Daisy Silicon Valley

Custom Integrator Playbook for the Next 25 Years

Well lit home interior with table and chairs, sofa and lounge chair with lamp on cabinet.

I’ve often been called a visionary because I started cyberManor, one of the first custom home technology integration companies in the United States in 1999, focused on using a broadband internet connection, a router, and a network switch to serve as the backbone of what is now commonly referred to as a smart home. In 1999 Cisco filmed a SmartHome video at cyberManor touting these technologies as the future of all new and existing homes.

Twenty five years later the smart home is now part of our everyday lexicon. The smart home is no longer a futuristic concept but have been fully built out in every city and state in the country with an average of 22 smart devices in every US household. (Source: Deloitte Insights). Mission accomplished - so what’s next?

The smart home infrastructure has been built. We now need to build the service infrastructure to support all of these smart homes reactively and proactively on an ongoing basis to ensure that every homeowner receives the maximum benefit and enjoyment from their evolving smart home systems.

As challenging as it was to build up a nation of smart homes, providing an ongoing reliable service of reactive and proactive service of all these smart homes in a profitable manner will be even more challenging. A leading industry player recently sent out a survey to over 30,000 customers on how happy they were with their smart home systems. Customers provided an average Net Promoter Score (NPS) of only 40 (out of a possible 100). This low score means that the average owner of a smart home system is dissatisfied and is unlikely to recommend our channel’s products and services to others. To be fair, clients of some custom home integrators would give a higher NPS score. There is no greater challenge, and opportunity, in our channel than providing home technology support service for this frustrated client base. There is also no better way to increase the value of our businesses than providing these services to our company.

“Subscription businesses enjoy generally higher valuation—five to seven times the multiples of their transactional peers.”
— Robbie Kellman Baxter, Harvard Business Review IdeaCast interview

This also applies to the customers whose systems were installed by other custom integrators. Over the last 2+ decades of smart home technology most clients have seen their primary custom integrator leave or go out of business. Less than 10% of the custom home technology integrators in the San Francisco Bay Area that cyberManor company competed against in the year 2000 are still in business today. By definition, most smart home customers in the San Francisco Bay Area have had to seek out at least one, if not more, new custom home technology integrators to help maintain and service their systems.

To date, how has the industry responded to these unhappy, stranded clients? Not very well. Taking over the home technology issues of a homeowner that is not an existing customer is not a strength of the custom installation channel. This is due to many, if not all, of the following reasons:

  • Most custom home technology companies’ technical resources are typically at capacity just serving their existing customer base as the NPS score above tells us.
  • Customers with service issues typically require a much faster response time than project based customers where some projects can take several years to complete, placing a strain on technical resources that are primarily dedicated to project completions.
  • Addressing the smart home issues of a new client can be extremely challenging. Equipment is often outdated, wired and wireless networking infrastructures may be compromised, and software and firmware versions may be out of date or incompatible. It requires the most senior technicians with the greatest experience and broadest range of home technology troubleshooting skills to tackle these challenging issues.
  • The customer is frustrated that they paid a lot of money for technology that no longer works well. The senior technician on these troubleshooting calls must also possess great interpersonal skills to help diffuse these tense initial service visits.

Those home technology companies that excel at providing reactive and proactive services to these dissatisfied customers will be the ones that will prosper and be most valuable over the next several decades. The following is a typical meeting scenario that serves to prove this point.

A customer who praises their custom integrator for their outstanding service over a long period of time will be the same customer that might someday be sitting in a meeting with their custom builder asking to build their new dream home. That custom builder, or architect, or interior designer, will most likely tell the client that custom integrator ABC is the best integrator in their geographic area and they should be chosen for the new home’s technology systems. The client responds back - no, I already have an integrator that I trust implicitly who takes care of my ongoing needs and I want to use them for my new home project. The conversation as to who will be the new home’s technology integrator is done.

Over the course of my home technology integrator career I have witnessed this conversational exchange multiple times and there is no better way to influence a new builder, architect, or interior designer to use your custom integration company on an ongoing basis than to prove to them that your project skills on this first job are as great as your service skills. Conversely, a relationship with a trade partner is highly dependent on the ongoing relationship of the custom integrator principal(s) and trade partner principal(s). If anything disrupts that relationship it will have a significant adverse effect on the financial health and value of the custom integration company. A strong, ongoing home technology service relationship between a custom technology integrator and a homeowner lasts a lifetime.

When I started cyberManor back in 1999 we initially sold networking equipment to our residential clients, most of it being used for just home office applications. As time progressed that networking gear became critical to the home's entire technology infrastructure, from distributed audio/video, security systems, and control. For every dollar that was spent on home networking gear $10 would be spent on all the additional equipment that was attached to that home networking gear and our business and profitability grew rapidly. CEDIA had a tag line - Own the network, Own the home.

Fast forward to today and a similar business model holds true. For each dollar of recurring home services that you sell you should be able to attract $10 of project based revenue over the lifetime relationship with the client because outstanding service leads to clients needing and wanting more home technology equipment. CEDIA’s new tag line should be: Own the ongoing service, Own the home.

As a custom home technology integrator your success is directly related to the quality and performance of your team and how you prioritize these scarce resources. Nothing will enhance the success and long-term value of your business more than prioritizing the provisioning of outstanding reactive and proactive home technology services over the long term. The smart home is still in its infancy, and it will need outstanding professional, long-term recurring service care for decades to come.

Pivoting to Services

For a more detailed understanding and comprehensive overview of the importance of services for the custom home technology integrator please click here.