unlocking the connected home market at retail

Unlocking the Connected Home Market

Connected home products are no longer just for early adopters

Messaging needs to adapt to engage and educate the mass majority

Brands and retailers still struggle to communicate value successfully at retail

Green Room Futures

Intro; The Pace of Change

The technology behind the Internet of Things and the possibilities this leads to for the ‘Connected Home’ and ‘Home Automation’ products has been gathering momentum for a while. We are now arguably entering a more mature phase in this product life cycle.

The early adopters are safely on board and products are now aiming for the big time of the mass market. With this target the ‘coolness’ factor will not be a strong enough pull, truly unlocking the category means educating consumers on the value of the category.

However, brands are struggling with the complexities of the sale. • Few brands have managed to tap into the promising potential. • Perhaps because few brands have managed to connect it to a

genuine consumer need. • And few brands are managing to communicate the proposition

successfully at retail.

While we see a proliferation of connected devices, from hubs that aim to control the entire home to stand-alone automated products like a coffee maker, a clear framework of understanding for this relatively new product category is lacking.

The evolution of this tech-led group coincides with maturing online shopping behaviours. Online shoppers for the consumer electronics category are frequently characterised by highly fractured research-focused customer journeys. This shopper journey often relies heavily on the consumer researching unaided. And doing so while lacking the framework of understanding for the product category. This presents brands and retailers with a challenge; how do they communicate the value of their product at retail?


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Research firm Gartner estimates that by 2022 around 500 devices in the home will be connected

Samsung said at the Consumer Electronics Show this year that all of its products will be connected in five years time

Three considerations to gain traction with IoT/Connected Home messaging

1. Understanding the customer; their needs and wants

2. Understanding the consumer; their fears3. Excelling at retail

Understanding the customer, their needs and wants

Understanding the consumer mindset and teaching behavioural shiftWe are dealing with a mostly latent consumer need. Without a frame of understanding, consumers will not be able to see the relevance of this technology in their day to day lives.

Concerning today, people cannot visualise the potential future benefits of this tech unless it is presented to them in a contextualised way.

Understanding how to contextualise the storyIn the spirit of the ‘horseless carriage’, the aim is to find tech that people are currently comfortable with and then extrapolate the understood benefit. You would not dream of buying a car these days without central locking. Why does ‘central locking’ for houses not exist? Well, the power of the IOT and the connected home enables this to happen.

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With reference to a previous behavioural shift, if Henry Ford had conducted focus groups before his production lines went live, asking what consumers wanted, they would have said ‘faster horses’, they wouldn’t have dreamt of cars. Therefore, the first automobiles were called ‘horseless carriages’.


How to identify the needs and wants?

The customer value proposition above looks at some of the often latent needs and wants a customer might identify and the potential way that the IOT and connected home can fulfil these desires. This model also helps to identify and, therefore, lead with the relevance (consumer benefit) over functionality (features). Often, this is about identifying routines and habits that can be automated through the connected home, saving time and worry.

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Benefits

FlexibilityNo need to worry

ControlInformation

Instant access

Peace of mind

Features

Reduces wasteKeeps plants watered

Turns off lightsProtects the plumbing

Conserves energy

Locks doors

Wants

Life to be simplerControl things whilst out

Immediate information ifsomething goes wrong

Peace of mind knowingthings are safe

Check status while on the move

Customise the environmentfor the return

Needs

Doors lockedLights turned offPlants watered

Energy conservedHouse secure

CustomerProduct

Experience

Education

IntegrationTrustworthy

Instant Access

Ease of use

Reassurance

Fears

Cost

Obsolescence

Complexity

Commitment to provider

Data Misuse

Installation

Blind down

Music controlled


Once the needs and wants are determined it is easy to see the benefits, here are some worked examples:

1. Low-level lighting changes the mood of a room instantly, making it homely and comforting. However, turning on five different lamps is a pain, but why should it be when they could all be connected to a centralised device. You expect to be able to control your television from a remote, why not your lighting?

2. When was the last time you left home worrying that you’d left the iron or the hair straighteners on and had to go back and check? No need to worry, these devices can be connected to a monitor that you can view on your phone in your pocket.

