ADT Answers Its Critics

‘Largest Mom and Pop’ Strives to Minimize Internal Bureaucracy
What is ADT’s philosophy regarding customer service? How
does the company handle it?

Snyder: When it comes to customer service, you have to constantly poll them and never be satisfied with what you are doing. We spend millions of dollars in this area each year. You cannot get complacent, even if you are doing a great job. We have to impress our customers every year.

For quality customer service, an organization has to workshop it, train it, Six Sigma it. A live person must always answer phones, calls must be returned within two hours and disputes can never place the customer in the middle. We have a manager training program called The ADT Way that covers these and other mandatory principles. We take care of problems immediately without pointing fingers. Not torturing customers separates good companies from bad ones. Our customer surveys show we are doing a great job. Also, we have the resources to keep customers up to date with the latest, state-of-the-art equipment.

But isn’t it a danger when a company gets as big as ADT that it becomes too bureaucratic and customer service slips as a result?

Snyder: I am sure some bureaucracy exists, but that can happen in small companies as well. We try to be the largest mom and pop in the industry. We don’t have a lot of forms, requests for approval, committees or anything like that. Of course, we do make sure to keep careful records of anything related the customer.

Typically, only three layers of the organization separate me from the customer; I challenge anyone to have a simpler structure than that in this or any other industry. I probably interact with my line workers more than my managers. I speak to 50-100 employee groups per year to make sure things are as streamlined and efficient as possible.

I am not a really structured guy and I don’t like to be bound that way. There are very few things that go on in this company that I don’t hear about. I like it that way.

Plagued by Negative Media, Positive Acts Go Unheralded

What about all the negative coverage of ADT-installed systems in the mainstream media the past few years, many of them associated with your Authorized Dealer program? How do you contend with exposes on Fox News, for instance?

Snyder: The pain lasts about an hour after the newscast, but it stays with me a long time. I can’t stand it.

When a media report takes place, we first must find out if the problem is real. If so, we fix it with the customer and then deal with whoever is doing the story to make sure the facts are right. We always assume there is some grain of truth and the top priority is to get it fixed, and then worry about the media spin later.

I see all these negative articles, but no one reports about the fact that the vast majority of customers in our dealer program are fully satisfied. They never cover the fact we were terminating dealerships at a rate of about two per month five years ago because they did not meet our quality standards.

If there is a problem with one of our systems, the edict is to get it fixed and we will find out the details later. I take it real, real serious. Do we have our problems? Absolutely. But if we know about it, we fix it. If it is part of the routine behavior of a given dealer, we throw them out immediately.

I always ask myself, if I run into an ADT customer in a grocery store, am I going to be happy to meet them or looking to avoid them? I am in the fixit mode and I believe we have done a pretty good job of that.

In 2002, ADT made some fairly radical reductions concerning its Authorized Dealer program.What were the reasons for that and where does it stand presently?

Snyder: There we so many things going on between the old and new Tyco administration and they needed to make some quick determinations what was working and what wasn’t. They looked at the economics and ended some of the dealer programs in other countries.

In the United States, due to economic reasons, the dealer program was cut back to give Tyco time to get comfortable with it. Some of it had very poor returns at that time. A yearand- a-half later, they are very confident with it; consequently, we are building it back up. We tightened down some of the credit scoring for customers and changed the compensation model.

In the old days, we made the mistake of just ramping up dealers and letting it fall where it fell. When we first got into the dealer program, it needed some real policing, and we got much better at it. Those dealers did not understand marketing or marketing law, or good customer creation. We have done an excellent job of teaching them through the course of seven years.

Free System Tactic Abandoned, Big Ticket Marketing Embraced

What is your opinion of the low- or zero-down approach to mass marketing of alarm systems? Why did ADT use that strategy?

