IoT devices are projected to diffuse exponentially from their current penetration by a wide variety of sources, with an estimated 50 billion connected devices by 2020. Among those sources is the home services marketplace, which totaled $319 billion in 2015 and is expected to reach $365 billion in 2018.
Monetization of connected products using new models is a significant opportunity. The value of the lead generation that IoT solutions provide to home service contractors is one new pathway to monetizing customer value. Marketplace models that eliminate friction by connecting buyers and sellers can be applied to connected products. When a product detects degraded performance or failure, a seamless path to investigate and resolve the issue can be offered, creating value to consumers and service providers.
Companies including HomeAdvisor and Angie’s List are creating marketplace platforms for the home service contractor market. A two-side platform that connects service providers to consumers eliminates friction associated with hiring professionals to perform a variety of home services. As the number of users grows on either the consumer side or contractor side of the platform, the value of the platform to the other side grows accordingly.
Contractors can pay $200 or more per lead, evidence that a service providing lead generation is of great value. Smart home solutions can monitor and identify issues remotely and then link consumers with service contractors that can address their issue. This clear and compelling opportunity has led HomeAdvisor, which had $361 million in revenue for 2015, to announce partnerships with IoT companies as it seeks a leadership position in connecting smart products to the home services marketplace. Among the partnerships recently announced are Amazon Echo, Apple TV, and Zonoff.
Angie’s List is another large provider in the home service contractor space, bringing in more than $340 million in revenue in 2015. As marketplace platforms partner with IoT channels, the consumer is offered more choice, and professionals enjoy a larger base and a facilitated acquisition methodology.
Home service contractor agencies have significant opportunity to leverage partnerships with smart home solution providers, but solving specific pain points must be a top priority. Customers want the convenience that connectivity provides, but will not accept solutions that do not work easily or that add problems rather than removing them.
The promise of the IoT era is that it will make the customer’s life easier, and ensuring that promise is essential to expand adoption beyond early adopters.
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