Industry maturation, increased scrutiny from outside interests and more competitors should cause you

Today, you are actively involved in responding to not one, but several, new challenges to the status quo on which you have successfully built your business. The force of those challenges cannot be underestimated.

As summarized by Albert Janjigian of STAT Resources in Chestnut Hill, Mass., “The new paradigm shift has already occurred as an undercurrent to the security market. For example, the small ‘mom and pop’ security dealers that I grew up with in the industry are for the most part gone. I think, in many ways, the security industry as it has been defined will cease to exist within the next two years to five years.

Although there is general agreement that our industry is in the grip of dynamic change, opinions as to the extent of that change and how quickly it will directly affect your business is a strongly debated subject among consultants and industry leaders.

When and how will those factors affect your business? Sandra Jones of Sandra Jones & Co. in Chardon, Ohio, suggests a pragmatic approach. “It all depends on how aggressive the competition is in a dealer’s geographic region. Obviously, if a dealer has stiff competition from three or four low-cost competitors for a traditional security sale, he/she is going to have to look for new market strategies – or find another way to make a living.”

Dealers, through the virtues of being small, independent and technically advanced, are uniquely able to adapt and succeed in the face of all the change taking place. The key, as expressed by Janjigian, is “for dealers to be prepared enough to know how to react quickly.

As a result of industry maturation, increased scrutiny from outside interests and more competitors, the independent dealer has several choices to make, such as whether to sell and retire, develop a relationship with a national dealer program or diversify to offer more services. New technologies, friendlier customer relationships and high-quality employees are solid answers.

Industry Maturation Calls for Quick, Researched Decisions

1. Residential security mass-marketing has achieved “critical mass.”

The security industry today is a text book example of an industry working through a phase of turbulent development as it struggles to reach its final maturity.

The most obvious attribute of that maturing is the consideration that has been underway for some time and that still shows no signs of slowing down. Although pockets of opportunity will allow business as usual in specific areas, specifically areas outside of urban core cities, according to Joseph Freeman of J.P. Freeman and Co. in Newtown, Conn., dealers are now or soon will be facing refined competition with marketing, organizational and financial resources on an enormous and sophisticated scale.

Betting against such huge traditional competitors, in key markets, the independent dealer really has three choices: one, capitalize on the incredible ‘multiples’ being offered and retire in style; two, align or partner your business with a national dealer program to obtain the promotion, product and financing you will need to compete; or three, strongly diversify your traditional business so that your services are beyond the reach of a large competitor.

Outside Scrutiny Challenges You to ‘Look Inside’

2. The residential security market has become the new battleground for broad consumer access and loyalty.

Security is gaining recognition by computer, software and home management system vendors as the ‘killer application.’

Non-traditional competitors moving into the industry pose both the greatest risk and the greatest opportunity for independent dealers. They pose the greatest risk because they have the potential of circumventing the existing structure and rationale of the security industry by selling on a different footing, through a different distribution channel, and to a much wider audience.

Ron Davis, chairman of Security Associates Int’l. in Arlington Heights, Ill., defined one aspect of this different footing in an article that appeared in the November 1997 issue of Security Sales magazine (See page 32.) when he wrote, “My first prediction [for the industry] is that alarm systems will be marketed as part of a package that people want to buy, rather than need to buy”.

Davis went on to predict how non-traditional competitors also pose the greatest opportunities for dealers by writing, “tomorrow … the bulk of [your] revenue may come from other products and installations that typically are not handled by the independent alarm dealer [today].

Beyond a straightforward program of developing new services upon the foundation of new technologies and suppliers, the first step in capitalizing on new opportunities might be to begin by questioning your assumptions concerning who your competitor truly is.

Take the example of the utilities. There are a few utilities making major security company acquisitions in the market today. But when you look behind those headlines, you see the immense operational difficulties these companies are facing in realizing the potential benefits of their acquisitions. It’s also apparent that the vast majority of the utilities’ peers are exploring opportunities for strategic partnerships as the route to offering security as part of a bundled service.

The second key step is to look inward to your organization, your people and your customer relationships to understand the unique skills and talents that you possess and that are valuable to others.

As a minimum, these attributes include, “A sales force with a proven record of being able to sell complex services in the residential home and an installation resource that is well trained to pull wire and commission low-voltage systems in a retrofit application,” says Jones.

Without question, independent dealers have a great deal of talent to bring to a strategic partnership.

David Price is manager of marketing services for DSC Security Products in Downsview, Ontario. He has 15 years of sales and marketing experience in the fields of energy management, fire alarm and security.

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