In 1996, legislation made it possible forsecurity companies to sell telecommunication services. Now,
In 1996, legislation made it possible forsecurity companies to sell telecommunication services. Now, with a deadline imminent that will permit telephone companies to enter the alarm business, it’s essential dealers diversify. Bundling telecom services with security is a low-cost way to boost RMR and help your customers save money.
So you’re in the business of protecting people’s lives and property. But what steps have you taken to protect the longevity of your business? Just as a prospect without a security system is more vulnerable to becoming a casualty of a burglary or fire, so too is your company more susceptible to succumbing to competitors unless you devise and implement a wise business plan.
For several industries, surviving in today’s rapidly evolving business climate necessitates developing a strategy that allows for diversification. As the saying goes, never place all your eggs in one basket. For the security professional, diversifying can mean many things, such as monitoring, home automation or bundling.
What is bundling? It’s the combining of other services, such as telephone, Internet or power, with standard security services. It’s also a diversification technique that can be utilized to broaden business horizons and increase recurring monthly revenue (RMR) streams.
One of the most direct paths to entering the world of bundling is to get involved with the reselling of telecommunications services. To do so, dealers may either contract directly with the applicable telephone company (telco) or a third-party operator.
In addition to generating more RMR, bundling can provide numerous other benefits to alarm companies and their customers. Dealers gain greater marketing possibilities and unique sales closing methods. And, since they are simply reselling services, there is no inventory to worry about and other costs are minimal. Meanwhile, customers receive savings on their local and long-distance bills, as well as possible reductions in monitoring, installation or servicing charges.
Telecom Act of 1996 Deregulates Industry
The Telecommunications Act (Telecom Act) of 1996 was a sweeping piece of legislation that, among other things, deregulated the telephone industry. In doing so, it opened the door for entities other than the Regional Bell Operating Companies (RBOCs) to enter the business of providing local and long-distance phone services as well as other telecommunications-based services.
Dealers Slow to Move on Bundling Opportunity
Curiously, relatively few of the thousands of dealers across the nation have taken advantage of the opportunities afforded them via the Telecom Act, as bundling has remained a faint glimmer in the eye of the security industry. This behavior may ultimately prove fatal for some as the business world’s Grim Reaper often comes calling on companies that are uninformed, complacent or in denial.
Security’s 5-Year Window Set to Close
That deadline was another significant component of the Telecom Act. In addition to deregulation, it also placed a five-year moratorium on telephone and utility companies being permitted to offer alarm monitoring services.
Telcos, Utilities Gear Up for Security Onslaught
Steve Johnson, president and owner of Southern Alarm and Security in Hendersonville, N.C., believes new business will be harder to come by after the Telecom Act expires, but that existing, happy customers will remain loyal.
Bundling Pundits’ Battle Cry: Diversify or Die
Whichever way the dust settles, dealers who have adequately planned for the future by exploring the diversification alternatives available to them figure to be the ones thriving rather than merely surviving in the post-Feb. 8, 2001 security landscape.
Bundling Offers Big RMR, Small Expenses
Dealers seeking to bundle services may either contract with the telephone company directly or through a third-party reseller of phone services. The former scenario requires more staffing and resources, while the latter approach may not entail any additional personnel. Either method can be beneficial for all parties concerned.
Technique Expands Dealers’ Marketing Options
Thus far, most dealers’ forays into bundling have been on the commercial side. These larger accounts have been more attractive since they present more lucrative RMR possibilities due to their higher reliance on telecommunications. However, the nascent residential bundling market is a nut that is on the verge of being cracked.
Know Your Limitations; Set Realistic Goals
While dealers are encouraged to investigate bundling, they are also urged to be prudent and not to overzealously immerse themselves in diversifying without giving serious consideration to practical constraints.
More Bundling Choices Are Seen on the Horizon
Shrewd business people must always be on the lookout for ways to help make their operations more brawny and profitable. Other traditionally tightly controlled service markets for businesses and homes may provide even more opportunities in the near future.
Bundle or Be Bundled in Security’s New Era
It’s clear that there are vast opportunities out there for proactive dealers to seize and profit on. Time is of the essence as it’s always better to operate from a position of strength rather than desperation. The ties that bind the security industry to success in the 21st century may be the same ones wrapping together security and telecommunications in a package of bundled services.
If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!
Security Is Our Business, Too
For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add sales to your bottom line.
A free subscription to the #1 resource for the residential and commercial security industry will prove to be invaluable. Subscribe today!