3. Do you find yourself avoiding buying plants because you’re worried that you’ll forget to water them, and they’ll die? Fear not, a sensor in the pot can alert you if your new purchase is thirsty and keep nudging you until it is replenished. A drip feed sensor is not far away so that the plant will only need a top up once every six months. And the same could be applied to the plants outside, sensing if things have been a bit hot and caring for them.

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Understanding the consumer; their fears

The Customer Value Proposition framework also works to identify not just what might turn a consumer on, but what might turn them off. For this sector, understanding this driver is extremely important. We’ve detailed below what we feel are the five most pressing customer fears.

1. Financial costConsumers feel they are making an investment due to the cost involved in the purchase and installation of many of the connected home items. Investment requires research, comparison, understanding and conviction, which can lead to an extended, stalled customer journey and fear of making a bad decision.

2. Fear of obsolescenceThe consumer commitment in is not only monetary, but they can also feel as if they are buying into a system. This investment is not futureproofed (#rememberbetamax). Reassurance needs to be given that future iterations of products can include this purchase within their infrastructure.

3. Fear/uncertainty about installationFull-service provision might need to include an option for installation advice or at the very least comprehensive professional ‘How To’ video and live chat options. Especially if the take-up of the product goes out to those less dexterous and less able to help themselves.

4. Fear of data misuseFear of theft and misuse of data is a big consideration for IOT devices. An individual is surrendering a great deal of information about their habits and everyday movements. Consumers need to be assured that the recipient of the information is trustworthy, or that they have the control and ability to opt out if they so wish.

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5. Fear of committing to one service providerGoing from 0 to 100 in one step is a big leap. Many consumers have very few connected home products in place yet; many don’t know where to start. Nest’s approach (“Trojan Horse”) does offer an interesting solution: sell one product, prove its right to play, then expand gradually. However, part of this problem is educating how the technology can integrate … more on this later.

6. An underlying fear of technology. Fear around where tech will take us in the future is frequently played upon by Hollywood doomsday-movies depicting technology/AI rising and overpowering humanity.

All these fears all need to be overcome by trust.

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Taking it too far – the Coates home example…

“Yeah, yeah, but your scientists were so preoccupied with whether or not they could that they didn’t stop to think if they should.” – Dr. Ian Malcolm, Jurassic Park


Excelling at retail

The potential is huge – who is the leader?Though the technology behind the Connected Home is coming of age, in many ways the category is still in its infancy. There is a lot of ‘noise’. But it’s unclear who’s going to take the lead as the game-changers. Many are watching closely as Sky Q launch their wireless home entertainment product into the market. Will they have the customer buy-in to broaden their offering into a wider conversation about connected home products?

Will Customer Service be the key differentiator?To lead the field, it’s essential to assuage the fears identified in section 2. The big differentiator here could well be the brand placing the customer at the heart of their thinking. Customer experience is often touted as ‘the differentiator of the omnichannel marketplace’. Would you agree that the mobile phone company Orange launched to become a top mobile provider largely off the strength of their customer service provision in a category which was in its un-understood infancy?

Does Customer Service also include education and content curation?This customer service focus has to be hand in hand with leading the category in education and intelligent information curation. As raised in section 1, the focus needs to be on customer benefit, not product potential.

The more complex the product/system is, the more buy-in it requires from the consumer and the more they need to be able to trust the provider:

• To look after their data• To keep their service running• To stay up to date and futureproofed• To be open and connect to other devices.

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Understanding how to integrate technologyThe last point in the list above asks the provider to be open and able to connect to other devices. Packages currently exist that allow you to connect one piece of technology to another and create ‘recipes’ to help automate your life.

For example ‘If I lock the front door, then turn off all the lights upstairs’ could be programmed into ‘If This Than That’ (IFTTT). These automating kits can work cross platform and cross brand. They can, therefore, connect similar pieces of technology from different brands, for example associating your ‘Yale’ home central locking system to your ‘Hive’ heating controller.

The big challenge here comes down to who leads this customer education? There are a number of key players in different sectors, Sonos for music, Velux for blinds, Lutron for lighting, but no brand has risen as an overall leader yet.

