2019 Brand of the Year: Ecobee brings purpose to smart thermostats

The start-up won customers over through its approach to social impact and data.

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This week, strategy is rolling out profiles of the 2019 Brands of the Year. To read about the long-term plans and build-building strategies behind the rest of this year’s winners, click here.

This story originally appeared in the October 2019 issue of strategy.

An object rises like a starship from the ether, dark and smooth all over. Slowly, its surface comes to life with a faint hum and glow. It then begins to interact with its environment, emitting forces that ebb and flow across space, enveloping the world. So goes the spot introducing Ecobee’s smart thermostat with voice control.

As abstract as it is beautiful, the video is a testament to how far the Toronto-based company has come since launching the smart thermostat category in Canada more than a decade ago. There’s none of the usual shoptalk around features and product functionality, as the video – created by design and animation studio Tendril in the summer – assumes consumers understand the basics of smart home devices.

Rather, the goal is to inspire and disrupt, to transform the way consumers think and feel about a category that, until recently, was decidedly low-interest and uninspiring.

“People are busy. They’re not looking to add more devices into the home. They don’t need more weekend projects, so it just felt like there was a void in terms of inspiration,” says Jackie Poriadjian-Asch, Ecobee’s CMO and chief revenue officer. “Being able to communicate the notion of being innovative and planet positive, not as a tension point, but that they can live in harmony, symbiotically strengthening each other – that’s at the heart of Ecobee.”

President and CEO Stuart Lombard says the brand’s new creative M.O. is the reason he hired Poriadjian-Asch, who previously led marketing for the Ultimate Fighting Championship and Canada Goose. As Ecobee faces stiff competition from industry giants like Nest and Honeywell, Lombard believes success lies in pushing the company – whose DNA is in engineering quality tech products – to become a lifestyle brand that’s focused on innovation, social and environmental impact, as well as having an empowered approach to data.

Ecobee’s recent investments in marketing are designed to help accelerate its already impressive growth trajectory. Currently on track to reach $1 billion in sales by 2020, the company has seen its revenues double almost every year since its first thermostat went to market in 2009. Ten percent of its sales are from Canada, the other 90% from the U.S., results that align with the populations of each market.

While marketing spend as a percentage of sales has remained more-or-less consistent in recent years, the brands strong year-over-year growth comes with “a couple extra bucks to put towards investments in marketing,” Poriadjian-Asch says. The CMO remains focused on running a “lean and mean” operation, she says, even as the company moves into a new office near Toronto’s Harbourfront to accommodate rapid workforce expansion. Today, Ecobee holds around 30% market share in smart thermostats across North America, second to Nest, the California-based smart home devices company that was acquired by Google in 2014.

SmartThermostat-Threequarter-CA 2Ecobee was the first to bring a smart thermostat solution to market. Twelve years ago, few people understood the product, let alone how to install it. Today, 75% of Ecobee customers install the device themselves. The early years saw the brand concentrate its efforts on the B2B channel, using HVAC service providers to get its product into Canadian households at a time when the smart home market wasn’t as developed. “Our goal was to win with the toughest critics on the planet, the people who really know about heating and cooling, and then marrying that with our consumer electronics background,” Lombard says.

With the entrance of Nest in 2011 and of long-time thermostat maker Honeywell to the smart category in 2014, it was time to communicate that message differently. In 2016, it launched its first awareness campaign, with the goal of showcasing the product’s usefulness to families in unpredictable weather regions like Alaska.

That same year, the thermostat maker launched Donate Your Data, a program for customers to voluntarily contribute their home data towards energy efficiency research. Through the program, Ecobee shares anonymized data – like age, size and occupancy of the home, temperatures, HVAC usage and occupant preferences – with academic, governmental and non-profit organizations.

Donate Your Data has led to tangible benefits for communities. Research for the state of Indiana in 2018 used anonymized data from hundreds of households, enabling researchers to discover a solution that could save the state anywhere from US$448 million to $2.3 billion – helping it avoid an energy crisis. Lombard says the program addresses a barrier to entry for consumers (privacy concerns that come with connected devices) while helping Ecobee differentiate from companies that monetize data.

“It shows how even in this state of panic over privacy and data, companies can still lean into sharing and using data for good – just by being transparent,” adds Poriadjian-Asch. “Organizations are rushing to send you emails and tell you all of the things they are not doing with your data, as a defensive play. You can simply continue to leverage data for good, make it the choice of the consumer, and tell them what every step of that process is.”

As part of its social impact strategy, Ecobee has also worked with Toronto Community Housing to install smart thermostats in 776 apartments in the city, making social housing more sustainable. The strategy has not only helped it win over customers, but also employees. Poriadjian-Asch says around 98% of staff cite Ecobee’s social impact and founding principles as one of the reasons they joined the company.

NM2_7853Some of the its biggest competitors offer a broad range of products. Nest, for example, sells smoke detectors, indoor and outdoor cameras, doorbells and locks, all designed to work together. But Ecobee has remained steadfastly focused on its core product offering, subscribing to the philosophy that “less is more” and aspiring to be the “smartphone of thermostats,” says Poriadjian-Asch. Moreover, the approach has given credence to its claim of offering customers simplicity – not a slew of new devices to master.

Instead, it’s built a partnership strategy to help customers integrate Ecobee’s products with other smart home devices. In 2017, it launched a North American-wide campaign for the Ecobee 4, which comes with Alexa built in, before the product was even available in Canada. When Amazon officially brought its AI assistant to market, Ecobee had already generated excitement around the possibilities of a voice-powered home. Today, its products integrate with Apple HomeKit, Samsung SmartThings, and Haiku Fans.

As for the future, the brand is looking beyond pure-play temperature control. In March 2018, it launched Switch+, a smart light switch that can be operated by Alexa voice commands. It also concluded an $80 million funding round – supported by Amazon’s Alexa Fund – that could help fuel expansion into new product categories. For now, Ecobee remains focused on doing what it already does well. Because as Poriadjian-Asch puts it, the “idea of doing everything goes against the whole point [of the brand].”