Alarm Company Execs Explain How to Outpace the Competition
In an exclusive roundtable, presidents and general managers from four leading installation firms discuss the current state of their regional markets and provide details of how they are positioning their companies for success in 2012.
Wheeler: There is a whole group in this industry that is cheapening the industry. It is having an adverse effect. If you are selling a system door-to-door or if you are selling a system at low cost, you’ve just told that customer that service is not worth a whole lot.
My whole theory is if I can sell these ancillary services and show the customer we are more than an alarm in a box, they are going to stay with me longer. The adverse effect of this lower-end mentality of some alarm dealers is it’s causing our government agencies — whether its police departments, AHJs, fire marshals — to come at us differently.
I literally had a state licensing representative sit across my desk and tell me she was there to audit me because of money; the state needs money. When you have government agencies that are creating false alarm ordinances, auditing alarm companies and things like this because they are after money, they are not truly working for the citizens. I am concerned that if this trend continues it could have adverse effects on security and life safety, whether it means that crime is going to go up as a result of customers taking response into their own hands, things like this.
I am concerned with the general lackadaisical attitude, which causes an increase in false alarms, which then cause police departments to tighten their belts on ordinances. It is a vicious circle. It comes down to the professionalism of the industry and there is a portion there that is going downhill right now.
Allen: I am concerned about cable. I really am. We have Time Warner now competing in the upstate New York offices in Albany and Utica. We still seem to do very well against them, but it’s not a level playing field. I look for a certain credit criteria and all they look for is, ‘Are you paying the cable bill?’ If you pay your cable bill, you get the system. They go for a two-year contract; I try to get a five-year contract. Overall we seem to be holding our own against them. I don’t know why I’m apprehensive, but it’s just the power of the fact they send that bill every month and advertise continuously. They have a relationship with the customer.
Like Larry said, you had better send something out to your customer and say, ‘We have all this stuff too. We have everything you would ever want. Wireless video, thermostats, locks, mobile connectivity.’ That’s how they are getting your customer, especially with summer sales. They knock on the door, they get in, they say ‘Oh, that’s the old XL1000.’ That’s not an XL1000 but customer doesn’t know. They are making your customer think you don’t have what they have. We started putting mailings out and let our customers know we are there and we have all the same products and services.
Jeremy, you mentioned 2011 was a breakthrough year for IP video but that it also presented your biggest challenge. Can you elaborate?
Bates: We like to do everything ourselves, so we don’t like to subcontract too much of it out. We have our IT person on staff who has helped, but we have been sending our technicians out for the training. It’s not just the technicians; the salespeople have to understand it. We have three key salespeople that have really embraced learning the products. It is a lot of elbow grease. We’ve been working hard to try to figure it out. It’s take a while. With each installation we get better and better at it.
We need more of our technical staff to be better trained in IT. We have these systems out there now and our service staff is having to take of them once they are installed. We have identified an individual who is going to come in and spend a couple of days with us and we are going to make the investment to do a lot of hands-on training specifically for IP video.
We invested in marketing and some other IT positions. We are not afraid to invest in training. We are not afraid to explore new technology. Our office is typically the first place it gets installed so we can play with it. That’s what we did for IP. It took us a couple of years to finally get it and now we’ve had several successful installations.
Larry, are you having success with IP video?
Comeaux: The time is finally here for IP cameras. We’ll go to a customer and give them a price for analog and a price for IP. There are two reasons: No. 1, when you go in with two different prices you are having people make a decision with you, instead of taking a price and then they go off to another company and get different price. They are making a decision in front of you between analog and IP. In the last few bids we’ve made, the customer has picked IP every time. We were very skeptical of going with IP cameras until Honeywell came to see us. We started off with their products. My sales manager came to me and said, ‘There is no way we are going to sell $20,000 and $35,000 IP camera jobs, compared to $10,000 and $15,000 analog jobs.
We signed a $35,000 IP job before leaving for the [FAP] convention that I never thought that we’d even come close to getting. I think the market has gotten to a point they know where the future is going to be. Of course, with laptops and other mobile devices and smartphones you can see what’s going on in your business. People understand the quality of the pictures and the quality of technology. The technology has reached a point now where it’s simple to install. The IP cameras are already addressed, the system does all the leg work for you now. Where it used to take eight hours to program a system, now it might take you an hour. I really see that is only going to get better in 2012.
Peter, can you tell us more about CCTV system your firm installed at that North Shore village?
Allen: When it’s all done you won’t be able to enter the village unless you are recorded by an IP camera, a 1.3 megapixel camera. We are also using a license plate recognition system. Because they are a village and have a police department they can use the NCIC [National Crime Information Center] database. It compares the license plate within seconds. You get a hit if it is a stolen vehicle, a violent gang member and so on.
