Figure 3 provides a topline landscape of which households have what type of security. Professional monitoring has dropped to between 15% to 16% of all households as compared to a steady 18%-19% reported in 2007.
While it is too soon to detect market stabilization in consumer surveys, the market bleeding may be coming to an end or at least slowing to a trickle. Weak contracts are gone … and so are many dealers who were running weak businesses, or had saddled themselves with high and then unsustainable debt, or who left the market or rolled up with other dealers for more market strength. With most weak contracts cleared out by or clearing out in 2012, the door will open for reinvigorated market campaigns and new customers.
New Sales Strategies Ahead
When surveyed dealers were asked to self-select their most pressing business challenges (Figure 4), a robust 70% cited a consumer hesitancy to spend money, evidence of continuing effects of an uncertain economy. While that is by far the dominant challenge, interestingly, more than 30% of dealers report finding qualified personnel as the second-most-named business challenge, selecting that option at a rate parallel to the choice of a weak housing market.
That high rate of selection points to an opportunity for both dealer associations and online training companies. If there is an inadequate labor force or an insufficient number of trained dealers, expansion and efficiency are typically the first victims of the shortage.
Only 12% of surveyed dealers report installing remote control and monitoring features in more than half their sales. However, nearly 60% project they will be installing remote control and monitoring features in more than half of their sales in five years; almost 25% believe these features will install in excess of 80% of sales. They expect 20%-50% of their sales to include some of these features even in just two years.
Yet the high percentage reporting remote monitoring and control features will become prevalent in the next five years doesn’t equate to a belief that their basic business model will change. Eighty-five percent of surveyed dealers offer professional monitoring either in-house or via third-party contracts. It is the bread-and-butter of existence. Figure 5 shows that close to half the dealers believe their remote control and monitoring services will be available ONLY with professionally monitored security; on the flip side, only 4% report they expect to install or sell self-monitored (no fee) systems while 68% report no RMR sales as highly unlikely.
Pleasing Younger Customers
The markets for IP-based security enhancements, control and automation features will play to a solid portion of current security monitoring customers. But importantly, they will also appeal to the 45-year-old and younger head of households who today are armed with smartphones and tablets, but often not households with professionally monitored security. Security dealers that seize these opportunities will be in strong demand.
Tricia Parks is CEO of Dallas-based research firm Parks Associates. She can be reached at [email protected] or (972) 490-1113.
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