Smart home security technology has changed the solutions we sell and the way people use their systems. It also offers an unprecedented opportunity to use insights from the system to more deeply engage with customers and increase the lifetime value of an account.
Traditionally, once an account was created, security dealers had limited options for upgrading customers. Legacy systems did not offer opportunities to expand the service or increase RMR. It also could not provide any insights into account activity and whether the account was at risk of cancelling their service. Growing the enterprise value of your business was driven exclusively by creating more accounts.
Today, smart home technology, cloud services and data analytics make it possible for security dealers to increase the lifetime value of existing accounts, resulting in higher enterprise value for the business at relatively low cost. The key is effective customer engagement.
It is now possible to expand a system over time to generate more RMR, drive system usage and extend the life of an account. With the right technology and insights, this previously untapped opportunity is accessible to dealers of all sizes.
Every customer touch-point — from customer acquisition and installation to on-boarding and support — can help build more valuable customers. The opportunities of engaging with existing customers is a significant opportunity and a new growth-driver that dealers are just beginning to capture.
Driving Engagement, Lowering Attrition
Historically, understanding the attrition profile of an any particular account was difficult. With limited visibility into account-level activity, the most effective approach was to apply an attrition expectation across the entire install base.
Now, with interactive services, it is possible to understand system usage at the individual account level, resulting in a more detailed understanding of the relationship between the use of the system and causes of attrition. With these insights, dealers can directly influence attrition at the account level.
This all starts with good data. An interactive system is generating exponentially more data than a traditional system. What used to be an alarm generated a few times a year (or less) is now a daily flow of activity from all the sensor activity, arming commands, alerts and mobile app use. Harnessing this information and turning it into action is a key to success for today’s dealer.
Alarm.com continually analyzes billions of data points from millions of accounts on our platform to identify specific account characteristics that relate to lower attrition. This makes it possible to improve attrition rates though re-engagement and deliver timely upsell offers to customers.
It is critical to get beyond the general notion that interactive services create ‘stickiness’ and actually produce actionable insights that are specific to dealers. Looking at behavior over time, there is a consistent relationship between the customer’s usage of their system and the attrition rate of the account. In short, the more a customer uses their system, the lower their attrition is expected to be. Of course there is some attrition you cannot control, such as people moving; however, dealers can make an impact and reduce overall attrition if they know where to focus.
The relationships between system usage and account attrition offers dealers a powerful tool. If you can identify accounts that are not using their system frequently, then you can use a customer engagement program to nudge a customer to re-engage with the system. Integrating those insights with a Customer Relationship Management (CRM) marketing program enables a dealer to proactively and efficiently reach out to those customers to help them re-engage with their system. For example, if someone has not logged in to their account in more than six months, you can send them a reminder or a tip for creating a new alert.
With these types of tool at very little additional cost, dealers can proactively reduce attrition in their account bases.
The Upsell Opportunity
Increasing RMR within the existing account base is another growth opportunity that dealers are just now tapping in to through customer engagement programs.
Not only is there a large opportunity to upgrade legacy accounts to advanced interactive services through products like the System Enhancement Module from Alarm.com, but the growing range of connected devices in the smart home ecosystem create further upsell opportunities. As new solutions become available, such as smart thermostats, video doorbells and garage doors, dealers can drive adoption with existing customers. This will increase the value of the account and likely extend the life of the account as well.
Effective data analysis can be helpful here too. Just as system usage data can help identify accounts that are likely to cancel their service, it can also find accounts that are good candidates for upsell opportunities or generating referrals. Integrated promotions for adding new connected devices to the system can be delivered to the customer for easy upgrades.
As the number of connected devices grows, it will give security dealers a steady stream of upsell opportunities. Because these devices are all fully integrated with the smart home security system, they simultaneously generate additional RMR and create more system usage that leads to lower attrition.
Engaging with Customers
As technology has transformed the product experience, dealers must also change how they manage the customer relationship. Not only can they capture a significant opportunity, but with growing competition, it is more critical than ever to deeply engage with their customer bases. Marketing solutions that harnesses usage insights and automate highly targeted engagement campaigns can improve the enterprise value of a dealer’s business.
The customer engagement opportunity and the technology that enables it is not just a notional idea. We believe in the power of effective customer engagement at Alarm.com so much that we have invested in building a Customer Connections program that we offer as a courtesy to our dealers. It is a sophisticated, opt-in customer relationship service that helps drive customer engagement, loyalty, referrals and upsell opportunities. It is turnkey and dealer-branded to make it easy to get started, and we have seen it drive meaningful results for our dealers.
Many dealers recognize the opportunity the smart home presents to capture new customers. It is time to also embrace the benefits the technology can deliver to nurture and grow your existing customer base.
Jay Kenny is Senior Vice President of Marketing for Alarm.com. Request more info about the company at www.securityinfowatch.com/10216128.
