Traditional residential security integrator owners are fatigued, and it is understandable. Over the past decade, these owners have been assaulted with new business models – from summer sales to cable TV companies; and now, the most recent threat, in the form of DIY companies and the various massive tech firms (think Amazon, Google, etc.) who are making waves while aggressively entering our industry.
It would be easy to throw up one’s hands and surrender to what so many commentators are describing as the total disruption of our business model. But not so fast – there is a strong case to be made that the independent dealer offers a set of benefits and has structural advantages that these new threats cannot match.
Local Power
While many observers are quick to point out the many strategic advantages that these new and powerful entrants bring to the fight, it is easy to overlook the one critical factor that only our business model brings – a local installation and service team. Our new competitors will be quick to point out that these assets are actually liabilities. They claim the cost structure of local brick-and-mortar and labor costs are just the thing they are focused on exploiting against us. They are wrong.
It is easy to see why pundits might claim that local staff and offices are liabilities; after all, the DIY model has no field installation labor costs and no need for expensive local real estate and associated expenses. Instead, the DIY model relies on their customers to provide hours of their own time for installation while the companies centralize their support operations in call centers and fulfillment warehouses. This centralization provides ample opportunities to reduce both the direct costs to install a system and associated overhead; in fact, if the customer experience is no better with local labor and support operations, then these costs are indeed liabilities.
How do traditional companies turn these local offices and staff into competitive weapons? By positioning them to deliver a level of service these new models cannot match. At ADS Security, we describe this as delivering “legendary service to our customers.” Call it what you will, but if you are not pressing this advantage every time you are face-to-face with a customer, you are giving away a unique point of leverage. Success for traditional residential security integrators will hinge on your ability to dramatically differentiate yourself every time your team engages your customer.
The Keys to Competing with DIY
Training: What will it take to succeed in this new competitive landscape? First and foremost, it will require spending time and money to invest in each member of your team. Every person who touches a customer must receive continuous training on new technologies to learn how they can make the customer experience easier. They will also require training on the principles and tactics of delivering exceptional customer service. Do not expect these to be one-time events – you must dedicate your time and budget every year to reinforce a culture of customer obsession.
Customer Service: Success will require you to build a team fanatically focused on making every customer experience an exceptional one. The sales process must be simple, easy to understand and on your customer’s terms. Installation has to be on time, fast, engaging and helpful in eliminating the stress of a new technology. Every subsequent engagement – from billing to service to technical support – has to leave the customer with a peace of mind they could never get from a remote service provider. The result will be customers who would no sooner think of installing their own alarm system as they would replacing their roof.
You must develop systems that make it easy to do business with your company and that prioritize the customer experience over all else. This requires a skeptical approach to everything you assume about how business should be done. If you make it difficult for your customer to request a service call, you better find a way to simplify that process. If your customers find navigating your phone tree a confusing and frustrating experience, you better pay attention. At every turn, your team has to be relentless at eliminating obstacles to delivering on the promise of a great customer experience.
Technology: Success will require you keep pace with the latest smart home technologies and how they integrate with security systems to simplify and improve the lives of your customers. To do that, you must engage aggressively with top vendors who will do the heavy lifting for you by evaluating and partnering with manufacturers of the many devices – garage door openers, door locks, thermostats, etc. – that enhance the value of our installed systems.
You must regularly introduce new technologies to your existing customers and help them with an easy path to upgrade their systems so they see no gap between what you can deliver and what the latest new entrant is offering. For too long, the approach of our industry has been sign, install and forget. Many companies just assumed that existing customers would continue to provide the recurring revenue to fund continued growth and took them for granted.
That formula no longer works, as these customers are hammered by advertising from competitors offering new services with enticing entry pricing. The only answer is to regularly engage with customers and open the door for them to upgrade their systems as they desire. Yes, this will require “reinvesting” a modest amount in these customers; however, the alternative is to have them poached away by aggressive competitors.
Marketing: Success will require that you build a strong local brand that your customers associate with reliability, trust and peace of mind. This does not necessarily require advertising – though often it can play a critical role. Most importantly, it will cement the value of your brand in the minds of target customers in your market and earn the recommendations and referrals that will come when you deliver a world class customer experience. These voices can be amplified by encouraging online reviews and social media attention.
Choose your Customers Wisely: Success will require that you concentrate resources and focus on those customers and market segments that play to your strengths. Consider ending the pursuit of customers who do not appreciate the value you are offering. Abandon them to these other competitors –customers who are not willing to pay for the peace of mind we provide are better left for others to service.
If you decide it best to stick with the old model of getting a contract signed, quickly installing a system and walking away, get ready to find yourself in the cross-hairs of these new, well-funded entrants as well as by traditional dealers who are following these tenets. That will not be a pleasant place.
Indeed, it is a tall order and the path is not easy; however, that is the beauty of our free market capitalist system – competitors with new ideas challenge conventional wisdom and market players must adapt and evolve to survive and prosper. Prosper we can, if we use these ideas to leverage the strengths we have and turn perceived liabilities into assets.
John Cerasuolo has been President and CEO of Nashville, Tenn.-based ADS Security since 2007. ADS was established in 1990 and currently serves more than 100,000 businesses, industrial facilities and residences throughout the southeastern United States. Learn more at http://adssecurity.com.