Snyder: In the 1980s, when we first looked at the marketplace, it was a nobrainer to reduce the installation price. That provided us with big-time growth and we were really happy with that. As we started to become bigger, we found some people felt the industry was too gimmicky and also there were too many competitors taking the same approach, which caused many potential customers to stay out of the market.

About a year ago, we changed our pricing model and we are no longer the zero- or no-money-down guys. We have made the pricing more logical, intuitive and user-friendly. Changing in this way does cause you to experience a dip in volume at first, but eventually there is great satisfaction from consumers. We are beginning to see that now. I would hope the entire industry moves away from the no- and zero money- down mentality.

Speaking of how you go to market, can you explain ADT’s marketing philosophy? What does the company get out of spending so much money sponsoring major sporting events, for example?

Snyder: We look carefully at the consumer and business sides to gain some sense of intimacy with that particular customer type. You’ll notice all the ADT ads speak a little differently to reach those audiences in a tailored approach.

As for our sporting event involvement, customers like to do business with the sponsor of a high-profile event that is synonymous with winning or competitiveness. It is a way of conditioning the market in demonstrating that ADT is only associated with the best of the best.

In addition, for our business customers, there is a fair amount of hospitality involved. Top customers can meet sports stars and get to enjoy the event on behalf of ADT. This creates a more casual atmosphere conducive to getting to know them better.

The amount of goodwill generated is tremendous. We would have to spend five to six times the money to match it through more conventional means. We are also increasingly partnering to advertise in the venues themselves, such as the new Home Depot Center in Carson, Calif. (see “In Brief” on page 20).

Responsibility as Industry Leader Is Taken Very Seriously

How important is it to you that ADT be perceived as an industry leader in terms of key issues and professionalism?

Snyder: ADT cannot sit back in its own foxhole and only do what it wants without thought to doing things that benefit the industry. We can’t live there. We have to be a company that develops the industry’s opportunities and helps solve its problems. Even if we are a voice in the wilderness, we have to do it. As the biggest company, if we don’t do it and enlist the help of others, who will?

I attend meetings that boggle my mind because we are the only ones contributing people, time and money. I have donated $150,000 for research in false alarm prevention when the entire budget was $160,000 and it was impossible to get the rest of the industry to do anything.

This is a good industry,
but it can be a great one. We have to get out of the mentality that I am just going to hunker down and protect my own area. On one hand, I love that this industry is the birthplace of so many entrepreneurs. On the other hand, it would be very beneficial for it to develop into more of a national marketplace. We are seeing it on the manufacturer side and I believe it is necessary and good.

It is going to be interesting to see what Brink’s, United Technologies, Johnson Controls, Siemens and others are going to do. I believe they need to get more involved and I hope they do.

What can other installing security companies learn from ADT?

Snyder: I believe they can learn a lot from the approaches we apply to pricing, industry affairs and false alarm efforts. They can learn how they can actually improve by operating more like a larger company, while still maintaining their local element and uniqueness.

We act local when it provides the best opportunities for our customers and national when it provides the best opportunities for our customers. I believe others could benefit from the same approach and it would move their businesses and the industry ahead.

About the Author

Contact:

Scott Goldfine is Editor-in-Chief and Associate Publisher of Security Sales & Integration. Well-versed in the technical and business aspects of electronic security (video surveillance, access control, systems integration, intrusion detection, fire/life safety), Goldfine is nationally recognized as an industry expert and speaker. Goldfine is involved in several security events and organizations, including the Electronic Security Association (ESA), Security Industry Association (SIA), Security Industry Alarm Coalition (SIAC), False Alarm Reduction Association (FARA), ASIS Int'l and more. Goldfine also serves on several boards, including the SIA Marketing Committee, CSAA Marketing and Communications Committee, PSA Cybersecurity Advisory Council and Robolliance. He is a certified alarm technician, former cable-TV tech, audio company entrepreneur, and lifelong electronics and computers enthusiast. Goldfine joined Security Sales & Integration in 1998.

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