Integrators need to look at security systems the way their daughters look at their Barbie dolls. Having a Barbie is nice but having all of Barbie's stuff (and Ken's, too) is the icing on the cake.
No matter the season, there always are accessories and add-ons that are hot sellers. Just as Barbie cannot live without her Malibu beach house or convertible, integrators should be able to entice customers with accessories and add-ons that build business and keep the client content and up-to-date with current convenience and technologies.
Focus on enhanced business value
"Dealers have to show they are capable of taking management of security outside and beyond the home or small business," said John M. Brady, president, TRG Associates, Old Saybrook, Conn. "You've got to be able to offer the 'whiz-bang' options on a plug-and-play basis, even if the customer does not buy them on the first sales call."
"Offering an alarm/contact one door is not a good security program," he added. Rather, a dealer has to offer mobile software applications to customers old and new. While the younger generation is more technology savvy, all customers are aware of the many threats to their safety-threats beyond burglary.
"The big attraction is interactive services. That's where we are getting good play. The time is here, the technology is here and the customers are ready," said Bill Graham, vice president of Sales and Marketing, Guardian Protection Services, Warrendale, Pa. He noted that members of Gen X and Gen Y not only want the newer technologies, but they expect it to be in their homes.
He said if security companies do not migrate to upgraded, accessorized systems they soon will be out of business.
"Security dealers need to offer a broader lifestyle package," agreed Mark Fell, director of Sales, Ocenture, Jacksonville, Fla. "Lifestyle security needs to encompass new consumer behavior and activities." He confirmed there are 1.2 billion people who have Web-enabled devices ranging from iPads to smartphones. But last year there were 71 million new virus signatures and over one million new spyware signatures unleashed upon the market.
Identity protection a great add-on
"Their main target is identity theft," said Fell. He added that many traditional alarm companies are missing the opportunity. There are 34 million users of identity theft protection services, spending $3 billion a year and growing at a 20 percent rate. His answer is what the company terms an 'ASAP' strategy: Acquire more customers; Sell more to each customer; Attrition reduction; and sustain Pricing.
Brady concurred there is a huge potential market for security integrators. "On the whole, we have low penetration as an industry," he said. "A lot of people don't even have home security."
Many forward-thinking companies are delving into other areas of the accessory market. Guardian is getting ready to roll out interactive cameras and thermostat controls. Lighting control will be the third step in their plans. Lighting, Graham explained, is more difficult since an electrician must be involved for offerings beyond lamp modules. He said Guardian is working on sales models that will permit the customer to buy a system that Guardian programs or one in which they subcontract the work to an electrical contractor if necessary.
Whichever direction the business goes, "the days of just installing a standard alarm system are gone," Graham confirmed.
Fire detection in the interactive fold
"For residential customers, text message control of systems and fire detection is a hot seller right now," said Jonathan Frase, president, Frase Protection, Memphis, Tenn. "Homeowners want to feel connected to their homes while away," he pointed out, adding that no matter where one lives or travels, people realize that fire is a real threat.
Frase sells service plans that take effect when the warranty expires. "Our customers need to budget for system maintenance and service and they are receptive to deferring the expense until the warranty period ends," he said.
"Digital security is a big seller right now," said Jim Arnold, vice president of Sales, Control4, Salt Lake City. Control4 partners with Honeywell, Kwikset, Yale and Baldwin.
Kwikset has a remote access control solution, the SmartCode with Home Connect Techology. These keyless entry electronic locks, developed for interoperability with home automation and security systems, communicate wirelessly with other devices in the home and deliver a variety of access control options for enhanced residential security.
"The lock will also allow you to check door status, automatically arm and disarm your security system, and initiate customized scenarios upon entrance and exit," Arnold said.
Yale's new deadbolt and lever locks are the first products in the Yale Real Living line. Available with either a capacitive touchscreen or pushbutton keypad, the platform operates seamlessly with the Control4 platform.
"The locks are integrated with the Control4 2.0 user interface, allowing the homeowner to directly access and control many of the lock's unique features. With the Control4 system the user can create personalized events or scenes triggered by the push of a button from anywhere in the home or remotely via the Internet," said Arnold.
