Expert tips on Authorized dealer programs
Perhaps you are hoping to parlay your experience with other companies in the industry into the start-up of your own security dealership. Either situation may be a motivator to examine the advantages of joining a companyâ€™s authorized dealer program. Such programs are maintained by equipment manufacturers, financial services, monitoring companies and other dealers and installers.
A brand name to recognizeSometimes the advantages of dealer programs are not immediately apparent. That was the case for Denise Mueller, CEO of Rancho Santa Fe Security Systems, San Diego. Because her dealership had been in business since 1978, she thought only newer companies would need a dealer program. However, when one in the mid-1990s offered innovative wireless technologies, she signed up with it.
She recommends going with a strong brand name consumers recognize. â€œNow we want to have this logo everywhere and utilize and piggyback on the name recognition,â€ she reports. â€œThat in and of itself gives credence to who you are.â€
Avi Dorot, president and owner of Fire Burglary Alarms Inc., Rockville, Md., agrees. He asked his 18-year-old daughter about brand names in the security industry and she only recognized one immediately.
â€œThis is the value of name recognition, especially with harder and harder competition,â€ he counsels. â€œIt makes a big difference at the end of the day.â€
Barry Simmons, president/CEO of Security Solutions Inc., Raleigh, N.C., says the best advice he can offer about dealer programs is ensuring that the one you pick has the best-known brand name in your market. â€œYou utilize that brand awareness and recognition,â€ he insists.
For the long haulLongevity in the marketplace was the advantage sought by Craig Metzger, president of GuardMe Security, Matewan, N.J., when he shopped six years ago for a financial dealer program.
â€œThe number-one reason we decided to go with one program was because their long-term goals were closely aligned with our long-term goals,â€ Metzger explains.
Financial supportThree keys to a worthwhile dealer program cited by Preston Coffer, president of ProLine Security, Boca Raton, Fla., are: advantageous financial terms for the dealer, timely payments by the group, and support and training.
â€œItâ€™s good to talk about multiples and attrition or retention, but if youâ€™re not supporting your dealer, if all you do is sign him up and turn him loose, itâ€™s not if the group will go out of business, but when,â€ Coffer warns.
For security dealers who sell their accounts back to their program as he does, Coffer recommends picking a program whose requirements remain consistent. Advantageous multiples and revenue sharing also are important requirements for a dealer program, he thinks.
Coffer tried for several years to retain his own accounts, but after calculating the costs of maintaining them, he thought it would be easier and less expensive to sell them to a program.
Among financial advantages Coffer thinks are important to receive from a dealer program are aging reports, which indicate whether customers are paying their bills in a timely fashion, holdback reports and â€œcureâ€ lists, which indicate that bad payers now paying their bills regularly have been â€œcured.â€
â€œThis feedback I get saves me money,â€ Coffer points out. â€œThey seem to understand that if you drive your dealer out of business, ultimately you are out of business.â€
â€œOther programs seem to think if the dealer stumbles, they can find another dealer,â€ he laments. â€œBut the industry has finally realized there are only so many people like me out here. That seems financially driven, but it is as much of a philosophy as it is dollars and cents. Let everyone make a fair profit and not strangle your dealers.â€
Selling accounts to his dealer program has enabled Dynamic Security, Palm Springs, Calif., to expand into new areas like CCTV more quickly, maintains Rick Strand, vice president.
â€œBeing paid upfront makes a great deal of difference,â€ Strand points out. â€œHow do you run a business with no money? If you can sell and install systems, youâ€™re making money within a week or two, and thatâ€™s consistent money you can count on to come in as long as youâ€™re doing it.
â€œI was amazed to find out it works and it works pretty well,â€ Strand says of his programâ€™s financial model. â€œWe went from nothing to turning $1 million in our first year just from knocking doors.
â€œWe would never have been able to do this expansion so soon, but we built a good sales staff and can pay them on a weekly basis, and you donâ€™t keep salesmen unless you can pay them,â€ he stresses.
Marketing materials with an edgeProfessional marketing materials are another reason to join an authorized dealer program. Muellerâ€™s group listens to dealers and creates innovative marketing concepts that tie into a national television advertising campaign, she maintains.
If the group advertises on national television and then makes the commercial available to dealers to put their tag line at the end, â€œThat is worth all the coattails theyâ€™ve spent nationally,â€ she points out. â€œIt has the effect of us paying for all the ads.â€
John Colehower, managing director of Matrix Security Systems, Wilmington, Del., is enthused about the results from a test in which Matrix participated, which was sponsored by his authorized dealer program, by a company offering Internet search technology.
