Driving New RMR for Home Security

Consumer demand for security solutions is slowing, and systems providers must adapt to meet changing needs. The security industry experienced a spike in purchases, subscriptions, and churn during the pandemic. The uncertain atmosphere of the health crises, social and political upheaval, and economic turmoil drove peace-of-mind buying. Self-installed systems’ providers benefited as consumers purchased online as they were hesitant to allow sales personnel and installers into their homes.

Professional installation from traditional security system providers has since rebounded as a share of systems sold. A healthy segment of consumers who prefer a professional to install their security solutions will remain, particularly as systems incorporate additional smart home devices that require integration or more complex set-up.

That said, overall demand for security solutions are down from pandemic highs. High inflation, an economic downturn, and layoffs constrain consumer spending. Also, less churn is reported. While security subscribers reported higher switching activity during the pandemic, fewer security subscribers are making changes now. This follows the slow housing market, with fewer moves occurring. In addition, the very definition of residential security has expanded to include devices like cameras and video doorbells that can be professionally monitored and provide a “safe enough” experience for many consumers. Security providers must continue to adapt their portfolios to meet customer demands in an increasingly competitive environment.

Traditional players must adapt to consumers’ preference for e-commerce, divorcing the sales approach from the installation approach. Consumers want choice. Operations have to evolve to sell online as well as through in-home sales but continue to offer professional installation to capture a new generation of buyers.

User experience is a strong contributor to DIY growth.

Ring Alarm dominates the DIY market, having a strong brand name as one of the earliest manufacturers of video doorbells. Its emphasis on user experience is a strong contributor to the brand’s success. The Ring Alarm system can be installed with no tools and sets up quickly.

DIY systems constitute a slightly majority of market purchases since their exponential growth from 2018 to 2020. In order to capture this market share, companies emphasize user experience and ease of system setup and use. Maintaining this emphasis must continue as traditional providers add DIY systems to their wheel houses.

RMR, or Recurring Monthly Revenue, is a key financial metric in the security industry. It refers to the predictable revenue generated on a regular basis, typically on a monthly basis, from services or subscriptions that customers pay for on an ongoing basis. In the context of the security industry, here are various types of RMR:

1. Monitoring Services: This includes services such as alarm monitoring, where a central monitoring station monitors alarms and notifies the appropriate authorities or customers in case of security breaches or emergencies.
2. Video Surveillance Services: Monthly subscriptions for video surveillance monitoring, where security cameras are monitored remotely for suspicious activities and potential breaches.
3. Access Control Services: These services involve managing and monitoring access to physical locations, often using keycards, biometric systems, or other access control mechanisms.
4. Remote Management and Support: Providing ongoing remote technical support and management for security systems, ensuring they are functioning properly and efficiently.
5. Home Automation Services: These services integrate security systems with home automation features like smart lighting, thermostats, and door locks, offering customers greater control and convenience.
6. Cloud-Based Services: Offering cloud storage for security camera footage, remote access to security system controls, and data analytics for security insights.
7. Managed Security Services: Providing comprehensive security management services, which may include monitoring, maintenance, updates, and reporting.
8. Cybersecurity Services: For networked security systems, providing ongoing cybersecurity monitoring and protection against potential cyber threats.
9. Environmental Monitoring Services: Monitoring for environmental factors like smoke, carbon monoxide, water leaks, and temperature changes to ensure safety and prevent damage.
10. Mobile Apps and Remote Control Services: Offering mobile apps that allow customers to control and monitor their security systems remotely, receive alerts, and view real-time video feeds.
11. Medical Alert Services: Providing personal emergency response systems (PERS) for individuals, especially seniors, who may require medical assistance in emergencies.
12. Guard Response Services: Partnering with security guard companies to provide physical response in case of alarms or emergencies, often on a subscription basis.
13. Fire Detection and Prevention Services: Providing ongoing monitoring and maintenance for fire detection systems, including alerts and coordination with emergency services.
14. Fleet and Asset Tracking Services: For businesses, offering services to track the location and status of vehicles, equipment, or other valuable assets.
15. Smart Home Security Services: Bundling various smart home security devices and services into a single subscription package, often including cameras, sensors, and alarms.

For example, system owners want monitoring for vehicle theft, trespassing, and fires. Parks Associates research shows that demographics influence the most important events to monitor after break-ins:

? 40% of 18-24 year olds choose stalking and harassment

? 65% of 65+ year olds choose fire

Many of these top-priority events occur in or around the exterior of the home where traditional window and door sensors cannot help. Security system providers and platform-makers have an opportunity to bundle moisture sensors into their packages, and include features like exterior monitoring via cameras and connecting to telematics to monitor and track vehicles.

This is an excerpt from Parks Associates research. For more information on how we can help you, contact any of our team or contact me directly [email protected].

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