Mobile connectivity is the way to go
Both solutions are popular, Arnold added, because of the accessibility to the Control4 platform from mobile devices and touchscreens throughout the home and when away from the protected premises. Control4 MyHome is a family of software applications, accessible through laptops and mobile devices that allows consumers to access and control lighting, temperature, music, movies, energy and security.
That certainly helps build a more loyal customer. "We enjoy an attrition rate that is about 35 percent lower than the national average," Frase said. "We attribute that, in part, to promoting valuable add-ons that we truly feel are in the customer's best interest."
Guardian's attrition is below seven percent and the customer lifespan with the company averages around 14 years. Anything that creates a stickier customer is valuable.
Frase said he finds customers are generally reluctant to make changes to existing systems unless their life or business circumstances change-such changes include growth in business, remodeling, moving, changes in family circumstances, etc.
"Clients have their own pressures and constraints to deal with," Frase noted. "They want the integrator to provide a solution that addresses their needs with minimal disruption, hassle, or call-backs."
Whatever the accessory sell, the idea is to keep the customer engaged, whether it be with text massages or value-added product, Graham confirmed. "That is the end-game," he said. "We want the customer more engaged in using the system and using it more often and regularly."
Make it sticky so they stay
The top reason customers quit contracts, Brady said, is that they feel they "no longer use the system."
"These new mobile apps and interfaces make it easier for the customer to manage and use the system even if they are not in the home," Brady continued. "You can get $5 in a heartbeat to deliver a security message to a cell phone or computer." The customer who is late returning home now can arm the system remotely, for example.
Yet the business is coming from both customers transitioning to newer technologies and buying add-ons, and those with retrofit systems.
Integration with security systems presents broad opportunities for Control4 dealers since many of their potential customers have high-end homes with existing security systems they don't want to change. Furthering the experience by incorporating integrated door locks into a complete Control4 system is a logical extension.
Fell said any good add-on "absolutely" produces a stickier customer. "If you have five products placed with a customer, you have them for life," he said. The more services an alarm company can provide, the more the customer's inertia increases and the more cumbersome it becomes to change providers.
Brady's strategy would be to present all the up-sells-remote management, CO monitoring, identity protection, smoke alarms, video-at the onset of the sales process. "Even if they don't buy all the add-ons, they know you are capable of providing them," he said.
Small business owners, for example, love video that allows them to see what is going on at their business. Are workers on time? Are they working? Is the overhead door on the dock open or closed? Even if the customer does not buy it initially, it pays to let him know the features are available. "Sell him a few services and you have a friend for life," Brady added.
New technologies also come into play during the sales process.
"The iPad is a huge selling point with dealers since they can now show a demo of how 4Store and Control4 apps work right in the store," said Arnold. Dealers pull up the Control4 4Store and demonstrate different security apps available for the home. "It's a very effective way to highlight the benefits. The iPad really furthers control options for security, as do other mobile devices," Arnold continued.
The real crux of the issue
Graham's concern would be just how much the customer will buy. Guardian's strategy is more about customer retention than added revenue. "We like the added revenue but it is not that much more money," he noted. "And you don't want to run the fees up too high. We are cognizant of what we are adding. The market won't withstand $100 a month."
Much of the accessory boom is facilitated by the proliferation of Z-Wave technology. It effectively transforms any component-switches, lighting controls, thermostats-into an intelligent device that can be wirelessly controlled and monitored. Some 150 companies are in the Z-Wave Alliance.
Dealers and integrators need training, of course. Companies like Control4 provide dealers with intensive training to handle the installation and service of security systems. "All our prospective dealers must attend and pass a three-day Control4 Installer Certification program offered in our training centers in Salt Lake City, Charlotte and Chicago," Arnold said.
The ease of up-selling, Graham said, depends on the age of the customer base and the installed control panel. After five to seven years, it simply makes sense to put in new hardware, since the capability of the old control panel is archaic.
Again, he noted the challenge of getting customer buy-in to upgrades or accessories. "How do you price this to the customer who got their system for zero down and a low monthly fee?" he questioned. "The GSM communicator costs more than the basic panel did seven years ago." Yet, Graham is confident the business will work out the marketing challenges. ADP, Comcast, Verizon and AT&T all are moving accessorized services to market.
Curt Harler is a freelance writer and regular contributor to SD&I magazine. He can be reached at firstname.lastname@example.org.