Monitoring Matters: Interactive Services to Drive Growth in 2014

A look at how interactive services will drive growth in 2014.

Happy New Year, all. I hope everyone is as excited as I am to get a jump start on 2014. I am really stoked about the opportunities and growth potential I see and anticipate for this upcoming year.

The past few years have taught security professionals a lot of lessons. For one, consumers are willing to pay more than $29.95 per month (and even much more) for home security services when presented with a value proposition that they understand and that makes sense. Although this is nothing new to a select few security providers, many (and maybe even most) were very skeptical about what consumers are willing to pay and how much the industry was willing to invest to step up structures to support these expanded services.

Let’s face it, overall only a few companies have aggressively approached the markets with expanded interactive services. I am not saying that many haven’t dabbled in it; it’s just that only a few actually invested in a meaningful way early on. What makes it more interesting is that the past few years really brought expansion and structure to the proposition. Many traditional dealers have engaged to emulate models of success that present strong value propositions with expanded interactive services in exchange for fees much greater than $29.95 per month.

This proliferation has also produced some very positive new statistics that were contrary to expectations. Now that time has passed and attrition numbers are more meaningful, reports have illustrated that when a strong value proposition is presented, sold, installed and managed properly, subscriber attrition actually decreases. What’s more, subscribers keep paying for their services longer even though they are paying higher rates than traditional security monitoring. How about that? Better closing ratios … higher margins and dollars … happy subscribers … and longevity to boot. All really great stuff that lends itself to building higher company valuations and equity for business owners.

Commercial Services on Upward Trajectory Too

Now back to the manufacturers and providers. As I stated, most have some sort of offering and VERY few have anything of real meaning. What I see and hear for 2014 is the industry is stepping up its game. The competition for platforms is going to accelerate. I hope this causes the existing providers to step up their value proposition, including the services offered and value for these services. What will really make this interesting are the new entrants to this space. Some will be brand new and aiming to disrupt, while others will be existing providers of other security services that will introduce a new layer to compete with current providers.

Given my decades of experience in this industry, I can really see how a current service provider can offer and support an actual integrated solution that could be painful to compete with if you’re simply a third-party interactive provider. If this happens in an aggressive manner, some of the providers that have failed in incenting wholesale monitoring companies may grow to regret that. With wholesale, third-party monitoring companies being the umbilical cord to dealers, it is essential that they stay in the support, as well as the economic loop. If not, I believe we will see more of these players come to market with propositions that will integrate all that they have and more.

In any case, this is all good news for the dealers. Choices are good and platforms that are competing for their business are better. Dealers must pay close attention and really look at the market and understand what residential consumers, and especially the commercial market, are looking for and what else they could use to make their lives more manageable.

Yes, interactive services do not stop at the residential channel. If presented and supported properly, the commercial channel could make the residential interactive market look pale from a revenue standpoint. I only wish I had these services when I was knocking on the doors of local businesses along Federal Highway in Fort Lauderdale, Fla., back in 1984.

Peter Giacalone is President of Giacalone Associates, an independent security consulting firm.

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About the Author

Peter Giacalone

Peter Giacalone is President of Giacalone Associates, an independent security consulting firm.

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