Security’s Young and Restless: Strategies the New Generation of Pros Are Bringing to the Table

SSI spoke with a panel from ESA’s Young Security Professionals to discuss the generation gap and how they’re fulfilling the security needs of today’s customer.

Let’s talk business. What products, systems or service offerings are working particularly well for you right now, as well as presenting challenges?

SARAH JENNINGS: We offer a visitor management software-based product but it’s also a recurring revenue model. Our customers are willing to pay more per month because they get a great service and it’s a more quality offering versus our competitors.

We’re at a really great time and there’s a lot of opportunity. However, keeping up with and staying attuned with new technology is an extreme challenge. Be it cameras or cellphones or smart everything or controlling access, people are really demanding in this day and age. They want answers and they want them now. No one really accepts mediocre anymore. That’s been our biggest challenge as a business, is how do you deal with a demanding clientele that did not exist probably three to five years ago? People want quality times 100 for what they pay for.

SWARTWOUT: What’s interesting is when we started our company we had two divisions: residential and commercial. Our commercial division was going to focus on low voltage such as CCTV or camera systems, access control and networking. Our residential side was going to solely focus on security. Over time, we’ve become known in our local area for doing more CCTV high-end camera systems in homes than we ever anticipated. Because we’ve been flexible, we’ve found that in serving our customers with what they want and not telli
ng them what they need we’re starting to specialize. That perfect place for us is really with CCTV and it’s working well. We’ve gotten some news coverage on it for just being a little bit out of the box.

STEPHANIE WAGNER: We’re seeing more of our customers opt for our interactive home automation solution, our ADT Pulse. It meets the range of the customers’ needs today with the increasing of mobile lifestyles. With Pulse you have all the options to get the thermostats, to get the door locks, and that’s pretty much part of the package. Once they go interactive they want all the bells and whistles, the cameras and everything.

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FEW: There’s really three areas at play in our industry today. You’ve got all the new people coming into the age of wanting some type of security or protection level. If you look at the millennials and maybe part of my generation that is looking for more of the connected home or business, it’s all about remote management, cool tools, being able to turn lights on and off, thermostat adjustment, energy efficiency. Then you’ve got the traditional people who are between that and the baby boomers that are still very much into physical security, making sure nobody can get in and making sure that they can get out in case of fire.

The third area has been growing for years but will start to escalate quite a bit in the next few years, and that’s the whole PERS [personal emergency response systems] market. With the PERS market it’s continuing to develop, where it was stagnant for 15 years. I think we monitored our first two-way voice account in 1989 through an old AT&T program. That is now finally catching up where your button in a box is now your fall detection, GPS for customers with dementia and Alzheimer’s, being able to track them so that should they wander off you can locate them.

A good company today will target all three separately. Each has their own wants and needs.

I’m guessing there’s a ton of emphasis each of your companies places on recurring revenue generation versus strictly installation or system product sales. How are you striking a balance while cultivating new RMR?

RENFROE: When my grandfather was running the business everybody would be excited. “Oh my God, we just sold $30,000 worth of cameras!” When I came into the business, everybody was talking about RMR. It was like, “How much RMR did you get on that camera sale? We didn’t get any? Why not?” Over the past five years we’ve changed that philosophy in our company. Now I don’t care if it’s a $100,000 install, if I don’t have any recurring on it I don’t want it anymore. That’s our mindset.

At first we were like, “How are we going to do that? That sounds nuts, and our revenue is going to drop, and we’re going to lose out on all this.” It was really about retraining the salespeople and people inside our company to realize if you don’t do this you’re not going to make any money anymore. We’re going to cut your commissions down. I know that sounds hard-ass, but in reality it was, “We’re going to pay you more by you changing the way you’ve done this forever.”

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From there, we saw our salespeople making more money and us able to push products that before they weren’t willing to push. Remote video monitoring, for example, we had two customers forever. Now we have more than 100. We dispatch our guards or patrol out to those sites if we don’t have guards out there already. That’s how we’ve grown our business from $4.5 million to almost $6 million. It’s helped us become a better company.

When my grandfather was running the business everybody would be excited. “Oh my God, we just sold $30,000 worth of cameras!” … Over the past five years we’ve changed that philosophy in our company. Now I don’t care if it’s a $100,000 install, if I don’t have any recurring on it I don’t want it anymore. That’s our mindset.

FEW: We charge for the equipment upfront because we want the customers to see value. Customers have less value in things they don’t have to pay for. At the same time, it’s not so incredibly reduced that we’re fighting to make our margins. Really it’s all about the recurring revenue then, especially on the residential side. With commercial, I personally work with a bunch of dealers who are high-end commercial, commercial fire, and there’s still a lot of money for them to make on the installation and service side.

But in order to grow your business and effectively retire with some type of nest egg these days, it’s all about recurring revenue. Acquisition and loan companies aren’t interested in a working business; they want to buy a book of business. So if you’re looking to retire from this industry down the road, you’re really looking to sell your recurring revenue. The big emphasis today should be on recurring revenue and driving that.

JENNINGS: My father always said it keeps on giving even when you’re sleeping with regards to recurring revenue. We definitely have a recurring revenue model. Safeguard obviously had way more when it came to that, and it paid off when we sold immensely.

My current company, QuickPass, offers kind of a different model. We charge your install for your non-recurrables, like your trenching, wiring and such. Then we have like a loan model on 12 to 18 months. We don’t make our money back for that period of time. We charge a higher recurring, like several thousand dollars per month, but it’s made up in the following months. It’s hard because all of our competitors have a model where you purchase all your equipment, which is sometimes $100,000 or greater. It’s been difficult to justify paying a higher monthly amount in the service you get versus a small monthly amount and you don’t get the service.

To go back to the whole security industry in general, our generation is more interested in paying a monthly fee such as is the case with cellphones, gym memberships, whatever. It’s going to become even more important in the years to come to justify why you pay a higher monthly amount and what you’re getting for that, versus justifying the other way around. It’s important to stress the service you get.

SWARTWOUT: From day one it was bred into me when I came into this industry: RMR, RMR, and I still hear it today. But something we have to be very aware of now is we’re starting to see a transition away from the traditional three- and five-year contracts. A lot of companies are starting to go monthly. So then a key point is how do you retain that RMR if you don’t have a signed contract? And some other threats that are out there, like where customers are buying equipment upfront, purchasing it online, and paying a monthly service fee to turn it on and off. There’s value in customer service and creating a type of relationship where people want to stay with you outside of a contract.

On the next page: Would you recommend others to consider a career in security?

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About the Author


Scott Goldfine is the marketing director for Elite Interactive Solutions. He is the former editor-in-chief and associate publisher of Security Sales & Integration. He can be reached at [email protected].

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