Signing a third-party central station provider agreement is like signing a contract for a car — one you likely will drive for decades. A trade-in is rarely possible. Security dealers need to be aware that it is quite difficult — even painful — to change monitoring center services; thus, it is paramount to get it right the first time.
Most dealers are good at connecting with their local community, identifying potential customers, and servicing or updating boxes and panels. However, especially at the small-to-midsized level, providing 24x7 phone response, billing, advanced training and other services is usually outside the alarm company’s scope of competence. The answer, typically, is to sign an agreement with a third-party central station provider.
“It is a different kind of ‘purchase,’” explains Daniel Oppenheim, vice president of Affiliated Monitoring, Union City, NJ. “The day you pick your monitoring center is the day it all begins — not the end of the purchase.” He notes that it is important for any monitoring station to offer the tools to provide a local dealer with a full suite of interactive apps and services so the local dealer can focus on servicing customers.
What to Look for in a Partner
On top of a technology vision, a good central station monitoring partner has to provide training, both on sales and service, says Jay Stuck, vice president of operations and CMO for New Jersey-based Monitor America LLC. “As we get into new technologies, you need a partner who will help you sell — who will help raise your RPU (revenue per user),” he says.
“Look for a company with experience, the proper credentials, and proven reputation for reliability,” advises Jim McMullen, President and COO of COPS Monitoring. The Williamstown, NJ-based firm operates central stations in New Jersey, Arizona, Florida, Maryland, Tennessee and Texas. He says dealers should look at a central station’s disaster recovery plan and response times when local conditions — for example, a blizzard or hurricane — affects their central station.
“Dealers often need to find third-party central stations that do more than just monitoring,” McMullen adds. “We offer services to answer a dealer’s phone in their name to make sure that their customers get the personal attention and expertise when the dealer is unavailable, perform subscriber billing on behalf of the dealer, collect payments if they need us to and more.”
Oppenheim says a third-party central station provider should be there to relieve the burdens of billing, overnight answering and other nitty-gritty activities that free the local dealer to focus on their own core competencies. “We know there are a lot of things only our dealers can do — build relationships, understand their local market, have a customer-service and install team,” Oppenheim says. “We tailor our services to the dealer.”
Other dealers need help giving their company and marketing materials a professional look. COPS, for example, will help dealers with marketing support, such as brand development, website creation, and business card and other marketing materials through exclusive relationships. “We can also help a dealer by giving them buying power and discounted equipment purchases,” McMullen says.
“Many dealers look for a central station that can also give them the tools and value-added services that can help give them a competitive edge,” McMullen continues. “They need fast and convenient access to their account base and a robust set of online tools to help them serve their customers,” he says, noting COPS Monitoring’s MPower dealer access system, which gives dealers information they need to serve their customers properly. Dealers can enter and edit their own accounts, run a variety of reports to help manage their business and to help identify false alarms, and they can even watch in real time as the signals are received at the central station.
Third party monitoring centers must also be able to handle all current digital dial-up formats and a wide variety of POTS-alternative transmission formats such as TCP/IP, cellular and radio. “As we move forward, central stations must be able to adopt and seamlessly integrate technology into their monitoring platform,” McMullen says. “The challenge with this is that it is tough to predict not only what technology will be developed, but also which ones will be reliable and widely accepted by dealers and consumers,” he adds.
An additional benefit some central stations provide is an annual conference. Affiliated’s next conference is Dec. 5, and will focus on video. Beyond technology, these events help individual dealers build relationships with one another with networking and learning opportunities from others in their same situation.
Staying on Top of Cutting-Edge Technologies
Security is going from looking for a guy with a mask and crowbar to services that let parents monitor kids at home, unlock doors and check their back yards from a distance. “Over the next three to five years, the prospects for the innovative dealer are very attractive,” Stuck says. “The new technology will resonate with a new type of customer. From the dealer’s standpoint, this is attractive — it is all about RMR.”
Dealers will have to know how to place the proper number of cameras in the right locations. Police and first responders are reluctant to respond to alarms that are not verified — and video verification is a deal-maker for fast, verified response. “We have seen the future and it is video — video verification of alarms, video guard tours and video concierge services,” Stuck says.
On top of that, video can follow a restaurant manager who leaves the café at 2 a.m. with the day’s receipts as she goes safely to the bank and leaves in her car. Those services have value to customers, and they all add to RMR (recurring monthly revenue).
“When it comes to new products and services on the market, we feel our role is to support all of the leading new tested and reliable technologies, and then help our dealers understand what’s available and how to adopt them,” McMullen says. They do that by inviting the different panel manufacturers and service providers to host training and seminars at each of their central stations.
Affiliated Monitoring, with an 82,000-square foot facility, is one of the largest monitoring services in the country and deals with everything from locally focused alarm dealers to national PERS and mass-market partners.
Monitor America has just ramped up, yet it has already achieved the Central Station Alarm Association (CSAA) Five Diamond certification for its 25,000 square-foot facility. “Your central station partner needs to have a vision for the future,” Stuck says. Monitor America offers cloud-based services, enterprise-level and residential services ranging from hosted video and access control, virtual security tours, video concierge services, video escorting, video monitoring and video verification of alarms, in addition to real-time event reporting and PERS monitoring. A highlight of the facility is a 40 x 11 foot video wall where alarm events and video clips can be viewed for analysis.
The Benefits of Training
Training offered by the monitoring center partner should be essential to an alarm dealer. “A good central station partner can help a dealer sell the technology in his local market, provide the IP and IT assistance for installing the equipment, and verification of alarms,” Stuck says. “Like it or not, we are going to be forced to learn to sell, install and monitor new technologies like video.”
On top of learning to install and trouble shoot new technology like IP video, dealers are going to have to learn to sell the technology. “You need someone to take you by the hand and train you on selling and installing,” Stuck says.
Be sure to stick you head into one of the classrooms where you, or your people, will undergo training. Look at the kinds of technology that are used. Is the training center a plain 12-by-15 foot room with a few desks? Or, is there state-of-the-art technology available for the learning process?
Show me the Money
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.
Curt Harler is a technology writer and regular contributor to SD&I magazine. Reach him at [email protected].