Publisher's viewpoint

Oct. 7, 2010
Elevate your business by adding an 'S' - service versus services
Our industry's always been a service industry. It's been the barrier to entry here for many non-security companies wanting to enter this space. We pride ourselves on service. Over 91 percent of you say you provide service to your customers in one form or another after the system's installed. Traditionally, monitoring alarms has been defined as a service and doing this has allowed us to monitor the health of a customer's security system and the products in it. Whether a system is monitored or not, integrators and dealers alike have technicians at the ready to respond when a customer has a problem with products in their system. A competitive advantage for companies is the skill sets of your technicians, their quick response to a customer's problems and the service offering promised to your customers.

In surveys I've conducted on "service" offerings, 53 percent of you wait for a customer to call with a problem, 74 percent only charge for time and materials used in a service call, even though 72 percent of you have service contracts to regularly review and monitor the health of your customer's systems. Some 82 percent provide ongoing training for clients with only 60 percent charging for this service. Service rates and service offerings have often been more of a value-add to your customers for buying products and solutions, not necessarily a profit center for the business. In fact, some companies even lose money here! Would we all like to go back and change this? I suspect there's a resounding 'yes' to this question. But customers expect free or low-cost services now and these offerings can make or break the sale. Before the crash, when we were making more money on product sales, low service rates weren't as distressing but lower margins put pressure on us to make service more profitable. If everybody asks for more money there, rates can go up.

For 10 years now I've been hearing that as we move to more networked products we'll have to migrate towards an IT-like sales model with smaller product margins and service and recurring revenue sales of software and upgrades being the way we make our money going forward. Well, we've certainly migrated there, no matter where the core of your business is today-monitored or integrated systems or both. About 74 percent of you are integrating systems whether you're a dealer or integrator. And more than 80 percent of you plan to grow your business through networked, Web-based, wireless communications technology and sales-related products, whether your customers are commercial or residential. You're increasingly driving data out to customer's PDAs and laptops, and offering buyers remote video, remote access control, remote lighting and remote energy management solutions. And, why wouldn't you, given what users expect from their technology nowadays? If you don't, buyers will find someone else who will offer them these "services."

It's important to define service and services here, as this will be the refining difference in our market going forward. We all know that monitoring alarms offers a variety of "services" to your clients. Hosted systems offer "services" as well. Remote access control, remote video and managed services for your clients is the future of our services offering, providing new RMR opportunities to integrators and dealers if you host the services your customers buy.

Fixing a panel is a technical "service" with a relatively fixed and definable one-time cost and a fairly capped profit margin. I say raise these margins as best you can, but figure out what new "services" you will sell and how you can do this as fast as you can.