Alarm Dealer's Expansion to SurveillanceBy: John Honovich, Published on Jan 22, 2011
We examine the challenges faced by a medium sized alarm company that exapnded their core alarm business by offering video surveillance. This can be a difficult situation as it involves new technology, new skills and potentially new suppliers. While this company has found a solution working with an online value added reseller, important tradeoffs and downsides exist.
The company has been a Honeywell alarm dealer for more than 20 years. They offer their customers an in-house monitoring solution and do not sell their accounts. Security expertise and support are the core value propositions they seek to offer to their customers - some of whom they have serviced for more than decades.
While the company had installed surveillance systems occasionally (almost always at the request of an existing alarm customer) the owner had never focused on growing this segment of his business in the same manner he attempted to grow his core alarm operation. Surveillance was an 'add-on'. He wanted to change that focus by enhancing his surveillance offerings so that both segments could feed off of each other.
He has very low employee turnover, so most of his techs and service employees have the 'expert' confidence level with alarms that only comes with experience. However, the owner came to realize that his people just did not have this same confidence level when it came to the networking aspect of surveillance systems. If he was going to go ahead with his plan to offer (and market) surveillance products, he would first have to find a way to overcome his employees lack of applicable knowledge.
Since he was already a Honeywell alarm dealer, his natural choice was to use their surveillance products. He got his equipment at the same supply house he already used for his alarms, but soon found that training his employees in networking skills was his biggest challenge. His crews had little difficulty in learning the operational aspects of the surveillance equipment (including integrating alarms), but it turned out that the real hurdle was all the different network configurations used by his customers (60/40 residential, small commercial) and the fact that his equipment supplier did not offer networking support.
Faced with this dilemma, while receiving increasing requests for surveillance, he saw no easy solution. His techs were the best at what they knew, but the needed skill sets for networking were simply outside the scope of their aptitude. Without a certain comfort level, his techs could never have that 'confidence' he knew that his customers expected. Further, he felt that bringing in a new employee with networking skills to complement his team might be more disruptive than positive. The average length of employment for his techs was more than 5 years, they all worked well together, and the owner was hesitant to introduce an 'outsider' into this well-ordered machine.
To compensate, he found a small on-line surveillance equipment provider who offered networking support. His specific needs were network-related (he could already get his branded hardware fairly easily), but this supplier only offered networking support for the equipment they sold. The fact that this supplier re-sold a Korean brand he had never heard of was a cause for concern; after decades with one brand, he would now have to trust something new. He had to make sure this suppliers equipment would hold up in the field and that support was available when he and his techs needed it. The Korean brand was significantly less expensive, but even one or two service calls for defects could easily cost him more in the long run.
Eventually this on-line supplier gained trust by providing references and offering to work with his techs to train them in basic networking on the job. Using commonly available remote access tools (LogMeIn.com, TeamViewer.com, GoToAssist.com), the supplier can connect to his techs laptop at the job site and walk them through the network configuration required. With training (and repetition) the owner felt his team should be able to learn these required skills at little cost to his company. If all went well, his techs would receive the training they needed and his hardware costs would be at least 30-40% lower than using Honeywell, allowing the alarm company's margins to improve.
The alarm company is so far satisfied. However, this partnership does have risks.
Because he now has to order his surveillance equipment instead of being able to get what he needs the same day from his supply house, his customers with malfunctioning equipment will have to wait approximately three days for replacements unless he stocks at least a minimal amount of equipment himself for this purpose. In addition, he no longer has the brand backing of his alarm equipment provider. As a long-time dealer under his current brand, this could have a negative effect on customer perception and possibly hurt his relationship with his current alarm brand.
The biggest challenge, however, is not having his entire customer support entity in-house. By outsourcing a portion of his support, he risks being left stranded if his supplier ceases to do business. As a preventative measure, this owner would be wise to mandate that his new supplier train his in-house techs on networking so if this does occur, his team will be better prepared to fill this void.
Lessons / Trends
This case highlights two growing trends in the industry:
- Resellers/Distributors increasing services to improve the value of their offerings beyond box sales
- Online support tools making it easier for support to be provided from anywhere (thereby adding value)