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For Sale: DVRs

April 1, 2005
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Considering how powerful today’s digital video recorders (DVRs) are, it’s not surprising that DVR sales are growing strongly. After relying for years on cumbersome videocassette recorders and tapes for image archiving, the security industry has recognized that DVRs can simplify storage and streamline the review of an incident. Perhaps that’s why 68 percent of security managers responding to an SDM online survey (conducted in May 2004) said they planned to purchase a DVR within the next 12 months.

Where are the best DVR sales opportunities for security dealers and what are some of the most effective techniques for maximizing sales?

DA Central, Oak Park, Mich., conducts seminars twice a year on the advantages of digital video systems.

Photo courtesy DA Central

Likely prospects

Some of the hottest vertical markets for DVR-based video systems are in areas where regulation or anticipated regulation is helping to drive adoption. For example, health-care organizations increasingly are being called upon to help secure patient records by providing physical security for information databases. Pharmaceutical companies face similar requirements from the Food and Drug Administration. Education is also a promising vertical market, because many schools are receiving grants for video surveillance systems from the Drug Enforcement Agency or from the Department of Homeland Security.

In addition, technology developments in related areas are driving the demand for video surveillance systems in certain markets. Retailers, for example, are realizing major cost savings by controlling shrinkage using a point-of-sale system linked with a video surveillance system. Other strong vertical markets include multi-tenant high-rise buildings, the financial industry and utility companies.

Security dealers and systems integrators cannot ignore the residential market for DVRs.

“Our [DVR] sales have gone from commercial to residential this past year,” notes Larry Comeaux, title, Acadiana Security Plus, Broussard, La. Comeaux’s company has progressed from selling one DVR a month to about 15 to 20 a month, with about 5 to 10 percent of that number installed in homes. “So if we did 100 DVRs last year, at least 15 went to homes. If you’re in a home valued at a half-million dollars or above, you’re more likely to see a camera system with a DVR. With an integration system, where they ring the doorbell and see the person at the TV before they go to the door, a lot of people are adding a few more cameras to monitor it – all cameras are connected to DVR.”

Although some clients choose systems that are monitored but not recorded, most opt to include recording capability – and in today’s market, that virtually always means a DVR with built-in hard drive storage.

“The DVRs are getting easier to sell because of the fact that they have come down in price [to] where it’s livable,” Comeaux says. “All the customers we’ve had in the past with multiplexers are jumping into DVRs, because you no longer can find anyone to repair VCRs and for the fact that they’re not dependable to get employees to put the tapes in every day the correct way – it’s gotten a lot easier to sell DVRs.”

Managing a videotape library is indeed a strong reason for clients to invest in digital video recording and storage.

“Clients like the fact that they don’t have to worry about whether someone changed the tape or whether a tape has been used too many times,” says Dave Runnells, CEO of Videotec Corp., Highland, Ind.

When selling a new system, security dealers agree that the biggest DVR-related challenge is not selling customers on the need for storage or on using a DVR rather than a videocassette recorder. Instead, the biggest challenge often may be to convince a client about which systems integrator to use.

Mike Kobelin, vice president of sales for systems integrator Selectron, Portland, Ore., has an interesting take on that issue. “We use a team selling approach,” Kobelin says. “We want to impress clients with our technical knowledge. We have sales and engineering involved.” For larger jobs, and for clients considering networked systems, Selectron salespeople bring engineers along on sales calls – and make sure that the prospect’s information technology manager is present at the meeting. “We like to challenge them to force our competition to do that,” Kobelin explains. “There are only a certain number of companies that have engineering support.”

Helping a client select the right DVR from hundreds of manufacturers, most of which offer multiple models, is a key concern for systems integrators. “The biggest challenge is trying to get an apples-to-apples comparison on what two different companies are bringing to the table,” says Randy Jara, president of UPS Security Systems, Orange, Calif. Jara points out that a DVR from one manufacturer might offer twice as many days of storage as a DVR with the same size hard drive from a different manufacturer.

To help educate customers about selection criteria, UPS created an informational pamphlet titled, “How to Buy Digital Video Recorders,” which it makes available to clients contemplating a DVR purchase. Using a question-and-answer format, the pamphlet explains issues such as remote viewing, storage and embedded versus PC-based DVRs in easy-to-understand language.

To help educate customers about selection criteria,UPS Security Systems, Orange, Calif., created an informational pamphlet that it makes available to clients contemplating a DVR purchase.

Photo courtesy UPS SECURITY SYSTEMS

Sales tools

Demonstration Web sites provided by manufacturers offer another tool that systems integrators can use to help in selling DVRs. Such sites can be reached over the Internet and typically display images from a camera that can be controlled remotely – often enabling prospective clients to operate the pan-tilt and zoom controls. “A Web demo is always the best thing,” Jara says. “It lets people know how they can see cameras from remote sites and see how easy it is to play back.”

But not everyone agrees with that approach. “I don’t like manufacturer sites,” Kobelin says. “We want people to believe they’re dealing with us. Anyone can log onto a Web site and look at a camera. The really difficult thing is installing it and making it work.”

As an alternative, UPS Security Systems has developed a demonstration kit that salespeople set up when they visit clients. The kit includes a wireless personal digital assistant (PDA) that prospects can use to view images from security cameras while they move around their site. “Everything is going toward wireless and networking,” Jara says. “These are things you have to be ready to demo.”

Talking with existing customers and viewing their systems also can be a powerful sales tool, notes Jim Henry, CEO of Diversified Security Solutions, Saddlebrook, N.J. “You can put together all the demos you want,” Henry says. “The only way customers will understand it is to talk to other customers that understand it.”

