The California Alarm Association’s (CAA) Winter Convention in San Francisco, held Dec. 9-11, included a provocative executive symposium with three industry leaders sharing insights and strong opinions on trends affecting the alarm industry. In a nutshell, among positive industry viewpoints, wake-up calls aimed at installing security contractors did ensue.
The panel featured Jim Covert, the Protection One dealmaker and SSI Hall of Fame inductee; Bob Haskins, UTC Fire & Security vice president and general manager; and JoAnna Sohovich, recently appointed president of Honeywell Security & Communications. George DeMarco served as moderator.
During her presentation, Sohovich admonished the installing community at large about an all-too-real threat from players outside the alarm business that believe they are well-positioned to commandeer a large number of security system users. Think home automation integrators, cable providers and telcos. Sohovich’s resonating message was that traditional security dealers had best evolve their alarm businesses to include bundled services beyond the traditional security/monitoring value proposition. Customers will expect no less than to interact with a system that integrates multiple technologies and capabilities, she said.
“There are a lot of parties out there today who are part of that disparate system equation that exists in home automation and each and every one of them feels that they are the owner of the home,” Sohovich said. “They want to be the unifying force of systems and communications in order to accomplish objectives that have never been accomplished before.”
Sohovich explained she’s well aware that cable providers and telecos have made prior runs at the security industry only to fail, but offered this cautionary anecdote: “I was privy to a piece of data the other day that said a particularly large cable company has discovered that adding security to their triple play has cut their attrition in half. How motivated do you think they are going to be to make that a four-play? Cutting attrition in half is absolutely incredible.”
Still, Sohovich remains bullish, expressing that the electronic security providers hold the “catbird seat in the home.” Why so? The keypad, given its close proximity to the door and the ability to communicate information to the homeowner as they come and go.
“The keypad is really one of the best places to deliver and consolidate information and communication to the homeowner,” she said.
One means for traditional security dealers to maintain a competitive edge is to bring on people who understand software integration, Sohovich said. Or at the very least, create alliances with other trades so that you can together deliver a holistic solution to customers. This could be as simple as partnering with a local electrician who can enable the lighting piece of a keypad, instead of forcing the homeowner to call for themselves.
“If the hardware providers and our channel to homeowners and commercial building occupants aren’t prepared to deal with system integration in the future, somebody else is going to eat our lunch and RMR is not going to be around anymore,” she said.
All the talk about new technologies, outside threats and evolving customer expectations would eventually goad Covert to expound on his fundamental belief that the alarm business — at its core — has not changed since the time he joined the industry decades ago.
“If I am an equipment developer I am going to tell you how my business is changing the whole industry. But what I have learned in my 40 years in this industry is we sell one customer at a time. Still. The industry is about service.”
Covert suggested that providing superior service, one customer at a time, will remain a necessary and winning defense against outside competition.
“I can tell you that all of these other things are just products. They are going to change what we sell in the industry — we have always had an obligation to keep current with technology — but that doesn’t change how you address your customer,” Covert said.
He continued: “Do I agree that college kids will do their purchasing differently than my father does? I do, and we have to keep up with all of that, but we’re still just selling products. At the end of the day if it doesn’t work, how do you take care of the customer? How do you fix it? How do you answer his or her concern? My point is about the customer and the industry that we are in; not about the products that we sell.”
Audience members were intent on continuing the dialogue about the perceived threats from outside providers. For instance, one questioner asked the panel to define what all is expected to be included in a bundled service package from a company such as Comcast.
Traditional security? You bet, says Haskins.
“They are going to offer certain packages within that space, along with a core system. Every system will have a smart touch screen. Every system will have a type of broadband capability. We’re talking wireless video and a PIR camera that’s in the home so that when the system isn’t armed it doesn’t send any video. It sends snapshots when the system is armed and only when it’s armed. Many things that we are not offering today because they’ve got the pipe,” he said.
Like Covert, Haskins likes the security installing contractor’s chances to prevail over outside threats so long as they remain competitively viable.
“Do I think they will be able to offer the level of service that you can? Absolutely not,” he said. “But you are going to have to have a bundled service. You are going to have to enter that space. And I suggest you don’t go kicking and screaming.”