CEOs Roll With the Punches, Plot Higher Profitability
In an exclusive roundtable, executives from four installing security contractors shed light on how their firms successfully navigated the recession to emerge primed for future growth. Find out how they adapted to changing market conditions, among other strategic moves.
In what ways has your company become more creative than it used to be?
Loud: For the traditional residential sales team, we created a MAC department in 2012, which is “move, add-on and conversion,” where we’re rolling a technician that is more like a salesperson so it’s more of a one-call close. The person is doing anywhere from 30 to 40 systems a month or they are doing the sale add-ons, the Total Connect add-ons, the upgrades or a moving customer. That has been a unique opportunity for us. I don’t think we would have guessed the numbers would have been as strong or as steady.
A unique niche for us is subdivisions, homeowners associations, and
this is about managed access control. We go in there and you put access on the pool and the tennis court and clubhouse, and the bathroom sometimes. People don’t pay their HOA dues, they can’t go swimming, they can’t use the tennis court, they can’t use the facilities. All of a sudden they pay their dues. Here’s what I love about the managed access control: First off, the system is profitable from the initial sale. Second, I have monitoring on it; we are going to monitor the burg combo type panel. Third, I am doing a maintenance plan and I’m doing management. Nobody on that board of directors wants to be the person to manage the system and add-delete, change cards and deal with all that.
Morris: We’ve tried to be creative and think outside the box more in 2012. Typically most of the answers are inside the box, but we look toward identifying markets or problems that aren’t being addressed. We have found success in the HVAC industry. Vandalism and theft of HVAC units have been more in 2012 than any time I can remember. We started using The Whip [an air conditioner alarm device with integrated EOL resistors] and informing companies about how you conventionally protect an HVAC unit by building a cage around it or you can put a camera on it. That is what the majority of our competitors were doing or recommending. We found a niche market. We identified the problem and addressed it electronically and that has been very successful for us.
Also, Total Connect. I heard a dealer say [at the 2011 FAP event] that he made the decision to go 100% GSM. So I thought about that and I went home and went 100% GSM. We only do landline communications as an absolute last resort. As a result, our RMR has increased significantly along with our customers signing up for Total Connect services. That has been a very good business move for us. The exception to that is commercial fire; we still do landlines and we do some GSM.
Lindberg: Ditto to what David said. We have done a lot of HVAC protection. We looked at The Whip and actually went a little bit different direction. We went with tilt sensors and a local sounder outside because what we found was that if we did not scare the person away, the unit still got damaged. Once you lose pressure, it’s already damaged. We installed a couple of The Whip devices, but the HVAC units were vandalized and damaged, and so the customer had to replace them anyway.
Hood: I’ll keep the theme alive. We definitely have been expanding what we do outdoors and we are more on the video side of things. We embraced video analytics and outdoor video, trespass detection, maybe more aggressively than others did because we have a security guard and patrol service. We have quite a bit of business there so we are able to offer that response and get a little more creative. We have quite a big group of customers who are paying us to do video analytics-based alarm events, and we also use Videofied, which is the outdoor video motion detection.
Over the last few years we have invested in new automation at our central station, but really more importantly training our operators to be on the other end of that video stream. That has opened some doors for us. We are going to continue to invest in that. Sometimes it is protecting assets like HVAC, although I don’t know that it is as big of a deal in the San Francisco Bay Area. For more general problems, oftentimes we would use our security guard and patrol service, which is an expensive way to address problems like loitering, vandalism and illegal dumping. Cameras aren’t always a good solution because they are so passive and require quite an investment. So we have been doing this hybrid approach. It is an RMR-based sale, but we are often leasing the system, bundling it all as a package. We bring revenue in for our security guard business so they are not getting cannibalized in the process. We are actually opening more doors for them.
How did the recession force you to adapt? In what ways has it affected your 2013 strategies?
Loud: We went from a builder-focused business to completely reinventing ourselves probably two times in the process. The transformation, foremost, was getting into home shows. That sounds so simple and rudimentary. We talked to First Alert’s DDG [Dealer Development Group] and Russ Ackerman at Certified Security and what he was doing, and we tweaked it to work for Loud Security. At our first show we signed 22 monitoring agreements. So then we got so involved in the community aspect and all the smaller shows from a branding standpoint. It became about penetration. One of the themes for us at that point was density per square mile.
We started to do some acquisitions in 2010. I’d been a debt-free company for 15 years. I went out to Jim Wooster’s group [Alarm Financial Services Inc.] and got some financing for the first time ever and just started to look at opportunities. It wasn’t until 2012 that we started to do some traditional marketing. I never had a traditional marketing budget. I had to create something. We revamped the Web site. We started some of the search engine optimization [SEO]. We did some TV for the first time ever. We cut a deal with Coca Cola for a 10-year contract to advertise on the back of their scoreboards at baseball parks. We have 50 scoreboards. We get to handpick them within our community; again, back to density per square mile.
It’s been a big change. Now we just started doing some contracts with some builders where we won’t be prewiring and we are doing the new technology, the wireless packages, instead of trying to beat ADT or Monitronics to the door.
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