Security Systems News

JUL 2017

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the customer sets the system up themselves but it integrates with our CRM and with our monitoring center just like a profes- sionally installed system does." In terms of professionally installed systems vs. DIY, Campau said, "We are a professional installing alarm company going on 60 years, so DIY is not a threat for us; we embrace this." He made a good analogy to someone who needs to have their house painted. Some will choose to paint it themselves while some will choose to hire someone to come and paint it for them. In regard to whether DIY sales impact sales of the professionally installed side of the business, MacDonald noted, "LivSecure is a complement to our exist- ing offerings and as a tool to close more sales, not to replace existing sales that we were already making. It is another option for our sales reps, and we will pay them a multiple of RMR, just like we would do on a professionally installed system." MacDonald said it is all about closing the sale—"selling the right product to the right person at the right time." "If we get a DIY system in the wrong hands, they will eventually deactivate," noted Campau. "With DIY in particular, we've got a very low churn rate in our business; we are hyper-focused on keep- ing our customers." Both pointed out that by just having a DIY option, it opens the conversation and can lead to that potential DIY customer choosing to have the system profession- ally installed, which "is just a better sale, because that is a stickier customer," said Campau, one who is more likely to use and add to the system and less likely to attrite. "If you are getting into the business or launching this, I would be very firm and specific on what the process is and the requirements are for rolling a truck to a self installed system," MacDonald said, noting that otherwise you are going to put yourself in a difficult situation of roll- ing a truck much more than you would like. Campau said that if a customer has a problem and needs assistance, he will roll a truck, but for a $100 fee and a commit- ment to an additional year on the tradi- tional two-year monitoring contract that he offers. "You'd rather have that convo before the sale, on the front end; don't rush to get that sale." The discussion also covered RMR potential, which is in the $40 to $45 range, as well as branding, marketing and engaging the customer. Both agreed that the more engaged a customer is with their system, the less likely they will cancel the service and much more likely that they will add more services over time. Day Two I started Day Two in the session "Must Know Future Trends of the Industry," featuring two highly knowledgeable speakers in Speros Venios, VP of channel sales at Interlogix, and Michael Barnes, founding partner of Barnes Associates, an advisory and consulting firm that specializes in providing financing and acquisition related services to the secu- rity alarm industry. Venios, who is responsible for the integration of security and smart home devices in the residential and commercial segments through the distribution, MSO and OEM channels, said that 50 billion objects are projected to be connected to the IoT by 2020. "Connected homes will be the largest sector for IoT technologies," he said, not- ing that by 2019 it is estimated to be a $490 billion market. "According to one survey, more than two-thirds of consum- ers plan to buy IoT technology for their homes by 2019." Despite all the disrupters, such as the cable, telecoms and tech companies in the market right now, "The security chan- nel is well positioned to deliver these solutions," Venios said, noting that they have an opportunity to be that trusted provider of both security and smart home products and services. Barnes pointed out that over the past year his focus on operating performance and valuation trends in the industry— how product and technology is affect- ing the industry—has revealed three big trends: Faster product evolution and shorter lifecycles; a broadening array of capabilities and services; and a changing competitive landscape. "The number of new products com- ing out each day is much faster than it was before and those products are expected to have shorter lifecycles … not because they're not manufactured well, but because they're going to be replaced with something faster, better or cheaper," Barnes said. The broadening array of capabilities and services is "a wonderful thing for consumers and commercial end users of ESX 2017 wrap-up all types," he said. "But, of course, it puts strains on those of you who are trying to provide those services—how do you pick which ones to offer, how do you package them and how do you price them?" With all of the disruptors in the indus- try right now creating a changing com- petitive landscape, "Clearly technology is enabling some of these new competitors … that previously wouldn't have been a competitor in the industry," he said. Despite some of the challenges present- ed by the abovementioned trends, "This is a great time to be in the business," Barnes said, noting that he sees nothing in the data that would tell him otherwise. "We look at, and we track hundreds of alarm companies and we try and track every deal that is going on in the industry, every dollar of capital that is being raised to support the growth for all of you." Next, I sat in on a spirited discussion, "CounterPoint of the Day: Cable Ser- vice Companies Are Here to Stay - What Impact Are They Having on the Indus- try?" which was moderated by ESX chair- man George De Marco, and led by speak- ers Daniel Herscovici, Comcast's senior VP and general manager, and John Knox, owner and president of Knox Integrated Systems, who was elected as ESA presi- dent in 2012. De Marco noted that the counterpoint forum is new to ESX this year, with the goal of getting everyone in the session involved in an interactive debate. A cush- ioned square, which had a microphone inside, was available to pass or throw around to anyone who had a comment or question. De Marco started the discussion by asking Herscovici why Comcast entered into the security industry and how this has helped or challenged traditional com- panies. Herscovici pointed out that Com- cast is not only a direct-to-consumer home security solution but through the acquisition of Icontrol, it is also a plat- form provider. "We entered the industry mostly because we saw a real opportunity to offer a great experience and leverage our current assets," he said. "Comcast has 27 million household relationships through our Internet, video and voice products." Plus, the acceleration of the connected home drove that as well, he said. "More than half of our customers have never had home security before, so it is not that we are out there converting or doing a bunch of takeovers—a lot of our acquisition is new to the category, new to home security," he said. "Awareness of what the possibilities are with the con- nected home security product on a broad scale and the awareness that we generate through our reach, through our consum- ers, kind of lifts all boats, and makes your conversations easier when you are sell- ing." Knox said that he hasn't personally seen any affect. "I don't think that I have lost any customers to the cable compa- nies," he said. "I think it is more like what he [Herscovici] says: They are bringing more people into the market that weren't in the market before." He continued, "Since I have been in the business, every five years someone has been putting me out of business. We have been living that our whole lives and we are still here. And if they don't do a good job of supporting the customer, we are going to benefit off of that." Spencer's wrap-up Day One To start the first day, I attended the OpenXchange Breakfast, featuring a pre- sentation on "The Changing Competitive Landscape." This session brought up a variety of points and perspectives from each of the panelists. The moderator, ESX chairman George De Marco, addressed an interesting topic: whether consumers are Continued on next page Continued from page 1 Together we can Educate Heal Nourish www.securitysystemsnews.com July 2017 SEC u RIT y S y STEMS NEWS NEWS 8

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