State of Residential Security 2020: Dealers Discuss Pain Points, Strategies to Succeed
Executives from four installing security contractors delve into DIY, the dearth of qualified technicians and the uphill battle to inform customers.
It is fair to assume the brain trust at a good many installing security contractors in business today can recount the not-so-distant past when customer interaction was anything but a priority. The accepted wisdom was the less a customer got reminded about that monthly monitoring bill the better.
It’s also fair to assume the owners and operators who continued to pursue that obsolete mindset up until the past few years likely aren’t reading this article. They’re more apt to have either since sold their business or gone belly up.
Interfacing with the customer — with multiple touchpoints — is vital to leading a successful, flourishing organization in today’s highly disrupted market. You must learn from your customers, and in turn, they must learn why you can serve them best. Call it a mutually beneficial, two-way education.
This fact resonated throughout Security Sales & Integration’s annual residential dealer roundtable conducted in October at the Resideo Connect 2019 conference in Phoenix. In the ensuing conversation, Chris Dobson, security sales leader, Smithville Security in Ellettsville, Ind.; Christian Hess, managing partner, Guardian Systems in Nashville, Tenn.; Shawn Kirk, proprietor, First Choice Electrical & Security in Sayreville, N.J.; and Stephen Wheeler, president, Holmes Electric Security in Fayetteville, N.C., discuss how they contend with ever-shifting market dynamics along with factors driving their success.
Read on to learn how they are approach the DIY phenomenon, hiring and retention challenges, fickle customers and more.
Let’s start with a quick introduction about your company, and then give us a recap on 2019 and how it compared to the past couple of years.
Christian Hess: We’ve been in business since 1996, at first specializing in residential security. We started in commercial about 2005 when the economy started turning and the residential market started to go under. That was one of the best decisions we ever made. Now we’re probably 70% commercial, 30% residential.
This past year has been great for us with the evolution of the Internet of things [IoT] devices. We’ve been able to repackage our security offering; two years ago we were selling security systems. We had to rebrand that because now everybody sells security systems. The DIY guys, Amazon’s getting into the mix. Basically what we’ve done is we rebranded all of our sales guys and we don’t necessarily sell security anymore. We sell the lifestyle system. That way we can encompass all of the lighting controls, all that automation. We’re trying to bring security as just an add-on benefit service to the automation portion of it.
It’s really been our mantra: ‘The security system is no longer a thing. It’s more of a lifestyle.’ Rebranding what we’re selling has been the difference for the last couple of years, but 2019’s been great for us. Our market is exploding in Nashville, both on the residential and commercial. The multi-family construction, the industrial construction has helped us out. We’ve averaged about a 20% to 27% growth for the last two years.
Shawn Kirk: My first year in business was 2016. We do electrical work and security work for many homebuilders throughout the state of New Jersey. I was very lucky when we first started, based on the industry in New Jersey. We did $2.5 million in the first year. Right now up to this point in 2019 we’re at $5.1 million. The growth has been huge. We get all of our homeowners handed to us. We work for all large national builders and every homebuyer that buys a house meets with us, and the first thing they want is an alarm system.
We do their lighting design and then their security. Now with everything being smart home technology, everybody wants the smart homes. Many of the builders I’m working with are putting in standards now. I had a different company prior to 2016, primarily focused on electrical. When I sold that company I started First Choice. A lot of the builders wanted to come back to me; they wanted me to get into the low voltage arena because that was part of my specialty. When I did that it just opened the floodgates for me.
Steven Wheeler: We are a 111-year-old company. My grandfather started it. My father spun off the security arm division in the 1960s. I’m the president of the company, my son works for me and we run our own monitoring center. We’re just a traditional company. I do it all. I do whatever I can do to take care of security. 2019 was another good year, double digit growth. In the last 20 years, we’ve grown every year and it’s just been wonderful. The remote services and the connected home is the key to the traditional security alarm company going forward. That is what’s been successful in 2019 for us is promoting that side of the business. It varies, but we’re probably 55% commercial and 45% residential.
Chris Dobson: We primarily operate as an ISP [Internet service provider] in Indiana. We’ve been family owned for about 100 years. We’re the largest independently owned ISP in the state of Indiana. I oversee the security division of our company. 2019 has been a transitional year for Smithville. In late 2018 we had a new president come onboard, new leadership. It’s been great, he’s really driving growth. In April 2019 we joined the Resideo Premier Security Dealer Program. That’s been great, great folks to work with. We’ve really just started to adapt to the changes that we’ve seen in the marketplace. I will echo what Christian was saying, we’re approaching security from that awareness and the lifestyle perspective, and then security is the added bonus. We’ve seen some great success in that.
As far as our market split, we are probably about 90% residential today, 10% commercial. We have started to really push into that commercial space more and we’ve seen some huge growth. Because we also provide the Internet service we’re talking to these big enterprise customers. It’s just a natural progression if you’re already in there selling Internet. It is a touchpoint, ‘Hey, we also do security.’ Typically most people want a bundle or they want to just have one provider that they’re going to deal with. Just being able to offer a one-stop shop has been successful for us.
