There are many angles to explore this question. But it’s hard to beat talking to customers. For our clients – energy suppliers, the heating and controls industry, and others seeking to enter the ‘energy’ part of the connected home – it’s critical to understand the answer this question so they can judge the appropriate level of investment and engagement in this emerging area. While sales volumes are growing quickly today, it’s from a small base so while the growth rates are impressive, the absolute numbers are modest for mass market businesses. So, we decided to explore customer attitudes to a variety of connected home ‘energy’ products and services across a number of European markets.
In a nutshell, we found that over half of the ~1,200 respondents found most of the range of products & services we tested either ‘very appealing’ or ‘quite appealing’. We, and our French-based market research partner IFOP were impressed by this given the low awareness of these products and services in most markets. The ability to control heating on a room by room, or zone by zone basis was the most attractive offering with up to 70% interest. Remote diagnostics for heating appliances was the least attractive with ‘only’ 50% of the respondents finding it at least quite appealing.
Finding a product or service appealing is one thing – but propensity to purchase is more important. And this is where we believe companies with the right strategy can get a lead. Based on the sorts of prices and propositions we currently see in the market, take-up will be low – not much above the 10% mark. Of course impactful marketing that maximises the perceived value of products and services will push this percentage upwards. But these numbers would tend to support those who argue that it’s a market for geeks rather than the mass market. However we found that take-up rises to close to one third of the market if prices fall to what we believe is possible with higher volumes. And, if business models enable the products and services to be offered at or close to free, with value being extracted in other ways, then unsurprisingly take-up rises much more significantly.
So the evidence is pointing towards a geeks market with products simply put on retail shelves or pushed through third party channels at relatively high prices. But for those who can understand how to increase the perceived value of these products and services, work towards volume prices, and develop clever business models to unlock value creation opportunities, the evidence clearly points to a mass market.
To hear more about our research in the connected home area have a look at our web page or to discuss our views on how to reach the mass market, contact firstname.lastname@example.org.
P.S. Our research found some interesting variations across different markets – in some energy suppliers are the preferred channel, in others local technicians are perceived to be in pole position. Germany and France showed the highest levels of customer appeal, although the UK showed the highest demand at current market prices.