Planting the Sign of Security
December 1, 2007
Although the residential business of Ackerman Security Systems, Atlanta, originally grew from its ubiquitous lawn signs, the company now relies on its own UL central station and presentations on salespeople’s wireless laptop computers to grow the business toward its goal of $1 million in recurring monthly revenue (RMR).
“We were one of the first to have a yard sign which promoted the company and allowed the police, fire and medical authorities to more readily identify the home,” maintains Jim Callahan, vice president of sales. “We have a board that goes below the sign that allows us to affix the street number on the sign, which is unique. I don’t know of any other company that does that. In an emergency, when seconds count, it allows the responding authorities to locate the house that much faster.”
“We feel it’s a first line of defense and a good marketing tool,” Callahan adds. “If somebody snatches it, we get a multitude of phone calls requesting that a new sign be delivered. That tells us it’s a good deterrent.”
Ackerman Security Systems was founded in 1976 by Charles Ackerman, a commercial real estate developer who became a crime victim when he was followed home and shot in a robbery. He saw this event as an opportunity to start his own security company.
In 1990, Ackerman Security was purchased by The Alert Centre, which went out of business in 1992. The sale did not include the Ackerman brand, so Charles Ackerman and Bruce Turry, then the company’s president, purchased Guardian of Georgia, which now does business as Ackerman Security Systems.
“When Charlie and Bruce got together again in 1992, they came back into the industry by buying a small company in town called Guardian of Georgia because it had its own UL central station,” Callahan remembers. “They then contacted Bill Rawlings, who was our director of operations in the old company, and a number of salespeople and service personnel who again formed Ackerman Security Systems.
“It only had 600 accounts, but it had a UL-approved central station, which is what Charlie and Bruce thought would be very important,” he relates. “We started out in December 1992 with eight to 10 employees.” Today, says Callahan, Ackerman Security Systems has 144 full-time employees and more than 40,000 accounts.
The new principals considered a local UL central station very important. “In the old company, they did not have their own central station,” Callahan points out. “The value was we could control the level of service provided to the customers. Being our employees, we could customize and do things third-party central stations either couldn’t, wouldn’t or would charge exorbitant amounts of money to do.
“So when customers had special requests, we didn’t have to check with anybody,” he notes. “A good deal of our residential customers are mid- to high-end. We’re not a mass marketing entity â€” we’ve never been in that freebie game. Their needs and demands are much higher than those of the mass marketing world, and we want to be in a position to accommodate those needs.”
In April 2005, Charles Ackerman sold the company in a leveraged buyout to five key members of his management team: Bruce Turry, CEO and chairman of the board; Callahan; Jeff Cohen, CFO; Mike Sandes, vice president of commercial operations; and Bill Rawlings, director of operations. Charles Ackerman is no longer associated with the company.
“We had a five-year plan with the leveraged buyout â€” we are ahead of that plan through August 2007,” Callahan reveals. “2007 has been a good year. We expect in 2008 to hit the million-dollar mark in monthly RMR, which is one of the key benchmarks and will throw us into a very elite category.”
The company ranked 34th in this year’s SDM 100 with $708,001 in RMR and 29th in total gross revenue of $17.27 million.
“One of the most important reasons for Ackerman’s outstanding growth in the last five to eight years has been the assemblage of what I feel is one of the most talented and experienced management teams in our industry, and that same team is the backbone and support for Ackerman’s future growth,” Turry asserts.
Callahan calculates that the company’s 37,000 residential contracts are approximately 70 percent of RMR, but an estimated 7,535 commercial contracts account for 50 percent of total gross revenue.
“More profit is generated on commercial than on residential,” Sandes observes, estimating that 60 percent of profit is from the commercial side of the business.
“The percentage of residential versus commercial has changed in the last five years,” he notes. “We intentionally sought to build out the commercial side of our business while maintaining rapid growth on the residential side.”
Commercial chain accounts of regional and national multi-location customers are the company’s secondary target market. Its primary market is residential and commercial customers in metropolitan Atlanta and north Georgia.
