The concept of a smart home has transformed from a futuristic dream to a reality that many households now embrace. At the heart of this smart home vision is the ability to provide personalised services and experiences to consumers. This could include services such as personalised diets, smart home energy management, health monitoring, and many more.
The future is bright for companies which embrace this vision. However, in an age where brand loyalty is increasingly fluid, consumers will demand greater value from companies to stay loyal.
The evolution of smart home and the threat to brand loyalty
The early phase of smart homes witnessed the introduction of basic analogue technologies, enabling the simple on/off control of devices, which has further developed into an analogue remote control. This was the era of connected thermostats, lighting, and security systems.
The next phase brought about integration and interoperability as key drivers. Devices from different manufacturers began to interoperate through digital voice controls, offering users greater convenience. However, issues of compatibility and competing standards emerged as barriers.
To address this challenge, the introduction of the Matter protocol became a game-changer. This open-source initiative aimed to create a unified standard for smart home devices, promoting seamless communication between different brands.
The next phase in smart home evolution could lead to the integration of robotics and AI. Robotic devices capable of performing tasks like cleaning, companionship, and security are becoming commonplace. AI-driven systems learn user preferences and adapt the environment to optimise comfort and energy efficiency. Human intervention will be kept to a minimum.
For consumers, as smart home technology becomes interoperable and brand agnostic, the risk of commoditisation increases.
Easy interoperability between products of different brands threatens the individual brand identities and hinders consumers’ loyalty
Source: Euromonitor International
Providing seamless digital experiences can help nurture brand advocacy and customer retention. According to Euromonitor’s Voice of the Consumer: Digital Survey 2023, 36% of global respondents believe that positive technological experiences lead to increased brand confidence and 34% to more frequent purchases.
The collection of personal data also raises concerns about privacy and security. Instances of data breaches and unauthorised access to smart home systems have raised scepticism among potential users. This is why convincing consumers of the benefits of smart homes remains crucial. The value proposition must extend beyond novelty to encompass enhanced personalisation, new experiences, and improved quality of life.
Personalised services and experiences essential to prevent erosion of brand loyalty
For consumers, seamless integration, cross-device compatibility, and intuitive interfaces are no longer optional; they are expected. The ability to personalise experiences is a cornerstone of modern loyalty strategies.
Smart homes excel in this aspect, learning user behaviours, preferences, and patterns.
Brands that leverage consumers’ behavioural data to provide tailored experiences will be able to establish a stronger emotional connection with consumers
Source: Euromonitor International
According to Euromonitor’s Voice of the Consumer: Loyalty Snapshot Survey 2023, 28% of global respondents are happy to share their personal preferences in exchange for free rewards, offers or experiences as part of companies’ loyalty programmes.
Leading brands like Haier, LG and Samsung have recognised the potential of smart homes in creating strong customer loyalty. With in-home consumer electronics projected to record a 26% CAGR in constant terms for the period 2023-2028, the competition is fierce. By seamlessly integrating their products into users' daily routines, these companies foster a sense of attachment that extends beyond single, individual devices. For instance, a user's morning routine could involve waking up to a smart thermostat, personalised lighting, and a brewed cup of coffee, all orchestrated by their smart home system.
Apple, known for its fiercely loyal customer base, provides an exceptional example of how brand loyalty can thrive in the smart home domain. Customers deeply embedded in the Apple ecosystem are more likely to adopt HomeKit-enabled devices, creating an interconnected environment where their iPhone, iPad, and other Apple devices seamlessly communicate with their smart home components.
In the context of smart homes, seamlessness encompasses a frictionless interaction between consumers and technology. Loyalty strategies that prioritise a seamless and enhanced experience will lead to satisfaction and brand loyalty. Consumers will naturally be biased towards an app that is easier to use as part of the loyalty programme.
As hardware becomes increasingly commoditised, brands will have to find ways to overcome erosion in brand loyalty. A company’s ability to provide value-added services and enhanced experiences will be critical to maintain brand loyalty.
Read our most recent briefing, Next-Generation Customer Loyalty, for in-depth loyalty trend descriptions and strategic recommendations. Or download our briefing, Smart Homes: How to Unlock the Potential.