Why Do Security Dealers Turn to 3rd-Party Monitoring?
SSI Editor-in-Chief Scott Goldfine asks managers of the industry’s top wholesale central stations why two-thirds of the industry outsources their monitoring.
When we asked in our 2019 Installation Business Report (SSI’s Gold Book) how many installing security companies operate their own central monitoring stations, respondents told us the answer is 28%.
Thus more than two-thirds of the industry contracts with wholesale, third-party monitoring centers to respond to their customers’ alarms and other needs. Keeping alarm systems monitoring in-house has the benefits of retaining all subscriber fees and more control. Yet the majority of dealers elect to farm it out. Why?
In putting together SSI’s annual Monitoring Issue I spoke with managers of the industry’s top wholesale central stations (see roundtable). Knowing they would endorse outsourcing monitoring, I put them on the spot to explain the reasoning. Here is what they told me …
“There are many certifications, redundancy, facility requirements, software and third-party services that need to be in place for a central station. You have to keep trained employees 24/7, every day of the year, to be able to handle alarm signals and calls. It is beneficial and more affordable to have a wholesale central station.” — Phillip Wohlfehrt, All American Monitoring
“The benefit to anyone contracting monitoring comes down to focus and cost. Dealers have complex business involving inventory, customer service, vehicle fleets, installation, B2C sales and a variety of other areas that need attention. Within that environment, a monitoring center becomes a ‘cost center’ and generally does not receive the investment it needs to stay sharp. Additionally, running a monitoring center is a huge management distraction because of all the time it takes to staff a 24/7 facility. A third-party monitoring partner sees monitoring as a ‘profit center’ as it is the engine that generates revenue. As a profit center the people and technology should see the investment needed to provide great service.” — Troy Iverson, AvantGuard
“Being a front-to-end security provider is expensive. Dealers do two things very well — find customers and build relationships. We want them to focus on what they do well and let us handle the long-term monitoring and customer support necessary to create profitable customers, at scale, for life.” — Wade Gibson, Brinks Home Security
“The sheer cost-effectiveness of using a third-party central station is the most obvious reason. It’s not just the cost of monitoring labor, but the talent to maintain a mission-critical facility — data, telephony, hardware and software maintenance. Even regional-sized central stations struggle with that. Customer service quality, based on deeper and broader experience, is a factor as well. Plus a small, in-house central station using off-the-shelf automation cannot quickly develop and innovate to stay current in the market place.” — Kevin Lehan, EMERgency24
“The operations of central stations are advancing with the increased use of IT. This requires significant ongoing investment in infrastructure and personnel with IT skills. Additionally, with new regulations emerging from UL, every monitoring center meeting certain criteria will be required to have a backup facility. Those not wishing to build another brick-and-mortar center can leverage monitoring stations having met the strict standards.” — Woodie Andrawos, NMC
“Outsourcing the monitoring portion of their business allows dealers to really focus on building their business and identify their niche in the marketplace. One of the challenges in-house monitoring creates is dealers tend to wear too many hats and become a ‘Jack of all trades, master of none.’ By outsourcing monitoring and refocusing that attention back to product sales, installation services and customer care dealers can increase their sales, RMR, and profitability.” — Teresa Gonzalez, UCC
“Cost of labor, technology and expertise. A dealer can be a virtual central station with a buffer and all the features with a fixed cost. They can update their accounts, see the alarms coming in and follow up with the customer after the alarm is handled by an operator. They can focus on what they do best: selling, installing and servicing systems.” — Joyce Rosito, USA Central Station
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