Getting 'fence sitters' to commit to security

A new study from Parks Associates says a new value equation with smart home features draws customers
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Friday, November 1, 2013

DALLAS—Nearly 10 percent of the nation’s homeowners with broadband at home—about 5 million households—considered purchasing a home security system over the past year but didn’t acquire one, according to a new report from Parks Associates, a market research firm based here.

However, Tricia Parks, the firm’s CEO, told Security Systems News that with the right strategies, such “fence sitters” can turn into customers.

That’s because the research—resulting from multiple 2013 consumer surveys of U.S. broadband households—also showed that two-thirds of households without security systems expressed interest in “smart-home” systems “that provide a mixture of safety, security, and home control features.”

By adding smart-home components, Parks said, “the security industry has a lovely opportunity to begin actualizing on this potential.”

The statistics come from “Expanding the Base: From Security to Smarthome,” a research project the results of which Parks Associates released this fall.

Among the key findings of the study is that “new features and capabilities have the potential to expand the market for home security services well beyond its current rate” of roughly 20 percent.

Parks said that smart-home components cost more but add value. “To be able to do things like turn on and off your lights, program your thermostat and have these cameras, the whole value proposition is going up and that’s going to encourage what I’m going to call the fence sitters,” she said. “I wouldn’t say it’s as simple as low hanging fruit [to turn them into customers]. … However, they’re available and that’s a darn good start to getting higher volume.”

Among the recommended strategies in the Parks Associates study is to “offer three tiers: safety; safety and security; and a comprehensive system [for higher end customers].”

Also, the study warns, “be cautious about cross-subsidizing equipment.”

The study explains that security dealers “often offer subsidized equipment in exchange for monthly service fees and a service contract. This approach has served the industry well to date, but the market may be entering a new phase. Those without security systems today are resistant to monthly service fees and are likely to remain so until the value proposition resonates. Therefore, expanding the market will depend on keeping monthly fees down even at the expense of higher, upfront fees. Cross-subsidized equipment may therefore be better relegated to promotional offers rather than a standard offer."