Security Execs Reveal Secrets for Dealing With Disruption
Four savvy security execs explain how they are ensuring fast-moving technology, customer preferences and market competition does not bankrupt their companies.
The word disruption has traditionally carried a negative connotation. “His behavior is disrupting the entire class” or “We apologize for the disruption in service,” for example. It can have an unfavorable association in the business or technology worlds as well — but that really comes down to perspective and position.
Dictionary.com defines that type of disruption as a radical change in an industry, business strategy, etc., especially involving the introduction of a new product or service that creates a new market. That certainly describes today’s electronic security industry.
The past few years have brought a convergence of disruptive forces upon the industry that include rapidly advancing technology, more sophisticated threat vectors, shifting customer needs/wants, a flood of varied competitors, the emergence of new service paradigms, skilled workforce scarcity, upheaval in marketing methodologies, business model mayhem and more.
That Hurricane Irma-like perfect storm would be challenging for anyone. But just as with the forces of nature the winds of change affecting entrepreneurship and business are best weathered by those imbued with a positive outlook, strategic planning and a customer-centric foundation.
“None of us will continue to be in business if we don’t take care of our customers. That has to be a focus for all of us,” says J.C. Gonzalez, president of Carrollton, Texas-based HomePro. “It’s the culture within a company that defines how customers are treated. It starts at the top and has to be the same culture throughout the entire organization. We try to make it fun for the technicians, for our customer care folks, for our service folks. And it’s how we treat the customer when we do mess up. Undoubtedly, we will stub our toes, but we do everything in our power to make it right.”
Gonzalez was among four security company executives who recently took part in Security Sales & Integration’s annual dealer roundtable conducted at November’s Honeywell Connect event in San Diego.
All the participants were in accord that today’s disruptive and ultra-competitive landscape requires an uncompromising commitment to executing and always improving customer care.
“I am not just hyper-focused on it, but more like ragingly obsessed!” says Alexandra Curtiss, vice president of Boston’s Alarm New England. “What separates us is really bringing a family-owned culture. Another differentiator is using technology systems to create a 360° view of our customers, who they are, what they care about.”
In the conversation that follows, Gonzalez, Curtiss and their colleagues — Brian Gartland, director of centralized operations for Bend, Ore.-based Vyanet Operating Group and Midwest Alarm (Sioux Falls, S.D.) COO Tyler Blake — get deep into the weeds of what is and isn’t working heading into 2018.
They talk challenges, RMR opportunities, DIY impact and much more. Consider it your disruption instruction.
Let’s get it rolling talking about interactive security and automation services. Is it a profit center for your business and by what other means are you generating more RMR?
J.C. GONZALEZ: Everybody has seen the benefits the past few years of interactive services. It’s really been to our benefit to talk to customers about everything they can do with their smartphone to control their houses, to look at data, to look at video, to control some things they’ve never been able to before.
We’re kind of taking cues from what the automobile industry is doing in that almost every car nowadays is equipped with cool features you can control with external devices. We’re trying to do the same thing with homes, turning them into smart homes that can be controlled with phones or smart devices. We show them [Honeywell’s] Total Connect platform and how it can allow them to control security and lighting and video from their phone.
A typical customer for you purchases a home through the builder that comes with a base package and you sell on top of that?
Exactly. A base package might be two phones and two TVs and maybe a security prewire. We try to meet with the customer in our showroom. We’re part of the design process for the homebuilder. When they’re meeting with their designers to pick and choose flooring and everything else, they come to our showroom to look at home technology from security to home theater to distributed audio to central vac.
We typically touch a house anywhere from $200,000 to $1 million. In some of those entry-level houses, we’re touching Millennials who are particularly interested in being able to control everything from their smart devices. They’re used to it already.
BRIAN GARTLAND: We’re about 60/40 commercial. In regard to RMR, the big thing I’ve been developing is a maintenance plan that includes some type of upgrade, such as adding a camera for verification. Owning our central station, we can tie in the alarms with the video feed. Then we can provide more insight to the customers to make a more informed decision on whether or not they want the dispatch.
We can inform first responders that somebody is onsite, or we can save the taxpayer money and not send anybody because there’s nobody there. This maintenance plan has really caught on. It’s kind of a carefree approach to serving our customers. They’re just responsible for the trip fee. Everything else is covered, assuming they’re not the ones causing any of the damage themselves.
For us, especially with all the cellular communications changes, we don’t want to go to the customer and say, “I know we upgraded this three years ago but here’s another bill for $250. We’re going to upgrade you again.” If they have this plan, we just take care of it. There’s no additional expense to them.
Our customers see the value, they tend to tell their friends and referrals kind of balloon from there. We’re rolling it out on a branch basis. So far, we’re at about 20% opt-out for the total rollout, and we’ve rolled out about 60% of our base. That’s a great service and it’s provided a huge incentive for our branches as well.
ALEXANDRA CURTISS: We sell mainly residential and small business over the telephone, and my division is very focused on a high range between $35 and $50 RMR. I only call on inbound web leads, of which we had 400 in September. We don’t cold call. We sell wireless Honeywell equipment exclusively and in September, 91% of my sales had Total Connect attached to it, with 65% having a video or smart home device attached to it.
We go really hard into the smart home, remote control and wireless, and easy to install.We don’t sell kits. We have a unique pricing model that allows us to customize the system. During the phone conversation we run a very consultative process that’s usually 30 to 45 minutes. It’s not scripted in any way but we need to get heavy qualification upfront.
