Position Yourself for More RMR, Less Attrition

Security consumers up until now have often seen electronic security as a kind of "pain issue". For them, an alarm system is an unfortunate necessity that provides the piece of mind that they can have a fighting chance to limit losses if there is a break-in. Others have employed security systems as a result of insurance industry discounts or demands. When a monitored alarm system is an "unfortunate necessity" or an insurance requirement, you don't tend to have great customer loyalty (and as I wrote in a previous article, loyalty isn't what it used to be anyway).

To keep ahead of the attrition curve, and to attract new customers - especially those tech savvy customers - I think our industry needs to examine itself and then look at expanding to include more technologies.

First, I think we need to look at how we are modeled. Our industry has been built on protecting fixed assets. We do a great job of adding electronic security systems to fixed assets such as homes, buildings, and offices. Meanwhile, the world has gone from being "fixed" to becoming incredibly mobile. Our industry needs to consider mobile things (like cars) and people as the kinds of assets it might be able to better protect or provide status data upon.

Finding Technology at the Tradeshow

That move from a fixed world to a mobile world leads me directly to global positioning satellite (GPS) technology. It's a technology that I believe the industry can use to drive revenues. And I'm talking about really using GPS, not just using it get to 1224 North River Parkway to complete that next job installation.

Fortunately the GPS industry has already recognized the security industry, even if we're slow in giving them the "hello" back. As I walked around the floor at the 2006 ASIS Seminars & Exhibits in San Diego this past September, I was truly surprised at just how many vendors were there representing one form or another of GPS services. At the same time, I was equally surprised at how few of them provided a means by which to allow the dealer (large or small) any opportunity to generate recurring revenue in a way that would not only 1) add value to the service they provide, but also 2) create a tangible means to increase customer retention and perceived value.

Many corporate fleet managers have employed some form of GPS on their vehicles to track and measure the performance of their drivers. In doing so, they are seeing an inherent benefit in terms of turning around downtime, fuel costs, routing efficiency, as well as the added benefit of knowing where a particular driver is at any given time.

But looking forward, the question is whether using GPS technology can increase recurring revenue, manifest growth beyond fixed asset protection, and lower attrition for alarm dealers? My answer after some months of research is a resounding "Yes!"

Bundling GPS and Alarm Monitoring

Before I get you excited about GPS, I must tell you that there are less than a handful of companies who have really figured out how to provide this service in a highly reliable platform that works for our industry. But there are a few really good ones, and those companies have established a reliable back-end infrastructure set up in a way that provides dealers with very little (if any) out of pocket costs to get started.

In the cable TV industry, recent business strategy has been to sell you digital TV, VoIP phone service and high-speed Internet "at one low price". The fact is that bundled packages add RMR and reduce attrition.

We can do the same thing in our industry and for our customers. In fact, since recurring revenue streams are the lifeblood of our industry, alarm dealers are always looking into ways to generate more RMR by selling maintenance agreements, additional monitoring services such as verification, guard response, and so on.

You already have a central station set up. Maybe it's your own or maybe you use a third party central station, but the point is you're probably already starting to bundle services - and GPS just might be your next step.

Creating a Model for Revenue

Consider the possibilities of offering your customers a package "deal" for monitoring and maintenance, back up transmission, video verification, and GPS options.

One example, little Timmy just got his driver's license. His parents are certainly concerned about his safety and have established certain fundamental rules Timmy must obey in exchange for the privilege to drive at 16 years old. Perhaps he is not to exceed a specific rate of speed, or he is not to go into a specific part of town, or beyond a certain distance for that matter. As this family's alarm company, you now have the opportunity to offer them a reliable way to monitor Timmy's activities for an affordable monthly fee and a very reasonable cost for equipment and installation. In many cases, alarm dealers are using the services of car audio shops to do the actual 30-minute install.

Now, mom and dad can go to the Internet through your company web site to access their GPS portal and easily and quickly establish the ground rules. Since the secure portal is on the Internet, they don't need to download any software. They define the rules, such as a maximum speed of 70 mph. They can easily bring up a map on the same page (like a Mapquest page) and drag a box around the area Timmy is not to leave, or perhaps a part of the map he is not allowed to enter. Lastly, mom and dad can click a box to allow for notification if the car is moved after midnight. (Aren't you glad this wasn't available when you were a kid?)

Next, mom and dad can tell the system how they want to be automatically notified (SMS text message, email, phone call from central station, etc.). They can also arrange for your central station to monitor emergency (panic) activations as well as a host of other useful services. Using just this one particular application, I know of several alarm companies that have easily converted existing single $30/month monitoring-only residential customers into four and even five $30/month accounts. Loyalty is strong because GPS technology is hard to do without once you have access to that kind of information.

For your commercial customers the applications are nearly endless. This is especially true if you monitor commercial customers who have fleets of as few as one or as many as a hundred company vehicles. GPS can also now be installed (even installed remotely) on many cell phones to provide the same high level of security. This has become a very easy sell for sales people working with real estate agents, home health care givers, and anyone who must go into people's homes alone, not to mention service providers such as plumbers, delivery businesses, and your own service and installation vehicles.

My Experience with GPS for Alarm Companies

When I worked as a dealer, we employed a GPS service simply to monitor our own techs activities and time spent on the job (and elsewhere, unfortunately). Within a few short days, we discovered benefits we never even thought of. The very week we installed the beacons in our service vehicles, an irate customer called in to complain about the charges for a service call. He said the tech was only there for 30 minutes yet we charged him for 90 minutes. I looked at the GPS web site and saw that the tech was actually at this customer's location for almost two hours. We were able to use this information to work out a reasonable solution with the customer.

Another time one of our techs was involved in an auto accident. The other driver claimed that our man was driving at a high rate of speed and caused the accident. We were able to use the GPS data to provide the insurance company with tangible proof that at the exact time and location of the accident, our driver was going 25 miles per hour.

On the flip side, we also went from averaging four services calls per tech per day to six calls per day (a 50 percent productivity increase for our service techs!). I am of the firm opinion that just based on the fact that people knew we could track them, they drove more cautiously and spent more time on the job and less time doing something else. As I said, once you have used it, it is a very difficult thing to ever do without.

Getting Started

Interested? Don't rush too fast. Like I noted earlier, there are only a very few companies who have really invested time and money to figure out exactly how to make this work for our industry. This being a business column and not an advertisement, I'm not going to even name who's good and who's not so good. But I suggest you look into it, and find out what your customers' present and future needs might include. I assure you that some of your competitors are already on top of it and have or will take away some of your customers by offering added value bundled services. Make sure that the GPS technology provider can provide a good platform. The platform you buy into is what makes or breaks the business model - your customers won't be happy if the platform isn't easy to use and no one will be happy if the system doesn't have consistent uptime.

If you use a third party central, call them and ask them if they are already set up for GPS monitoring. They most likely are and you can ask them who they use and then dig in to research the company and to see how this might work for you. If you have your own central or attend association meetings, ask your colleagues if they use GPS and how it's working for them. The technology, which has military origins, works brilliantly, and has finally reached the point where it is extremely reliable, affordable, and -- unlike many other services we provide -- requires little if any subsidization. Many alarm dealers are reaping the benefits of this valuable revenue enhancing business, and I want to let you know this is a great thing to consider to help grow your business and keep more of your customers for the long term.

About the author: Bob Harris is managing director for The Attrition Busters. With over 30 years in the alarm industry, he provides seminars, business consulting, and workshops to help great companies become even better. Bob can be reached at (818) 730-4690 or by email at bobh@attritionbusters.com. Learn more about The Attrition Busters at www.attritionbusters.com.