NEW CUSTOMER SERVICE DEPARTMENTAckerman Security established a new customer service department in November 2006. “Anytime you call this facility, you’re going to talk to a live human being 24/7 who is capable of handling most situations that come up,” pledges Callahan. “Our customer service reps are cross-trained in all functionalities.”
The new customer service department was staffed by taking one person each from accounting, billing, service and installation and adding three new employees and a manager.
Customer service personnel and central station operators can answer account billing questions, and can schedule service calls and sales leads at any time.
“They’re not told to call back in the morning when the office is open,” Callahan says of customers or prospective ones trying to schedule service or sales calls late at night.
“We’re convinced that has a lot to do with the improvement that we’re seeing in customer attrition or retention rates,” he continues. Ackerman Security reports that attrition rates have declined from 10.9 percent in 2005 to an estimated 10.1 percent this year. “We get a lot of complimentary e-mails and letters from people who just want to tell us it was a delight to speak to someone and resolve their request with one call.”
“We’ve taken that frustration out of the equation and made it very easy for our customers to get to us,” Sandes maintains. “If they want to commend an employee or advise us of less than acceptable performance, they can reach us, and they will talk to Bruce, Jim, Jeff, Bill or me. We’re not hiding from people â€” we make it very easy to find us when and if they need to.”
Other customer satisfaction solutions include an installation quality assurance manager who inspects new installations, oversees customer satisfaction calls and develops training agendas based on customer feedback.
“Our success is built on the employees that we have that are dedicated to ensuring our customers are treated like a member of the family,” Callahan emphasizes. “We continue to look for people who have that mindset and continue to develop that mindset in the jobs they have. Our [customer service representative manager], Ivette Britt, instills in them the phrase, ‘Our customers may not remember what you said, but they will always remember how you made them feel.’”
The company recognizes birthdays, weddings, graduations and other personal events of employees. Ackerman employees also receive client attrition reduction efforts (CARE) awards that recognize their work to avert a customer’s cancellation. Central station apprehension awards go to operators whose actions have led to a police apprehension on-site. Other employee benefits include bonuses, health and dental insurance, floating holidays, a 401K plan, a credit union and buying clubs.
NETWORKING NATIONALLYUnlike other large security companies, Ackerman services its 41,000-plus customers including some Fortune 500 companies and national accounts in 38 states including Anchorage, Alaska, and Hawaii out of one national office in Atlanta. This is accomplished through a network of affiliate installation service providers.
“We developed this network on our own,” maintains Mike Sandes, vice president of commercial operations. “Ackerman has a consistent network to provide service, installation and maintenance. We still remain very competitive price-wise â€” we have a lack of overhead.
“Over five years, we’ve developed over 300 of these affiliates around the country, so we don’t have to stay with one affiliate in one town,” Sandes points out. “We have two- to three-deep bench strength in each town, so we can provide an alternative to the larger companies.”
Rates for affiliates are negotiated based on local compensation. The company’s national accounts program is nearly three years old.
“There is a selective national account presence on the sales side, because our customers pushed us more than our business model originally intended us to be in that arena,” Sandes concedes. “They wanted us outside Atlanta, and that really started the foundation to grow the business nationally.
“Our market had always been very strong on the service side, residential and medium-sized homes, and commercially,” Sandes relates. “We’re not an enterprise-type company, nor would we want to be.
“You’re not going to see Ackerman at the Pentagon â€” that’s not the client we would serve,” he concludes. “We are capable of providing everything from A to Z, and our real sweet spot is in the core commercial business and the residential platform.”
MARKETING FROM THE LAPTOPAmong the innovative Ackerman Security marketing programs is a free $1,500 Insurance Deductible Program and Seconds Count Guarantee, in which all customers are automatically enrolled.
The insurance program allows homeowners to increase their home insurance deductible to $1,500 and apply the savings to security system costs. Customers are protected because if they have an actual loss from burglary or fire, the $1,500 deductible is provided by Ackerman Security’s program.
