Dealer News

Our Industry's Transition To Subscription Revenue (Part 1 of 4)

A/V Dealers need to start considering securityTechnology markets are known to move fast and be relatively merciless in the process. Today’s home technology market is no different. Forecast to grow over 20% per annum for the next 8 years, the competition is fierce. Understanding the source of this growth is key to remain relevant and capturing your share of the opportunity.

Noteworthy is the substantial growth in households with security and the recurring monthly revenue market. A market that has been relatively flat for years, is exploding. So what is driving this?

This sudden growth will be driven by turning professionally installed monitoring into True Smart Home control and personal monitoring.

Home Control Industry Projection

Numerous studies have been done by leading market research firms with the intent to understand simple principles behind the ‘smart home’ phenomenon. For example, what does the term ‘smart home’ mean to a consumer? When offered categories to select from, which are the most important? Common categories across these studies include: security, energy management, lighting, and entertainment. Without exception, the number one selected category in every survey we have reviewed is security. And security does NOT mean burglar alarm. Survey respondents are really reacting to the safety and security of the envelope of the house. Cameras, locks, garage door controls and of course, alarm systems. People want to be virtually present 24x7.

From a technology perspective, security and ‘smart home’ or home automation are converging, and it is our belief at Clare Controls, that over time, smart security offerings will meet the automation needs of a vast majority of all homeowners. The cloud backends of advanced interactive services solutions like Clare are sophisticated, flexible and deliver tremendous value the consumer.

Those service offerings also drive your business as a dealer. With subscription revenue (RMR) tripling in eight years, it is logical to conclude the industry is migrating from one of hardware sales to services. As with many contract service driven markets (e.g. mobile phones), the contracts are where the value is, not the hardware. These monitoring contracts can be accumulated and serviced or sold outright at rates of up to 40 times the monthly contract fee. As they say, ‘do the math’. If you had 1,000 contracts paying you $35/month - the liquidation value could reach in excess of $1.25MM.

We do not in any way doubt there will always be a market for luxury systems and services in our industry. Forecast to grow about 5%/year, it will be lucrative for some. If however, you want to ‘market to the masses’ and not fight the onslaught of smart speakers, DIY products, and advanced video solutions from nearly every service provider, ‘smart security’ solutions from companies like Clare Controls can pave the way.

Clare offers full-featured home automation and monitored security in one highly differentiated platform that will help you generate subscription revenue.

In Part II of this series we will go into more detail about Clare Controls, its products, services and marketing and sales tools and strategies that ensure success.

In Part III of this series we will explain in further detail the monitoring contract market, funding alternatives and general contract strategies.

In Part IV of this series we will provide you with a getting started checklist for the new alarm contractor: contracts, licensing issues, billing, call centers and common tools in the industry that help you streamline your service offering…

Wish to know more? Reach out to our inside sales team at any time with questions you may have on getting started!

941.328.3991 ex:7049 

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Topics: smart home automation dealer clare security recurring monthly revenue