This article originally appeared in the September 2012 issue of SD&I magazine
It’s interesting to find new players in the market—those who are doing well in an extremely competitive space. We found just that company, LiveWatch Security LLC/ SafeMart in Evanston, Ill., and went straight to chief executive officer R. Brad Morehead to get his insights.
Q. You are relatively new to the market. What are your impressions?
A. “We think the security industry is a great place to be. It is a huge market where so many companies can do well by simply doing good for others. We get to help people protect what is most important to them, or as we say: “protect what is priceless.” So many people that I’ve spoken to in the security industry really do care about their customers. I think that is incredibly important as we see more competition from the cable companies and telcos who don’t necessarily view that customer relationship as sacred.
If you look at our industry’s residential market penetration, it has hovered around 20 percent for what, decades? I believe that our weakness as an industry is in sticking to the old way of doing things, whether in terms of hardware, sales, marketing or operations. At LiveWatch, we try to actively embrace new ways of doing things so we can constantly evolve. We believe a bigger market is better, so our goal is to help expand the residential security market beyond the existing 20 percent. We really want to see people of all ages, walks of life, credit scores, housing situations and income levels obtain security. Customers in any and every life stage should be able to get the protection of home security and alarm monitoring. When I told this to a friend, he called it the “democratization of luxury”. We believe in that. We want to take home security to the remaining 80 percent of the market by finding additional ways to delight customers.”
Q. Tell me about SafeMart and LiveWatch. What is your ‘model’ or ‘philosophy’?
At LiveWatch Security, our mission is to ‘heroically help people protect what is priceless.’ This goes back to one of our founders who was a paramedic. We strive for the highest standards of protection, because we know our customers have entrusted us to protect what is priceless to them. Every action we take is intended to make the overall customer experience better and that’s what we work toward every day.”
Q. What is your impression of the recurring monthly revenue (RMR) landscape? What’s necessary to earn profitable RMR today?
A. “From what I have seen, average RMR has been pretty consistent over the past few decades. However, I’m hearing from people that new competitors like the cable companies and telcos are increasing competition and driving prices down. That may be our new reality.
We’ve done some research on the telcos to better understand these new competitors. Declining telco RMR (they call it ARPU) is something they have been dealing with for decades and it seems like they are bringing that mentality to security.
The cell phone industry, for example, charged about $0.55 per minute in 1993. By 2010, they were only charging $0.05 per minute. At LiveWatch, we believe that for us to compete with these goliaths like Comcast Xfinity, AT&T Digital Life, Verizon and others, we have to deliver more services that customers want at a fair price with great service to help expand the market.”
Q. How did you get the information you needed to start SafeMart and LiveWatch?
A. “In my experience with a few businesses prior to starting LiveWatch Security, I came to the conclusion that service determined the winners and losers. I believe that if we can deliver a great upfront experience and supplement it with fanatical support, then we can grow the market and continue to succeed in the home security industry.
In 2011 I took our leadership team to tour one of the world leaders in customer service, Zappos.com (now a unit of Amazon.com). We spent the day at the corporate headquarters of Zappos. We saw firsthand that Zappos doesn’t sell shoes; they sell “WOW” through service. That left a lasting impact on our team. It reinforced that in order to compete with larger companies, we had to move faster and deliver an experience that went way beyond customer satisfaction–we had to delight customers. Every day, we talk about customer delight, measure customer delight, reward customer delight and try to improve customer delight. In fact, we’ve had customers get so excited about our service that one actually proposed marriage to one of our reps over the phone!”
Q. Where do you see the future of security systems installation and monitoring?
A. “The future of security is all about service and technology. We’ve found some great ways to leverage service and deliver a better experience for our customers. And service now has to be accessible to customers whenever and wherever they want it via new technology. Customers now want to email, chat, call, search, Tweet, post or submit to get the answers they need 24/7, so we have implemented tools to help them do it quickly and easily. We think customer expectations will continue to increase as even more complex systems are installed and new communication tools emerge. We (as an industry) will have to constantly evolve to deliver a better experience so that we can expand the market and retain our existing customers.”
Q. What are the key ingredients to being successful in the security market?
A. “Delight customers with service: If we make purchasing and using a security system easier and less intimidating, then we can help expand the market into the untapped numbers who don’t have security. That gives all of us a bigger and better security market in the future.”