Biannual Survey Finds Monitored Accounts Are Costing Dealers $30.89 Apiece
Listen to the radio, read the newspaper or watch television and the news you hear is all the same: the economy is in recession. Spending has slowed, confidence has evaporated and the remarkable growth that the American economy saw through the 1990s is just a memory of a better time. Well, that seems to be for everyone else. The results of the 2001 Security Sales Sales and Marketing Survey shows that marketing spending is up; it’s up because the whole security market is up.
In 1992, when Security Sales conducted its first marketing survey (based on 1991 figures), respondents reported spending an average of $11.74 per monitored account. Seven years later, our 1999 survey showed a 250-percent jump in spending on marketing to $29.38. Two years later, our 2001 survey (results are taken from year 2000) shows that amount has continued to climb, if more modestly. Marketing spending per monitored account now averages $30.89, up another 5 percent from two years ago.
One might be tempted to think that the survey’s 107 respondents would be businesses declining with the economy, but that is not the case. Nearly two-thirds of the respondents (64 percent) have been in business 16 years or more. These businesses demonstrate a balanced approach to the market that has given them real staying power.
Business seems to be good whether a company is large or small. According to Bernie Krentzin of Stat Resources in Chestnut Hill, Mass., “Among the mass marketers, I have not been aware of any drop-off in revenue. Our sense of the market is that the numbers of dealers have dropped, but all segments went up in revenue.”
Dealers Are Not Sitting on Their Dollars
While the landscape for the economy has changed pretty dramatically in the past two years, very little has changed about how security dealers are marketing their companies. Average spending on marketing shows consistent growth at $43,151 per business. This is a 6-percent rise from 1998 and a 50-percent jump from 1991. That number seems remarkable until you understand that 72 percent of the businesses surveyed spend less than 5 percent of their operating budgets on marketing. Such a drop in the bucket in spending would seemingly prevent ongoing growth for companies, but that’s not the case. In 1998, dealers averaged $1.69 million in revenue. In 2000, dealers averaged even more, earning, on average, $2.3 million in gross revenue. Despite spending less than 5 percent of their budgets on marketing, growth during the past two years has averaged an impressive 27 percent. Want to take those hard-earned dollars and invest them intelligently? Put them into a security dealership; right now, security beats the stock market.
Sandra Jones of Sandra Jones and Co. of Chardon, Ohio, believes dealer programs can be credited with “reducing marketing cost.” She says, “There has been a great deal of education … they aren’t just spending more money on marketing, they are spending more on the business.”
Using Relationships to Grow the Business
Dealers report that the majority of new sales leads come from existing relationships. Referrals by existing customers remains the No. 1 way to find new customers. While the percentage of dealers reporting this method as successful dropped a remarkable 12 percent, customer referrals continue to be a success for 52 percent of all dealers. Following that, 33 percent of dealers report that networking with homebuilders and contractors has helped them secure new business.
Another 17 percent of businesses report that they network with realtors. This points to a concerted strategy of following transactions. Many new homeowners will sink thousands of dollars into their new property, buying furniture, kitchen appliances, window treatments and flooring. What better time to approach potential customers than when they are in the process of making a house a home? After all, it won’t feel like home if it doesn’t feel safe.
Increase Sales by Marketing Carefully
The 2001 survey shows that dealers are more careful with time and effort than ever before. In 1992, when the first survey was taken, only 14 percent of all dealers tracked sales leads. That number more than quadrupled seven years later. And since 1998, the figure has climbed another 11 percent, with 69 percent of all dealers tracking sales leads.
The vast majority of dealers tracking sales leads also sell the leads as professionally as possible. Almost two-thirds (59 percent) of dealers report that they employ a structured sales presentation.
To Succeed, Target the Customer’s Needs
Dealers are having great success at targeting particular demographics and selling to them. As a result, sales volume has increased, allowing dealers to see a marked increase in average gross revenue.
The change in gross revenue from $1.69 million in 1998 to $2.3 million represents a 27-percent rise in revenue, a number that spells best buy no matter what your portfolio looks like. For dealers/owners, it spells comfortable retirement.
Growth of this magnitude may seem a bit odd given the economy’s currently flat status, but may be explained by the recent spate of mergers and acquisitions. With so many transactions taking place in the past 24 months, the size of the average security dealer has risen markedly. While the average spent on marketing on a per account basis rose less than 5 percent, the amount spent on a per-company basis doesn’t read so small at $43,151.
The 21st Century Dealer Is a Deliberate Salesman
Reading between the lines, one gets a sense of how today’s most successful dealers do business. Gone are the days of shotgun advertising. Dealers have identified who their most likely prospects are and where they can be found.
Today’s dealer will spend, on average, $43,151 in marketing. The materials will be produced in-house and are most likely to include Yellow-Page and newspaper advertising, yard signs and window decals, custom-printed brochures, and direct-mail pieces.
While yard signs and Yellow-Page ads will always direct customers to dealers, the proactive dealer must hunt for the next sale. Increasingly, dealers look for buyers by networking with both contractors and developers, and with realtors selling existing properties.
Today’s dealer has seen sales volume and gross revenue continue to rise during the past two years, while the rest of the economy has been in decline. Finding the right prospective customer is more important than ever before.Perhaps what is most telling about today’s dealer is his success rate. With nearly one-third of reporting dealers indicating a 71-percent to 80-percent close rate for new business and another 24 percent reporting an 81-percent to 100-percent close rate, a notable portion of dealers are hitting the mark with their sales efforts.
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