Parks Associates Finds Why Consumers Are NOT Buying Smart Home Devices

• The adoption rate for many smart home products has remained consistent (slow and steady) over the past few years.

• Manufacturers and service providers are eager to understand what they must do to make significant gains in sales and revenue.

• Addressing high cost, security concerns, and then winning consumers over with onboarding and ongoing support is necessary to increase device adoption and brand success.

Elizabeth Parks, Parks Associates

Despite the proliferation of available smart home devices and services, as well as numerous escalating promotions, the adoption rate for many smart home products has remained consistent (slow and steady) over the past few years. Manufacturers and service providers are eager to understand what they must do to make significant gains in sales and revenue.

Parks Associates’ research on market barriers mines consumer fears and presents strategies for addressing or alleviating their concerns in order to expand sales towards the mass market.

As smart home device manufacturers strive to drive purchases, consumers’ low market awareness and insufficient product knowledge are adoption barriers. Addressing high cost, security concerns, and then winning consumers over with onboarding and ongoing support is necessary to increase device adoption and brand success.

Parks Associates research indicates that the primary inhibitors to smart home device purchases fall into three main buckets and addressing these will help with the continued growth of smart home devices in the mass market:

• Poor perception of product value

• Security and privacy concerns

• Fear of technical issues

Increasing perceived value - Consumers who have not seriously considered a smart home purchase are likely uninformed of actual costs. Given their desire for low costs, messaging to overcome price sensitivity must tap into other pain points and promise to alleviate at least some pain point. Examples include helping the consumer save energy, preventing losses based on water leaks or equipment failures, or offering life safety solutions. Providing increased value and benefit messaging increases a consumer’s market awareness and product knowledge, and taps into existing pain points that can be solved or mitigated through smart home devices.

Bundling, discounting and lower pricing- The adoption of smart speakers or displays provides a potential adoption path for other smart home devices that can be controlled through a smart speaker. Bundling smart speakers with other smart home devices and integrations with Amazon and Google will continue to prove fruitful in driving growth of smart home devices. Offering discounts and lower priced models of existing devices address both lower income households and the older demographic of ages 55+ who are far more likely to ran affordability as a top three consideration.

Providing more information on data security and privacy – Consumer questions when attempting to purchase emerging connected devices reflect concerns about data security and privacy. One-third of consumers who do not own or intend to purchase smart home devices report data privacy and device security issues as adoption barriers. Several brands and third parties have been taking measures to improve data privacy and minimize the risk of security breaches. Device security measures can also be introduced at consultations with support providers to assure consumers of device security or inform them of available measures to minimize the risk of a breach.

Simplifying and streamlining the setup process - Some consumers will avoid purchase altogether, if they feel unprepared to setup the device. Twelve percent of consumers who do not own or intend to purchase smart home devices report confusion about how to set up and use the device as an adoption barrier. While connected devices inevitably require additional setup compared to their unconnected counterparts, the process must be simplified and streamlined as possible. Uniformity in the setup process across device types and brands can help drive consumer confidence to adopt new products.

Offering ongoing services – Offering ongoing technical support and extended warranty after the onboarding process increases the likelihood of purchase among consumers who do not own or intend to purchase smart home devices and cite 24/7 technical support for the first year and support warranty for at least 5 years as purchase incentives. This gives consumers confidence that if their smart devices don’t work, they can receive free technical support, or send it to the manufacturer for repair or replacement at no additional cost.

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