That project was a long time coming. We invested three years in just researching that project. But we are happy to see it underway. We are adding two supplement sites. We had to learn a whole new technology. One of the roadblocks was the recurring; it’s always the recurring. The connectivity was the hardest part. We wound up using FIOS. Each drop was about $205 a month and we originally had 19 drops. The idea of having a large monthly [recurring expense] was really bothering the village. So we started to look at [the village layout] on a map and determine ‘these three drops could go into this main one,’ and by using fiber optic cable we brought it down to 9 FIOS drops. That helped make the job go.
Stephen, your company is more than 100 years old. How have you contended with the rapid pace of change in technology?
Wheeler: One of the challenges that is currently going on right now is I keep telling my staff if we don’t change with this technology boom, somebody is going to have our customers in three years. Whether it’s the phone lines going away, whether it’s new technology, we can’t do the same ol’ same ol’ and expect new and better results. We have to change what we are doing to be able to do bigger and better for tomorrow. I run a 103-year-old company. We haven’t done the same ol’ same ol’ for that long. We have changed as the market has changed. That is how we have been successful.
In 2011, because of all this technology change, I hired an IT network [specialist]. I put him in my programming area. I have two programmers that program panels and customer systems and access control. That’s all they do all day long. I put him in there so he could learn all that. So, he’s helped us internally with our network to get ready for this technology revolution whether it’s Total Connect, Total Connect Video, IP video and so on. I learned a long time ago the younger people know a whole lot more. Let’s bring them in and let them teach us something, and I’ll teach them the business. They’ll teach me technology and we’ll try to move forward.
How do each of you leverage the First Alert dealer program and how pivotal is it to the success of your operation?
Comeaux: I have been with First Alert since the first year they started 21 years ago. Every year they have grown and I have grown with them. They are there for you — for sales training, technical training — and they are always available. It is the support that they give, over and above. The networking at these conventions is huge. The biggest [benefit] is to be able to go up to these guys [FAP members] and ask them for insights on what they are experiencing in their markets and what they are doing to meet their challenges. You can’t go to your competitor and say, ’ I’m having difficulty collecting money. What are you doing?’ You think that guy is going to tell me?
A guy that doesn’t belong to a group like this has to struggle. We have learned a lot. [FAP representatives] travel around the country speaking with other dealers and ask what’s working best for them and then they come and tell us about it.
We were fortunate to get on the right bandwagon. I was at the first FAP convention in Chicago in 1989. There were maybe 80 to 100 dealers. We were dealer 62. Today there are about 325 [FAP] dealers.
Bates: Being a member of First Alert has been a great business decision. We joined First Alert to help our residential business grow and it actually helped our commercial business as well. We joined about 11 years ago. Many times now First Alert and Honeywell reps have been in our office. Any time we want to learn something new we call them up and I have had them there as quick as the next day or within a few weeks.
We are going through the process of trying to reassess going to the next level with our residential business. We had [two FAP reps] in our office last week and they spent all day with us. They will be coming back to help us further with our planning. We have never marketed – TV ads or radio ads or anything like that. To be able to bring them in and instead of having to learn everything on our own, I can talk to [the FAP reps] and other [FAP] dealers and I’m not starting at ground zero. I can leverage their knowledge base. I’m not out there all alone. I get a chance to learn from their successes and mistakes. Being a member of First Alert continues to be an important part of our business.
Wheeler: Through the years it has made me a better company. I hired a marketing person. He was outside the industry. We talked about all kinds of things we were going to do. I said, ‘We don’t want to reinvent the wheel,’ and I took him to the convention four years ago. He got involved in the marketing committee. We have beta tested some of the marketing programs for the FAP group. Most everything we do is a modified commercial that [FAP] created and we adapt to our market.
This industry does not talk to each other. I have been president of the state association. This group can come together and share ideas. Jeremy is in Kentucky, Larry is in Louisiana and Peter is in New York, and we are sitting here like best buds. But you try to do this on a local level and I don’t believe you would have gotten a word out of any of us.
I don’t think an independent alarm guy can survive in this world today without associating yourself with some
sort of program like a [FAP] program. You can put up shingle and have a thousand accounts, but once you start getting over two-, three- and four-thousand accounts, I don’t think you can survive. These programs — and especially the First Alert program — takes you to that next level. It opens doorways as well as it teaches you things that you couldn’t do on your own.
Allen: We have been a member since 1994. We had no branches in ‘94. We had 12 salesman and [FAP representatives] put on four days of intensive training. I was blown away. It was all about how to do a close, technical training, everything. About a two months ago I told my sales manager that I’m interested in managed access control, and so Honeywell came in within a week and did a whole demo for us. Whether it’s literature, the product itself, their support, whatever it is. We rely on it so much. Total Connect is a good example. They came in and we did a separate training for the sales reps and we did a separate training for the techs.
Rodney Bosch is Managing Editor of SECURITY SALES & INTEGRATION. He can be reached at (310) 533-2426.
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