The company claims it can place security companies in the first three sponsored links on Web search engines in the dealershipâ€™s market area by identifying the area in which the search request originated.
Metzger of GuardMe also praises the marketing support he receives, which includes advertising, brochures and marketing know-how about areas of the industry in which investment has been successful.
Exclusive & discounted productFor some dealers, such as Mueller, having an authorized dealership provides discounts on equipment, early access to new designs, and exclusive models. In fact, Metzger of GuardMe is in a second dealer program because of the equipment that is available through it.
To be able to offer exclusive products and be monitored by a reputable central station company makes it easy to present a security business in the best possible light to customers, Metzger concludes.
The discounts make Strand feel his dealer program is worthwhile. â€œYou couldnâ€™t go and buy it for what we pay for it,â€ he insists. â€œItâ€™s a good break when you can cut your equipment costs, because thatâ€™s just profit.â€
Networking & benchmarkingLarry Matson of Matson Alarm, Fresno, Calif., praises his groupâ€™s â€œnetworking and camaraderie, meeting the dealers at our level and above it and bouncing off their ideas. Itâ€™s friendlier than meeting with [our] competitors. They try to strengthen everybodyâ€™s business.â€
Mueller agrees. â€œTo me personally, the networking has proven to be the most valuable,â€ she notes.
Educational resourcesSales training is a key component of most authorized dealer programs. Simmons of Security Solutions said his program has trainers assigned to specific geographic areas. â€œI see a trainer in one of my offices every six to eight weeks and doing training with my folks constantly,â€ Simmons points out.
Strand relates that the training provided by his dealer program has helped him hire and start up new employees. â€œWeâ€™re adding four to 10 systems a week from firing guys up and getting them out to the field," he asserts.
A source of qualified leadsStrandâ€™s dealer program sends his company sales leads that he maintains are well-qualified. â€œWhen we get a sales lead, we pretty much go out and sign them up,â€ Strand reports.
The leads mostly are call-ins from the thousands of company signs in the field. â€œTheyâ€™re real partners,â€ Strand says of his program.
Simmonsâ€™ program not only furnishes leads but also has partnerships with numerous companies such as the American Association of Retired Persons (AARP), insurance and real estate companies that can bring in additional business.
â€œThese partnerships provide dealers with some reasonable ongoing lead flow,â€ Simmons explains.
Keep the serviceAnother source of income dealers who sell their accounts should consider is providing service for those accounts after they are sold.
â€œWe just took that on two months ago, and itâ€™s an income all its own,â€ Strand explains. The program also pays a good rate, he maintains.
Coffer of ProLine points out that when a $100 alarm broke down and it cost $300 to repair it, historically dealers had to absorb the cost themselves to avoid losing the customer to a competitor. However, by selling accounts to a dealer program, the program pays the dealer for the repair. â€œThatâ€™s a windfall,â€ he points out.
Loyalty paysAlthough some dealer programs offer benefits like group insurance, other advantages may be less tangible. Some dealers think that these advantages give them an edge over dealers who arenâ€™t part of an authorized program.
â€œYou usually find out about [new] products earlier, and youâ€™re closer into the loop and have a closer relationship with the management of the company,â€ points out Jim Coleman, president of Operational Security Systems Inc., Atlanta.
Dorot of Fire Burglary Alarms thinks that relationship with management is comforting to small and mid-sized independent security dealers but questions the practicality of it. â€œI donâ€™t know if a person can have a relationship with 300 to 400 dealers, but the image somebody has in their brain is, â€˜I am not alone.â€™ That has value,â€ he concedes.
Authorized dealer programs can bring a sense of exclusivity to a security dealership. â€œIt allows you to differentiate yourself from your competition, but the more sophisticated programs start looking amazingly like airline frequent-flier programs,â€ Coleman concedes. â€œThey are more programs to garner loyalty from the dealer population than anything else.
â€œFor the integrators, if youâ€™ve made the choice to be a dealer for one of the manufacturers, you canâ€™t do that nonchalantly anymore â€“ it has to be a commitment in terms of training and coming up to speed on the nuances of their system,â€ Coleman emphasizes. â€œSo if youâ€™ve made the commitment to carry a line or you find yourself flying on one of the airlines, why wouldnâ€™t you want to sign up?â€