The bottom line is that it is becoming cost-prohibitive for any but the largest dealers or franchises to run and upgrade a central station. When a dealer sells a customer, the decision must be made to either retain ownership of the customer and buy service from a third party, or sell the contract outright. Selling at a decent multiple makes sense for many dealers; however, retaining the account can be even more attractive. For example, a simple alarm contract may bring in $39 a month. A central station will do the monitoring for $3 to $5 a month, allowing the dealer to pocket $35.
The scales tip even more in favor of the third-party relationship when the dealer begins to sell new technology with lifestyle and convenience packages that are sold at a premium. The dealer can boost that RMR to $49 or $59 and only pay out a small additional fraction to the third-party provider.
Additionally, some dealers need capital to help grow their business. “That is why we have a wide variety of traditional account funding and flexible loan programs that offer not only financing dealer programs but also purchasing dealer programs,” McMullen says.
Of course, the third-party central station profits by providing the ancillary high technology that dealers will need down the road to continue to compete.
Making the Choice: Final Considerations
The list of services and features that a dealer should expect when choosing a third-party central station provider is long and goes far beyond price. “I believe the number-one suggestion would be to visit the alarm center,” Oppenheim says. “Never select a partner without visiting their facility.”
Oppenheim insists on a visit that goes beyond the marketing and salespeople and includes folks like the shift supervisor who is in charge of the actual operation of the center. His second key checkpoint would be to get an understanding of the full suite of services that the center offers. “It is difficult for any monitoring center to stay up to date (on technology),” he says
A lot of companies make the mistake of selecting a provider without analyzing the company’s ability to support their own growth over the coming decade. “Be sure your partner will be able to grow with your business,” Oppenheim says. Affiliated boasts 10 full-time, in-house developers who add functionality and platform integration to keep their suite of services current.
Look for a stable and broad-based management team. People change jobs and it would be a pity if the key person — the one who most impressed you with a particular central station — were to leave six months after the papers are signed.
“Our credentials such as our UL listing, FM approval, IQ certification, CSAA Five Diamond certification, and involvement in CSAA, ESA, NFPA, SIA and SIAC means that dealers can trust that we can monitor their accounts properly,” McMullen says. This allows the dealer to focus on account growth and servicing their current customer base.”
Ensure your monitoring partner has the appropriate certifications. There are plenty of choices for third-party central station provider available to the 11,000 dealers nationwide; yet only about 10 percent of the pool — about 200 central stations — have the UL seal. The other 1,700 or so do not. UL approval is a special cachet that separates the top dogs from the rest of the pack. The central station’s policies and procedures must meet UL standards, be verified and tested. The facility must be fully redundant.
Given the technology and certifications look good, the next step is to snoop around the monitoring center. See what the actual on-site setup is for redundancy and disaster recovery. Additionally, Oppenheim advises a potential customer to look at the breadth and depth of management talent.
In the end, making a good choice for a central monitoring partner is important to growing your business. Think about the improved sales pitch — despite storm or power outages, the alarm station will always be watching your customer’s business, and that business will always be protected. It’s a win-win for dealer and customer.