What has caused you the most aggravation this past year?
Wheeler: A year-and-a-half ago we changed our operating system, our in-house computer software system. As everybody in this room knows, if you change your operating system it changes everything in your office. That has been a struggle. We are seeing the positive of it, and it’s going to be a great thing, but it’s hard to change people and the way they’ve been doing business over such a long period of time. Everybody was onboard, everybody is still onboard, but it meant change for us internally as we operate.
Another big change issue has been teaching and educating our customers as to what a security system is. Christian has nailed it. A security system is not a bell and a battery and a switch anymore. It is part of your whole home, and so you have to re-educate your customers and your employees as to what all your home can do for you and how we as a security alarm company come into play there. We have weekly meetings and we introduce a new thought pattern, a new product, a new way of doing something, and then we gradually roll it out. It just takes time to get that information out to our customer base to be able to help them. It’s just teaching and educating your employees and then letting them educate your customers. It’s been a challenge but we’re doing well, I think.
Kirk: Employees. Finding the right people is probably my hardest challenge. It is very difficult to find low-voltage technicians or ones that you would want to represent your company. Then if they do come in they’re not what they say they are, and they can’t do what they say they can do — then they’re at the door relatively quick. So I have been concentrating on training. I bring guys in and I just groom them and I mold them the way I want them to be and the way I want them to represent my company.
It seems to be working. I don’t have to break somebody’s bad habits. I’m lucky I can have my electricians wire everything and then I need a limited crew to do the low-voltage aspect. Go put the panels up, the keypads, the motions, and then go back to do the home orientation. I need better quality people, and I’m seeing New Jersey is dried up to tell you the truth.
Hess: The biggest thing in 2019 we found is just being able to hire competent technicians. Twenty years ago, you find a guy to do the wiring, put the contacts in, etc., he’s done. Now they have to acquire a little bit of IT backbone, a little bit of IT savvy, and that’s harder to find. What we’ve done, earlier this year we started an in-house apprenticeship program. We hire guys that are right out of technical school and we send them out with some of our best technicians and do a lot of on the job training with our IT staff, then cross-train them with our technical staff, so they get the best of both worlds.
It’s definitely not fail-proof. We’ve had our failures in that, but now when we hire someone they can organically grow into where they want to be, what we need them to be. But just finding good guys, people that want to work, it’s been our biggest frustration in 2019.
Christian, are you able to keep these techs onboard with so much competition for their services?
Hess: Yes, we do because we finally implemented an employment agreement. If we are going to make a monetary investment in you for training — whether it’s programming access control or layering in a gateway and tying a bunch of wireless devices to it — whatever cost we have, you have to work for us for 24 months. If you don’t fulfill that agreement, then you’re going to pay us back X amount. Some people frown on that type of methodology, but we found that once they understand we’re invested in them they seem to be more loyal to you. We’re trying everything we can just to retain them.
Dobson: One of my biggest frustrations this year is just being able to talk to people. I’ve really noticed that buying habits in particular have been changing over the last several years. In the past, if somebody was interested in security it’s just assumed you’d have an onsite sales conference or assessment where we’d go to their house and essentially tell them what they need. More and more, we’ve seen people that don’t want you in their home as a salesperson. They expect to find you online, read your reviews, check you out on social media, go to your website and essentially make a buying decision without ever talking to a salesperson.
It has forced us to adapt our sales process to be able to have these conversations with people over the phone, through our technicians on the website, through social media, those different channels, and not requiring a physical onsite appointment. That’s caused a little bit of frustration, obviously, just with the DIY movement that is out there. There’s a lot of noise out in the marketplace. People, they think they know what they want or they have an idea of what they want without that onsite consultation, that touchpoint. Sometimes it’s hard to have the full conversation the way that we’ve been traditionally used to having that conversation.
Stephen and Chris, let’s have you both address the hiring-retention issue as well.
Wheeler: I hire culture first. My staff does the initial interviews. They bring in people and they talk to them, and then I talk to them. I can teach anybody to do anything under our roof, but I make sure that if I’m hiring you that you and your personality are going to fit our culture. I offer the typical business benefits, insurances and all that, but you’re not going to stay with me if you don’t enjoy coming to work. I try my best to figure it out. Usually, if I have a new hire that stays with me 18 months to three years, they’re going to be with me for 35 years because we have a good time.
We have lunch often. We just had a family; everybody brought their families and we had all the blowup toys and did all that. We’re creating a culture in which they like to be there. That’s what I’ve tried to do. I will tell you my best hires come from my own employees’ referrals. We have a deal where they get a little money if they bring someone in. After they’ve been there, 90 days, they get $300 just because I want you to bring somebody in that you like. Because when everybody likes each other and they get along, we have a good time.
Dobson: Most of the time you come in as an Internet technician, so you’re installing copper wire or fiber-optic cable. Eventually you graduate up to installing business-class Internet, then the last tier is security, so low-voltage. Along the whole way, the whole path, they are always installing low-voltage systems. We, the security side of the company, inherit all of the good technicians from the Internet side of the company. So, it’s not been a huge challenge for us on the security side of the house.
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