The Big Idea with Ron Davis
March, 2011
The Industry is Calling. Are You Going to Answer?
Idea of the Month
If you had just one really great idea you could share with the alarm industry, what would it be?
This month’s great idea comes from Jerry Tester, owner of Security Alert Inc. in Winterville, N.C.
Tester’s Great Idea: No matter how much or how little amount of money you’re making, spend some of it to support your local and national associations.
This month I am presenting the second installment of a great idea presented to me by Jerry Tester, owner of Security Alert Inc. in Winterville, N.C. First addressed in my January column, this theme is so vital to the well-being of our industry that I felt compelled to indulge the topic further.
The imperative is for all electronic security professionals to actively participate in efforts that advance the best interests of our customers and our industry. To secure our future, installing security contractors can look no further than to begin contributing their time and financial support to causes advocated by the various local, state and national associations.
Tester’s great idea led me to start thinking about all of the changes that are altering the security industry landscape. What are the financial impacts of those changes on the independent alarm dealer?
For example, a veteran direct marketer I’m familiar with has in excess of 100,000 monitored accounts, not to mention one of the lowest attrition rates around. The company probably maintains as happy a customer base as I have ever seen. The founder of this company is a real pro, and since no one told him he couldn’t do it, he just went out and did it.
There is a group down in Texas that is selling do-it-yourself (DIY) systems, as I understand, in the tens of thousands. If they had asked some of the industry’s leading experts if this could be done they would have been told, unequivocally, you cannot sell alarm systems on the Internet or to the DIY market. Fortunately for them, they didn’t ask any “experts” and just went out and did it themselves. Other companies are jumping on the bandwagon and changing their strategies to incorporate direct marketing approaches as well.
The impact to you is rather dramatic. It’s dramatic enough because if someone buys an account from a direct marketer, it is more than likely an account that a “traditional” alarm company is not getting. Consider if some of these direct marketers start charging $9.95 per month for monitoring or less, all of a sudden the financial dynamics of the industry have changed – radically.
It will be very similar in effect to the bottom dropping out of the financial markets when people discovered the real estate bubble was about to burst and property values plummeted. Many individuals are quite amazed to learn about the margins in monitoring. They think that you can sell monitoring at half or two-thirds the price we’re now charging and still make money. Whether that’s true or not is immaterial, but it does raise the question of what happens to the industry if this potential game-changer materializes.
Business model dynamics aside, there is much you can positively influence in this industry. So let’s get back to Tester’s great idea about contributing time and money and participating in industry events. Providing financial support to associations can help fund state and national lobbying efforts to ward off burdensome regulations. Another example is helping fund law enforcement liaison efforts to ward off nonresponse policies.
I want to conclude with special emphasis on the participation aspect. Association events and meetings provide you a royal opportunity to network with your industry peers. You get the chance to ask others how the industry’s changing landscape is affecting their businesses. Seek the advice and ideas from noncompeting companies in other regions of the country. You might find a brand new opportunity awaits you, one that can help reinvigorate both you and your business.
Ron Davis is Security Sales & Integration‘s “What’s the Big Idea?” columnist and contributing market analyst. He is president of Davis Group, a full-service consulting firm serving the security industry, which also includes GraybeardsRus. He has 35 years of industry experience, including founding Security Associates International in the 1980s.
Ron Davis is Security Sales & Integration‘s “What’s the Big Idea?” columnist and contributing market analyst. He is president of Davis Group, a full-service consulting firm serving the security industry, which also includes GraybeardsRus. He has 35 years of industry experience, including founding Security Associates International in the 1980s.
