It was always quite obvious that the mass market smart home offering was a race to the bottom, with premium devices quickly undercut by cheaper generic offerings. To this end, strong brand recognition and loyalty was a key requirement, and why so many in the smart home have moved so conservatively, but the expansionist opportunity for these device-slingers was always in the services channel. Smart thermostat maker Tado has done just this.
Tado has now officially launched Tado 360, its new SaaS product that is being aimed at those companies making their living in the $84.5bn (£66bn) European heating repair market. Yes, that’s right – the market for repairing knackered boilers is quite a lot larger than our projections for the smart home market itself. To this end, Tado wants to expose the analytics it gathers through its smart thermostat offering, and use this as a means to put repair services in touch with customers before their heating fails entirely – with the data helping speedier diagnostic and repair times.
Tado’s app already has some element of this feature. Anecdotally, this writer knows that they can be put in touch with companies that would install an entirely new boiler. This writer has a Tado because it was bundled with the utility Eon’s 3-year free finance offering, which was taken advantage of to replace a boiler that died during the winter break – an opportune time.
Eon, one of Tado’s many channel partners, would like to offer such installation and repair services itself, but of course, uses networks of third-party contractors and installers. For the utilities, retaining control of that sales process is extremely valuable, especially as such installations tend to enjoy quite nice profit margins.
Ensuring that a customer always has hot water and heating is a good way to keep them from churning away from your services, and as the utility provider, supplying more efficient boilers means reducing the wasted gas used by these boilers – cutting the amount of gas the utility has to purchase in the first place from the wholesalers, as well as improving its carbon footprint.
Factor in the efficiency improvements that a smart thermostat can provide, and you can see how the utilities are motivated to partner with this flock of startups. For providers like Tado, any home that has installed a smart thermostat is an opportunity to partner with a local repair service provider, and not just a utility channel partner. In time, there will be marketplaces for such services that are built on data provided by the likes of Tado. The company says that it currently supports 16,000 heating system devices, from over 900 manufacturers.
“Tado 360 helps heating service companies to comprehensively monitor the heating systems in their customers’ homes 24/7,” said Christian Deilmann, Co-founder and CPO at Tado. “Our service represents a step change in the way this market operates and opens up new possibilities for energy companies to transition into holistic and highly-efficient energy service providers.”
In the announcement, Tado cites customers Eon, Engie, Naturgy, and OVO Energy, which are already using its offerings. With 220mn homes in Europe, there are an awful lot of opportunities for things to go wrong, and for these utility providers to swoop in to the rescue. With data giving providers a heads-up to an imminent failure, or the ability to calculate which spare part is needed and fix the problem in one truck-roll trip, the likes of Tado should be able to quickly prove their worth to these sorts of customers.
Tado goes as far as saying that its system can reduce the average number of customer callouts from two to one, and “in many cases this can even be reduced to none.” It explains that this is due to its predictive maintenance systems being able to flag a struggling boiler, and allow the utility customer to preemptively call the boiler’s owner and solve many issues completely remotely.
Of course, the evolution of this mechanism will be bypassing the need for the thermostat itself, and integrating that functionality into the boiler. In this case, the customer would not have to be involved, as the boiler should be able to carry out many of the tips recommended over the phone. This change would cut thermostats out of the loop somewhat, but the likes of Tado would hopefully migrate into the algorithmic and data processing side of the service offering, away from hardware that could be ruthlessly consolidated.
But a more long-term view of the market flags the major issue that gas boilers themselves may not be long for this world. We have written about this issue in the past, but if we want to move away from fossil fuels, our heating and hot water needs have to be shifted onto renewable energy. Chiefly, this means moving onto electrically powered systems, which is going to be quite a culture shock in many countries – and something not very popular with consumers and voters.
In the meantime, Tado wants to be able to show a clear RoI to its customers. Reduced truckroll costs, better uptime, less churn, happier customers; all of these are likely outcomes if you can make the data work for you. With Tado’s thermostat as the conduit, reading the telemetry from the boiler, a utility customer can tap into a very rich data channel, to be exploited to fatten its margins.
Tado’s customers sound quite supportive. Engie’s Digital Managing Director Olivier Sala said “Engie invests 100M euros each year into impactful software to ensure that we are at the forefront of digital innovation for both the good of the planet and our customers. Integrating Tado’s remote monitoring capability into our solutions for smart homes, we unlock significant savings on our maintenance interventions and decrease our operating costs. Concurrently, our customers benefit from quicker repairs and less disruption to their week.”