Smart home technology: friend or foe?

I’ve been doing a little premature pontificating that smart home technologies could be a threat to building product manufacturers. Based on some secondary data and some of our Energy Pulse 2014 data, I’ve hypothesized that if people believe they’ll save 10% on their energy bill with a smart thermostat (both Nest and Honeywell have issued white papers claiming that level of savings) and they can achieve that for $250, why would they spend $2,000 to add extra insulation or several thousand for an HVAC upgrade or new windows?

I’ve also hypothesized, again based on some of our data points, that if a utility customer purchases a smart thermostat from someone other than their utility, that customer could then be “lost” to that utility. I’ve imagined that action would open a Pandora’s box of non-utility behaviors – that he/she would continue to buy products and services from someone other than the utility and eventually ascribe the “trusted energy adviser” role that utilities so want to own to a host of other players. Ultimately, they would buy as little as possible from the utility.

According to the data just coming in from the field from this year’s Energy Pulse, I was wrong on one front and right on the other.

Smart home technologies/smart thermostats are – broadly – not seen as a better solution to energy efficiency than traditional energy efficiency measures:

  • Only 36% of Americans planning a new home purchase prioritized a smart thermostat as a feature for their new home (compared to 50%+ who want ENERGY STAR appliances or a high-efficiency HVAC).
  • When asked, “Of the following home improvements, prioritize the top three things you believe have the greatest impact on making a home more energy efficient,” only 9% chose a smart thermostat (matching insulation at 9%, so there is a competitive threat there). Far more chose traditional features like replacing an HVAC system or windows.

So … it’s not a threat to traditional energy-efficient product manufacturers as a replacement for traditional energy efficiency measures (though I’m a bit worried about the insulation industry), but it is another shiny new thing people can spend money on vs. spending on energy efficiency improvements.

The bigger threat is to utilities. As we’re digging into the Energy Pulse data, it appears 10% of the American market is what we’d call “Home Technology Enthusiasts.” These folks …

  • Want their new homes to have “a home automation platform with an app for controlling the smart thermostat, lighting, blinds and security system from my phone”
  • Prioritize spending money on their home to make it more automated/technologically advanced
  • Already own a smart home device(s)
  • Are also home energy efficiency enthusiasts

Most importantly, 47% of these folks would change their electric utility if given the chance, and 56% of them would choose a non-utility provider for their electric service.

The people who are Home Technology Enthusiasts are also highly engaged in energy efficiency and open to new energy alternatives. If they don’t buy their technology from utilities, other sources will have a foothold to market/sell energy efficiency solutions, ultimately weakening the utility-customer relationship and pushing utilities further out of the equation.

The one silver lining for utilities: electric utilities are more trusted with home data/usage information than Internet or cable providers or manufacturers (but less so than home security companies).

So what’s the bottom line? Partner, partner, partner. If you’re a building product manufacturer or a utility, establish partnerships in the tech space and start bundling home technologies in with energy and water efficiency offerings. You should seek to be the channel, the concierge who connects the consumer with the right bundle of solutions, and you should get brand credit for it. That opportunity is wide open today, but I’d say the window will be closed within the next 24 months, given how rapidly this space is evolving. We’ll see who the winners are …

Expect more on this and many other smart home technology projections and insights in our next special report – coming in January.

Skills

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Posted on

September 24, 2015

About the Author

Suzanne Shelton

Suzanne Shelton

Where Suzanne sees opportunity, you can bet results will follow. Drawing on her extensive knowledge of both the advertising world and the energy and environment arena, Suzanne provides unparalleled strategic insights to our clients and to audiences around North America. Suzanne is a guest columnist in multiple publications and websites, such as GreenBiz, and she speaks at around 20 conferences a year, including Sustainable Brands, Fortune Brainstorm E and Green Build.

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Suzanne Shelton

President and CEO

Suzanne is the voice and the vision of Shelton Group. Drawing on her extensive experience in energy and the environment – and 25+ years in the marketing and advertising industry – Suzanne provides high-level strategic insights for our clients and guidance for our research and creative departments. She regularly speaks at conferences around the country, including Sustainable Brands, Fortune Brainstorm E and the International Builders’ Show, and serves as a guest columnist for publications like Fast Company, Green Builder and GreenBiz.com.

Susannah Enkema

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Susannah directs our research team and plays a key role in extracting the nuggets of information that pave the way for recommended marketing strategies and creative approaches. Susannah has nearly two decades of market research and strategy experience, including her role as president of SE Consulting, where she led the services for the likes of DIY Network and the makers of GORE-TEX®.

Matt Brass

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Matt steers the creative department in concepting, designing and producing campaigns. He ensures sound strategy and deep insights inform everything his team develops, and works closely with the accounts department to ensure copy and designs will meet our clients’ goals. As a designer and filmmaker himself, he’s also a principal contributor to all of Shelton’s in-house photography and videography work.

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Courtnay oversees our day-to-day operations to keep us running smoothly and support our growth. She establishes project management systems and processes to help our teams anticipate bottlenecks, prevent process issues, and keep projects on time and on target. Courtnay has built extensive experience over 25 years in all aspects of marketing, from account services and project management to design and production.

Aaron Crecy

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Aaron brings to the table more than 20 years of marketing leadership experience with premium consumer-facing brands. He came to Shelton Group by way of Malibu Boats, where, as Director of Global Marketing, he oversaw strategic marketing planning and execution for multiple product lines, with specific emphasis on social media and digital. Prior to that, he served as CMO for a leading daily fantasy sports operator, guiding it from startup to the industry’s third-ranked site.

Scot Case

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A sustainability strategy consultant since 1993, Scot has served as non-profit leader, as a partner in an environmental marketing firm that he grew and sold, and as an executive in a multi-billion-dollar, international company. He has published dozens of articles and case studies, was co-author of the original “Sins of Greenwashing” study, testified before Congress, and been quoted on NPR, Good Morning America, CNN, The New York Times, Business Week, and the Wall Street Journal. Scot was also highlighted in an Emmy award-winning documentary on sustainable purchasing.

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Casey manages our relationships, growth and development with a specific group of clients that includes Environmental Defense Fund, Cotton LEADS and CertainTeed Insulation. She provides leadership and support for the account team members who manage the day-to-day processes for these clients. She contributes to strategic direction for each client and guides our creative efforts to ensure everything we do builds toward meeting – or exceeding – the client’s goals. Her ability to simultaneously see the big picture and pay close attention to the details helps her champion her clients’ needs and identify new growth opportunities for them.