My reps are trained to get people who aren’t qualified to be customers off the phone quickly. We’re really trying to understand who the unique homeowner is: what’s their family, how are you going to us this technology, do you have kids, do you have a nanny, do you have a dog walker, are you a busy couple, are you a retiree?
Each one of the key personas we market to has different needs for these types of systems.Then we build that into our pricing model to hopefully get something they’ll really use. Again, after the sale, we work really hard to train the customers. We use phone conferencing tools to train people on Total Connect and set up their scenes in smart home automation. We do a lot of education in our marketing funnel as well. These people know a ton about our company before they get on the phone with the salesperson.
TYLER BLAKE: The big mover for RMR in 2018 for light and midsized commercial is definitely access control and hosted access control. With the change in technology, customers are not going to spin up a full server for access control if they have a system that’s below 32 doors. Moving up the food chain on the enterprise side, the biggest RMR driver in 2018 is going to be vendor management, from both compliance and business operations standpoints.
CFOs and accounting want to know, if I’m running a global enterprise or a hospital, how long were the vendors actually at our site? Just issuing badges won’t cut it. The other opportunity is that wireless offline locks are going to continue to be big.
What’s the RMR piece there?
The RMR piece is based on the licensing of the lock. A market it’s going to be big in is multifamily. Think what they’re paying for locksmith services or for maintenance on hand to rekey doors every month, and it’s an easy conversation to talk to the customers about. The biggest issue is keeping up with all the demand.
It’s the same as any business out there with fewer people doing more work. So it’s how do I automate it, get these tools to work for me, and manage my business and enterprise?
What are a couple of examples of current challenges for your business?
GONZALEZ: One of the biggest challenges we’ve seen the past year or couple of years is electricians getting more into our space. They are starting to offer security systems and smart home systems, or basic home control systems. So this year we launched a high-voltage electrical department within HomePro. What we saw as a defensive move is now being looked at as an opportunity.
We’re able to have more conversations with builders using the platform of high voltage and electrical services, and then sliding in and using low voltage to upsell and be another profit center for them. We have a game plan to defend, but also to go on the offensive.
Organizationally, what did that mean for you? You’ve got to get licensed. Was it just to hire a couple of guys that do high voltage?
That’s exactly what we did. We identified a couple of key players in Dallas and hired them. They are fully licensed and built the division from the ground up. We have to protect that relationship with the builder. It’s easier for a builder to make one phone call and have both high- and low-voltage services done at the same time. That was really a big step for us in 2017.
GARTLAND: A challenge for us is that the majority of our attrition is due to homes being sold. We struggle with being able to re-sign the new owners. We have stickers all over the place, but we have yet to really grasp a good approach to ensure we maintain that system and the new ownership of that system. In some markets we have licensing issues in regard to the trade.
In Oregon especially, it’s a three-year program. Most people who go through the program end up becoming electricians. Spend one more year and guarantee yourself a higher wage. So getting qualified personnel has been extremely difficult. It’s to the point where our books are so full we’re turning work away because we can’t bring on somebody else.
We don’t want to disappoint a potential customer because we don’t have the manpower to properly take care of them.
Have you found a magic bullet for the attrition piece when a homeowner sells?
We have door hangers. We do follow-up. We have a customer care team. They follow up with the account owner to hopefully get a very candid response of why they are canceling with us. Then from there, hopefully play off of was it our services, was it something we could’ve improved upon?
For the sellers, it’s simply if you thought we did a great job please pass on our information to the new homeowner and let them know if they want to continue the services our number is on the window.
CURTISS: One of the challenges we face is the legacy technology our company runs off. We’re obsessed with world-class customer service but that’s really difficult when your company has grown through acquisition over the years and you have central station monitoring and accounting software that are not very clean and easy to pull data out of.
For world-class customer service you have to have a really clean 360° view of who each individual customer is, what they care about, and readily be able to pull up that information. When a customer calls and says I want to upgrade and we’re like, “Can you take a picture of the keypad for us?” That’s not OK. I call our competitors all the time to see how they package, how they price and how they market.
I play in the DIY space, which is now filled with some large companies that are really good at digital marketing. They have a lot more money than I do. Getting a bite at that apple means being really strategic in our marketing efforts to get that lead before it gets to those other people. It’s so disruptive right now. In just the past three weeks, four huge DIY systems have come out. It’s about constant change and needing to be better.
This concept that a rising tide lifts all boats, is some of that marketing more broadly beneficial to help educate the masses?
If I didn’t believe that I wouldn’t be in the business. Otherwise, it’s a very dire, bleak picture. I believe if we’re really good we can get a bite at the apple. The worst-case scenario is I’m hoping to acquire a lot of customers in two or three years that got sold on the idea of security on my competitor’s dime, but demand quality service.
I do believe our world is getting scarier and the need for security is going to be more and more. You’ve got to be really flexible and open-minded, not scared.
BLAKE: For us, a challenge from an employee standpoint is not only being educated on the products but being educated on some of the things specific to a customer’s industry. Whether that is healthcare, finance or something else, you have to keep up with those regulations. They move at a speed that’s just as fast or quicker than the technology in the security industry.
You have to be there for the customer, building a relationship, and be able to intelligently answer questions and talk about a regulation coming down the road in six months. How is that going to change how you run your business and your security or organizational plan? I think for all of us the big differentiator is the customer relationship, and being really a customer-relationship and customer-experience company.
It’s the customer relationship, whether on the phone conversation and consulting or bringing them into your showroom, that’s really what’s going to set integrators apart going forward, and being able to survive as things change. It starts from the top. We really push our employees, whether they’re sales or a central station operator, to be active in their communities.
Read on to find out how these execs ares dealing with DIY…
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