P1 Makes National Accounts Priority No. 1
Long one of the largest and best-known residential installation and monitoring providers, Protection 1 has had its share of ups and downs. Now an ownership change with celebrated CEO Tim Whall at the reins has P1 broadening its ambitions in the commercial marketplace.
Give me the top three opportunities in technology, services and markets.
Whall: In technology, the first opportunity is Wi-Fi at the premise, both for consumers and commercial. That’s going to drive services as well. It’s coming and is the natural evolution of the transmission of the panels. Next, cloud-based solutions clearly are prevalent today for video and access, and the move of system design to the edge. DVRs are becoming a medium of the past, similar to what happened with VCRs. A third area would be devices are becoming smarter with algorithms and flash drives built in. Control panels are moving toward IP appliances if you will.
On the technology side, those are the three things I feel comfortable saying, “Hey, we need to pay attention to these.” The first two are about the customer asking, “Why can’t you …” Anytime you’re in that basket, you need to work with your partners and manufacturers to come back at those customers with solutions.
Moving to services, daily reporting and trending has really taken off. Eight or nine years ago, just being able to show people the data of what was going on was new and innovative. Now there is so much information available. You need intelligence built into your reporting mechanism to identify what’s important, what can drive a proactive versus reactive response, and what data you want to see daily versus just reporting trends and analysis at maybe a monthly interval. It’s what P1 calls our eSuite services.
When customers sign up with a maintenance contract and our proactive service, we go out there and try to whittle down the activity to their sites. We say, “There are 100 sites and these 17 are creating most of the problems, and here is what we’re doing about those.” And then we say, “Once we quiet these down, if we don’t spend the money on maintenance, we can actually give you half back of what you spent with us.”
Another thing we’re trying to help with is product inventory. Imagine if you were managing 100 to 1,000 locations, I could provide you reports, and talk about the age of your equipment and its useful life to help you make a budget decision. We can give customers a dashboard of what happened at their sites yesterday. That’s very powerful. It’s the ability to not just show a bunch of transactions, but boil it down to things the end user can act on and find useful for their business. Data reporting is a huge opportunity, and the change is providing actual and intelligent data to them that helps them manage the businesses.
As we talked about in technology, cloud storage as a service is also very popular. There is a great demand for letting the end user be done with that whole DVR concept at their premise. The other one we’re seeing a fair amount of movement on is online panel management services. Rather than having somebody in technical support call up to your panel and do a data dump and download, you’ll be able to do that over the Internet. That’s a very popular service and one people have been paying a fair amount for.
In terms of vertical market opportunities, definitely for us retail is huge. It’s not just a growing market in terms of new locations, but it’s a huge opportunity for P1 because we have so little market share. There are dissatisfied end users out there and it is a realm where security is a required business necessity.
Quick-serve restaurants are also getting a lot more play with the economic pressures pushing people down and these types of restaurants are also trying to find healthier food choices for people. They are seeing an increase in traffic that’s creating additional security and operational needs that our technology supports. We also like banking as a vertical. This market can upgrade to network communications that enable things like immediate user access, permission changes, as well as eliminating some of the costly phone lines previously required for security.
How is the competition leaving money on the table for P1 to grab?
Whall: There are two issues that plague most companies in this business. The first I’ll call the financing plan and the leasing opportunities of the low money down approach of bringing customers on. When you do that, at the end of the term the customer is now overpaying for services because built into their price is a fee that they financed the purchase with. That creates a competitive opportunity and why so often firms take over accounts from other providers.
When you’re talking to your customer and your competitor comes in at $15 less, what isn’t said is, “Your price is $15 higher because you financed a system and didn’t put money down, so it was built into the monthly.” But the monthly never goes back down. That’s a problem for everybody in the industry that plays in the finance market on the lower end.
The other issue is the math never works for most organizations in this business. Very few companies will actually take the time to staff and say, “I have ‘X’ number of customers; how many people does it take to check in on those folks every six months to just say, ‘Hey, is everything OK? Do you need anything from us?’” For firms to take the time and build that money into their programs is hard to do in tough economic times. What happens is you’ve got thousands of customers but only a few reps and the math doesn’t work. Who is going to stay in contact with that customer for you?
I see that as an opportunity for us but it’s a struggle for the competition. Let’s say you’re a public company, attrition doesn’t really hurt your earnings in a given year so if you have a chance to take costs out of the mix and attrition is going to go up a little bit, you’d probably take that trade because quarter-over-quarter you’re still going to show a win. But if you look down five years, you’d be making a short-term decision that is going to hurt you long-term because if you start to deal with that many fewer customers every year all that revenue is gone.
An existing customer paying a recurring stream is where the profit of the business comes from. P1 does a good job understanding there is an inherent cost that has to be paid to take care of existing customers. We track it and I can tell you how often I’ve been there for the top 10,000 or 15,000 customers, 20,000 or 50,000. Again, it’s about actually putting the math to it and saying, “This is how many people I have to meet. This is how many phone calls I have to make. This is how many letters have to be mailed out.” I have to make sure my customers are tucked in. I don’t believe they are going to leave if they feel they know you.
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