Monitoring Matters: The Real Cost of False Alarms

I want to pause the issue of how to prevent false alarms and, here, talk about their true costs.

Although I understand there are a number of meanings for the term “false alarms,” I want to look at two scenarios:

• In the first, the alarm is triggered but results in no dispatch. I’ll refer to this as a false alarm.
• The second is when it turns into a “call for service,” which is how a public safety service would classify it.

Both are important, but they mean different things.

In some recent studies, including ones by Parks Associates, false alarms are one of the most distressing and problematic events that can occur for a subscriber or security system user.

Dealing with a false alarm is unsettling and can be unnerving because there are so many unknowns. You have to remember your password; you’re worried about the police or fire department showing up; there’s the likelihood of a fine or fee.

All these concerns are swirling around in the subscriber’s mind. I can tell you that, even though I am in the business, it stresses me out, as well!

Relationship Between False Alarms and Churn

All these things contribute to overall churn. And the result stands out: You can track the companies that have lower false alarm rates because they also have lower churn. There is a pretty direct relationship to this.

And for companies that live and die by four-star ratings or Net Promoter Scores (NPS), that relationship can reveal a day-to-day struggle and result in poor ratings and, ultimately, bearing the cost of replacing customers. And the cost of acquisition goes up every single day.

Now, let’s look at the cost of a false call for service. This occurs when there was an unnecessary dispatch for an alarm, with no crime committed. The costs associated with this situation can double the previously mentioned stressors.

There’s also the direct cost for the dispatch, which takes the form of a fine or fee levied against the subscriber, alarm company or central station. These costs can vary from city to city, and they are direct: Someone is going to write a check for that response, even if it’s a private guard response.

The Biggest Cost to Consider

While writing a check for a false call for service is never fun, it’s an easily calculated and resolved expense. It’s really not the biggest cost to consider. The real cost is that agencies are understaffed and overworked.

That real cost will only be realized (a) when first responders can’t come anymore because they have too many calls to respond to or (b) when the costs to respond become so prohibitive that no public service can afford it. That would significantly change the way we do things.

It’s in our best interest to reduce false alarms and false calls for service. It’s also in our best interest to make the interaction with the subscriber, when an alarm does sound, as stress-free as possible. Both of these must be intentional, and they should be part of the everyday process inside an alarm company and monitoring centers.

What follows are some things that have proven helpful with both. Here are my rules for reducing all of the above and making for happy and healthy subscribers.

Morgan’s 10 Rules for False Alarm Reduction

1. Put a team in place to manage this. Ensure the team has representation from all parts of the business, including an executive champion who can make decisions and make things happen.
2. You can’t manage what you don’t measure. You need to measure all false alarm statistics, get a baseline and then set goals for yourself. Then, monitor your success.
3. Follow up with a customer service representative on every dispatch and a percentage of all alarms. Very quickly, you will learn more about how happy or unhappy your customers are. The goal is to fix malfunctioning systems, so do checkups on systems as you work through these calls. This will generate a significant amount of service revenue, as well.
4. Replace system and sensor batteries every three to five years. I did this with an alarm company and, in three years, reduced my numbers by 25%.
5. Make sure your staff is programming or leaving in the CP01 panel programming. It’s there for a reason, and there is no excuse to remove them for most systems.
6. Make sure your monitoring center has processes and instructions for how they use cancel/abort signals, openings-after-alarms, exit-errors and recently-armed-system messages. You should never be dispatching on alarms when these signals come with them.
7. Get off POTS lines! Too many alarms are missed or end up on the wrong accounts because of this.
8. Use SMS messaging for alarms. The SMS application needs to enable the customer to cancel an alarm. This alone will reduce your calls for service 40% to 50% in short order.
9. Have a process to allow the subscriber to recover or get a temporary password when they’ve forgotten it. About 25% of your calls for service are because of wrong or forgotten passwords.
10. Spend time with your local alarm coordinators. This will earn you a lot of goodwill and help you understand the needs of the local responders.

False alarms and false calls for service cost us all. It will require all of us to work diligently to reduce them. As AI and AVS-01 become mainstream, there will come a time in the not-too-distant future when they will become the exception.

But, until that time, we do have good tools and proven processes to significantly reduce both.

It’s up to you to make it happen.

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