Another approach to selling DVRs is to emphasize benefits that may not be security-related. RFI Communications & Security Systems, San Jose, Calif., is one company that is having success with this approach through an offering that RFI manager of business development John Nowack calls “interactive video.” RFI’s offering leverages the remote viewing capability of digital systems, enabling RFI central station operators to check in on a client’s video system according to a pre-arranged schedule. Operators might check in on a retailer’s branch locations to make sure displays are set up properly, for example. To sell such offerings, the company draws upon success stories from companies with similar applications.

“Interactive video is something we’re really going after in terms of marketing to different vertical markets,” Nowack says. “But there has to be an equation that makes sense. The return on investment or return on assets has to be compelling.”

Upgrades

Considering all of the benefits of digital video, the industry would expect to see a strong market for upgrading existing VCR-based systems to DVRs. But many systems integrators say selling upgrades can be a struggle.

“There are a certain number of people who believe if it works, keep it,” Kobelin says. “The people who use it see the benefits, but people with money frequently say it’s too much money.” Some customers are so set in their ways that they may actually replace VCRs that break down with brand new VCRs, rather than upgrading to a DVR.

Selling upgrades can be particularly difficult for residential and small business systems with just a few cameras because using a VCR is less cumbersome for such systems than for complex ones with multiple recording devices and dozens of cameras. “If a customer has a lot of VCRs, it’s easier to migrate them,” says Dick Ramsdell, vice president of sales for DA Central, Oak Park, Mich.

To help sell upgrades, DA Central conducts seminars twice a year on the advantages of digital video systems. Analog customers receive invitations to the event, which is held at a local hotel at no charge to the customer. “We usually get about 30 to 40 people,” Ramsdell says. DA Central also has a white paper about the advantages of digital systems that it makes available to prospects.

A number of systems integrators say they periodically mail promotional pieces to analog customers about the benefits of upgrading to a DVR. Although companies say the response rate is relatively low, mailings of this kind can help keep the company name top-of-mind with customers so that whenever customers are ready to make the upgrade, they know who to call.

Targeted monetary incentives and discount programs also can help in persuading analog customers to upgrade to digital. Through its “Digital Dumpster” program, for example, RFI Communications & Security Systems offers rebates to customers who turn in analog equipment. RFI also helps make digital upgrades more affordable through third-party leasing arrangements.

Randy Jara

How Difficult Is it to Sell DVRs?

SDM asked systems integrators to rate the difficulty of selling DVRs on a scale of 1-10, with 10 meaning very easy to sell and 1 meaning very difficult to sell. Here are their answers:

Randy Jara | UPS Security Systems

RATING: 10

“Nobody who’s buying a new system

buys an analog system anymore.”

John Nowack | RFI Communications & Security Systems

RATING: 10

“You get so much more functionality out of the investment, as long as the unit itself is pretty easy to use.”

Al Albrecht | Security Management Systems

RATING: 10

“I can’t think of anyone who puts in a camera that doesn’t want to record it.”

Larry Comeaux | Acadiana Security Plus

RATING: An “easy 9”

“The highest percentage is at banks right now.”

Dave Runnells | Videotec Corp.

RATING: 9

“Features are better, and prices

have come down.”

Jim Henry | Diversified Security Solutions

RATING: It depends

“If you’re dealing with a purchasing agent, it’s extremely difficult because they don’t understand

the technology. If you’re dealing with a security director who understands DVRs, it’s easy.”

Mike Kobelin | Selectron

RATING: 2…or 10

“My first answer is 10; it’s easy to sell because of

features and functions. My other answer is 2; it’s

difficult to sell because of all the low-end products that are out there. The challenge is to educate the buyer on making the correct investment.”

Dick Ramsdell | DA Central

RATING: 2-3…or 6-7

“It’s relatively straightforward to sell the concept. That’s a 6 or 7. The issue then is how much they should pay for it. Specifying a DVR is challenging because you can have so many different combinations. It can be in the 2 or 3 range to figure out what to sell that has the right combination of features.”

Bob Matsuura | RFI Communications & Security Systems

RATING: 4-5…or 9-10

“If there’s a need, it’s a 9 or 10; it’s very easy to sell.

If you were cold-calling, it would be very hard.”

Sidebar
Cracking the Residential Market

Although video surveillance systems in homes are still a relative rarity, demand for them is increasing. One company that has had some significant success in selling to the residential market is RFI Communications & Security Systems of San Jose, Calif.

“The people we deal with are more technologically knowledgeable than they were before,” says Bob Matsuura, manager of Team 15, RFI’s residential division. “When you explain that this is basically a minicomputer, they understand.”

Although Matsuura’s team focuses primarily on sales of residential alarm systems, some of these customers ask about video surveillance. “Nine times out of 10, they’re having a problem,” Matsuura says. “They think a neighbor or someone is doing something to their yard.” Typical residential customers buy at least three cameras because they want to protect the back and both sides of the house – and because residential systems are not usually monitored live, a DVR is a given. “If you’re not there to view the video, it won’t do you any good unless you archive it,” Matsuura says, adding that any DVR he sells has dial-in capability so that homeowners can check in on the system as needed.

If a prospect does not ask about video, Matsuura doesn’t bring it up – at least not right away. “My primary goal is to secure a monitoring contract,” he says, adding that he takes care not to complicate that decision. After an alarm system has been installed, however, he calls customers back to see how the system is working out and also lets them know that the company also offers video surveillance. Although the majority is not interested, a significant minority ultimately buy video as an add-on system.

RFI also has been successful at selling residential video surveillance systems to high-level executives of companies that have video systems installed by RFI’s commercial division.

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