• The software packages, such as IFTTT are free to customers but they potentially don’t have big budgets to promote their kit.

• Is it in the interests of the hardware providers to educate about the kit that would allow their hardware to be virtually connected to other hardware? Arguably not.

• Should the overarching retailers/curators be advice providers and is this their point of difference in the market.

• Should one provider take the lead and be the ‘never knowingly undersold’ of the market? Hmmm, interesting proposition.

Building customer journeys for specific customer needsWithin retail, the sales assistant needs to act as a real-time, live educator and content curator, specific to the individual customer’s pre-existing knowledge and benefits sought. The role of ‘sales assistant’ is transitioning to that of a fully equipped personal shopper for the category.To enable sales assistants/personal shoppers to quickly profile and segment customer, they need to be digitally equipped and given appropriate profiling tools that help distinguish: • The research customers have already done• The level of connectivity they require (benefits they aspire to

achieve)• The connectivity they are trying to link into (pre-existing tech)

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Right Place Right TimeConsumer mindset needs to be considered by geography and the carefully curated content and education information on products needs to be presented accordingly. Many car manufacturers are now opening pop-ups in malls, why? Because they need a new platform to speak to consumers and can no longer rely on them to come into stores.

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At Green Room, we’ve been instrumental in driving uptake of the British Gas connected home proposition to rival Nest by creating a mall pop up with playful interactivity to help consumers understand the proposition.

Always in Beta – Retail Example; Retailing Connected TechnologyIn recent months, American discount retailer Target and department store Sears have been among the first to attempt a new, dedicated store format for the Connected Home (Open House & Connected Solutions). In addition to being about selling, these formats are “labs to figure out the challenge that is selling the smart home to the mainstream consumer” (Target). Is this right for retail? Were people experimenting and then buying or just understanding and taking in information for later? This ‘always in beta’ state is one that retailers may well have to adjust to in an ever-changing marketplace. For more on ‘always in beta’ see our blog on the subject. http://greenroomdesign.com/blog/green-room-stylus-innovation-forum/


Final takeaways; communicating value, validating buy-in and being right for retail

Key takeaways from article about this; the role retail could/should play in communicating value at points of sale, both in-store and online.

Rules for communicating the value of connected home products at retail

Rise above the noise; amidst the plethora of marketing slang and messaging around products and functionalities, consumers can and will easily get lost and confused in the category. A clear message, focused on educating the customer, is necessary to draw in the mass market.

Don’t talk tech, lead with emotion; don’t just celebrate the technology or create an in-store ‘lab’. Speak in understandable human terminology. Lead with a direct emotional benefit (e.g. stay in bed 20 minutes longer) and capture/convince with a more practical benefit/long term value (e.g. save money on your energy bill).

Put the user first; every consumer’s use case for the home will be different, and so should the product offer. Don’t force entire systems on them, or trick them with product selectors that are nothing more than up-sell tools in disguise. Get to know the consumer’s use case to distill their need and respond to it. Better yet, help them to understand their need and make a grounded decision as to what they need.

Understand the moments; relate the value of the category to the value for an individual; IoT supposedly has endless possibilities, anything with a power button could become connected in the future. Don’t get lost in the prospect of all people-people, people-things and things-things communications/systems, but consider the moments in the home that matter such as ‘the morning ritual’ or ‘bed time’.

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Show the right amount of value in the right place; a store in the traditional sense may not be the ideal place to tell the whole story as you cannot always mirror the context in which the products will be used. If you can’t sufficiently show or trial the product, what part of the story do you focus on to tell the most compelling story?

Finally, consider the long game; this category is growing, nobody knows how big. Earning a place in the consumer’s home is one thing, gaining their respect as an educator is another. Google Nest seems to have delivered an excellent level of value/service (i.e. higher than ‘necessary’ for just the thermostat) and used that over-performance as a beachhead to establish their right to play in the broader Connected Home category, they’ve now moved to smoke alarms and home cameras.

Proving one’s right to play in the Connected Home category is essential to expanding the presence within the consumer’s home. There may yet be untapped opportunities for achieving this, such as truly owning the post-purchase service level.

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