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Why I Segment Home Technology Customers into Three Types - ResidentialSystems.com

Why I Segment Home Technology Customers into Three Types

At my custom integration company, we’ve segmented our market into different categories: Pays For Service (self explanatory), DIY (Do It Yourselfer), Free Stuff (thinks that a $99 ADT system sounds swell), Big Box (bring on the Geek Squad!), and Trunk Slammer (one- to two-man shop with no overhead and little business acumen) and developed engagement strategies for each.
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For years, all we’ve asked for in the CEDIA channel is mainstream understanding of home control and automation. Thanks to ADT Pulse, Lowes Iris, Staples Connect, and many others, now we have it. Sadly, many of the new features available on these systems (proximity sensing, geo­fencing, and contextual notifications) aren’t available on their high­end counterparts in home control. Why is that?


I’ve wondered aloud about the lack of geofencing in high­end control systems for months (Alarm.com introduced geofencing in 2012). Why was my Lutron Caseta app the one alerting me to the four lights left on as I left home this morning? Wasn’t that part of the promise of the higher end processor­based control systems? Are we heading toward a world where the majority of home control takes place through a security system or internet­connected puck with legs approach?

What do our customers expect? Who is our customer?

At my custom integration company, we’ve segmented our market into different categories: Pays For Service (self explanatory), DIY (Do It Yourselfer), Free Stuff (thinks that a $99 ADT system sounds swell), Big Box (bring on the Geek Squad!), and Trunk Slammer (one- to two-man shop with no overhead and little business acumen) and developed engagement strategies for each. Here’s how we handle the categories:

1. Pays For Service: Target and Engage. These are our customers. Keep them happy.
2. DIY and Big Box: Drive On. That’s not our customer.
3. Trunk Slammer and Free Stuff: Educate. That’s not our customer. Yet.

Because of this segmentation strategy, we can tell very quickly who’s a customer and who isn’t. It’s very liberating. When we started 14 years ago, we’d take work from anyone who could fog a mirror. As home control and automation has become more mainstream, however, backing the wrong horse or serving the wrong market segment can put you on the road to ruin very quickly.

Because we only target and engage the Pays For Service cohort, we get the opportunity to filter our product and solution selections through the lens of whether or not the product needs professional installation/support and does it produce recurring monthly revenue (RMR)? Sadly, many CEDIA channel products don’t pass that simple test (especially the RMR question).

With the home security system industry going through its own upheaval, we also have new competition from alarm vendors, cable providers and even HVAC contractors. Fortunately, what appears to be a negative quickly turns profitable after digging a little beneath the surface. It turns out what the Pays For Service cohort wants is excellent service! We all know how hard that is to deliver, and rest assured, none of our new competitors are winning any A+ Angie’s List reviews anytime soon.

Because the Pays For Service cohort also sees the benefits of technology, it can be frustrating to get into conversations about typical CEDIA home control offerings. We need features like geofencing, integration with activity trackers like Fitbit, and systems that learn and change based on interaction. Instead, most of the controller­based systems have to be programmed, give the customer very little control over customization, and don’t integrate well with popular products like the Nest thermostat.

It’s time that we realized our place in the ecosystem and started playing well with others in the space. Netflix figured out long time ago the fastest way to market involved becoming ubiquitous. I’m pretty sure my last toaster oven has Netflix installed in it.

We need ubiquity and we need it now. To our trade partners, I say hire the developers, poach the top talent, build the teams, and get ready to acquire or be acquired. To my fellow integrators: sell your customers simple systems, sell RMR, deliver excellent customer service, and don’t tolerate inferior products not keeping pace with the times (no matter how hard your reps try to convince you otherwise).

Good luck and see you in the field.

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