio visual, lighting control and security. And we are seeing that occur. So in a $400,000 house, our target is to be able to provide $10,000 to $20,000 worth of systems.”
Having a great showroom is a plus also for builders.
“We tell builders not to go crazy in their model homes,” said Simmons. “We have a 17,000-square-foot showroom here in Las Vegas. Instead, let’s bring them down to our showroom so we can educate them. For many customers, when they come into the showroom, it is the first time they have ever been exposed to home technology.”
Eagle Sentry starts its sales pitch with security, then infrastructure wiring, then distributed audio. Later, the sales team shifts the focus to lifestyle to introduce a full great room/media room for gaming and movie-watching. But the company also scores points with customers by talking about motorized window treatments.
“The No. 1 increase for us by far, 400 percent, is shading,” said Simmons. “Lutron has made it easy to retrofit motorized shades. I have been prewiring for years and now I can go back to a community that I did previously, with maybe 1,600 homes, and have the conversation with a mid-level market customer about automating their shades and their lighting because I can do it wirelessly with very little damage to their house. It has been really successful for us.”
Simmons advises all integrators to shift their sales conversation from “selling boxes” to selling other physical amenities.
“Boxes are kind of going away,” he said. “A lot of things are going to cloud. But shades, furniture and other physical things are not going to go away. So why not bring that into our conversation? We are talking to the customer way before they are going to talk to the E-Z Blinds guy who is going to charge them the same amount of money anyway. The customer is going to buy shades for his new home from somebody… why not buy them from me?”
Work with Builders
As a builder, Napolitano says having one source for all his technology needs is vital. Napolitano Homes is a top production/semi-custom homebuilder in Virginia Beach, Va. that also targets middle-income buyers.
“We separated it several years ago so the electrician does just the wiring in the home and the integrator does everything else. And that works very cleanly. There is no overlap. It also helps the customer better understand who is doing what. The customer can meet the integrator and sign on for their alarm monitoring, service plans and such,” says Napolitano.
“A lot depends on if you have that showroom facility. That is always the best option. There, [home buyers] can ask the questions and get a customized package that fits their lifestyle needs, such as if they work from home or they travel a lot. As a builder, if you are not working with an integrator that has a showroom, then you need to make sure your field sales representative or the selling realtor is very knowledgeable so they can operate the model home from their smartphone for a demo.”
Napolitano Homes, which also works in North Carolina as well as Virginia, says the marketing on home automation being done by telecoms, cable companies and security giants incited potential buyers to start asking questions and ask for pricing.
“Even though we are production builders, we always customize the options for them. We now have technology as a base package and that has helped us maintain a competitive edge,” he notes.
Lutron has coined the term “mass custom” to describe this new burgeoning market. “The drivers are without question the Internet and the advent of smartphones that are not just a novelty, but bring a lot of value to make users’ live simpler more enjoyable and more pleasant,” says Weinstein, who cited data that there are 10 billion connected devices in homes today.
But by 2020, there will be 50 billion connected devices in the home. According to NPD Group, there is currently an average of only 5.7 connected devices in the typical U.S. home.
He also pointed out that in 2012 there were 3 million smart home-capable dwellings in the United States. In 2014, there are 7 million and by 2017, there will be 23 million smart homes.
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Jason Knott is Chief Content Officer for Emerald Expositions Connected Brands. Jason has covered low-voltage electronics as an editor since 1990, serving as editor and publisher of Security Sales & Integration. He joined CE Pro in 2000 and serves as Editor-in-Chief of that brand. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He has been a member of the CEDIA Business Working Group since 2010. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at email@example.com
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