The Seconds Count Guarantee gives customers free monitoring if Ackerman Security’s response to an alarm does not meet UL’s requirements of 45 seconds to dispatch from the time the first signal is received to the first call to the residence.
Ackerman Security participates at home shows in a concept called the See-Thru House, which shows consumers through bare stud walls where all of a home’s systems are installed.
The company also is co-op marketing the Permanent Escape and Rescue Ladder (PEARL). The nationally marketed product is recessed between studs on the inside wall under windows that are above a building’s ground floor. In the event of an emergency, the ladder unfolds out the window like a rope ladder and provides escape from fire or other dangers.
Ackerman Security provides educational programs on security for members of the real estate and insurance industries that were so innovative they were used in a manufacturer’s training film for other security companies.
The company’s award-winning brochure has a green alarm button on a photo of an Ackerman security panel that simulates a real response by the central station. Using the same technology as greeting cards with music, when the green button is pushed, a recording of a central station operator answering such a call is heard addressing the brochure reader directly.
The company is listed as a recommended security provider on a closed intranet hosting site, Sparkfly, for employees of major local corporations, such as Coca-Cola, Delta Airlines and the Weather Channel.
In 2005, Ackerman Security started a program to use wireless radio alarm transmission for customers with Voice over Internet Protocol (VoIP) and cellular phones instead of land lines.
“One of the most interesting things about our marketing program is the way we leverage technology to understand what programs are working and what programs are not,” Callahan points out. “We’ve got some pretty sophisticated lead tracking programs that enable us to understand where our business is coming from. Every company has marketing programs, but if they can’t tell where their business is coming from, they can’t identify or replicate it.
“What makes that work is our ability to understand which salesperson had which leads, and what the disposition of those leads is,” Callahan explains. “On any given day, week or month, we know what they closed. It helps manage the sales force more efficiently and effectively, as well as provide data to guide marketing program funding.
“We take that one step further â€” all our salespeople are armed with a laptop computer and scanner,” he reveals. “They have our video sales presentation on the computer. We made a six-figure investment developing a video presentation narrated by our CEO, Bruce Turry. After completing the process, the presentation was made into small CD business cards for distribution by our salespeople, as well as now residing on our Web site.”
With wireless communication through the laptops, salespeople can schedule installation and service calls while they sit in customers’ homes.
“There’s no phone call back and forth, and salespeople are able to transmit the sales documents we need to start that process via e-mail without having to come into the office,” Callahan notes.
“We put some 40-odd laptops in everybody’s hands. We really felt that these technological improvements would improve closing percentages and make them more productive and profitable,” he says of the salespeople. Now each prospective customer is seeing that six-minute video.
The company’s closing rate has increased from approximately 26 percent before the laptop video to 44 percent after it.
THE FUTUREWhen Ackerman Security acquired Impact Security, Dallas, Ga., last June, it was Ackerman’s first acquisition in 11 years.
“If we find a company that has been doing business synergistically with the way we do it, and they too are a customer shop with a good reputation, we will certainly take a close look at that to see if it makes sense,” Callahan declares. “Our desire would be to have acquisitions where the owner stays on.”
That is the case with Impact Security’s former owner Mark Floyd, who is a senior security consultant with Ackerman Security and is working to grow the Ackerman brand in his former company’s territory.
Regarding ownership, Callahan expects no changes. “Our growth plans and business plans are to continue to grow the company,” he pledges. “We have had some internal dialogue regarding entering other southeastern cities, and we continue to discuss the growth potential of a regional concept.”
“Our projections are that at the end of 2008, we should be around 55,000 customers, which would [put] us into the SDM 100’s top 30,” he calculates. “We project in about three years, we could be inside the top 20. It’s not going to happen tomorrow â€” it will be a lot of work to make it happen â€” but we’re focused on those goals, and what we focus on, we generally succeed in accomplishing.”
Sidebar: Building PlanAckerman Security Systems, Atlanta, has tried working with builders in the new construction market but has found difficulty achieving profitability in it.
“A number of years ago we were in the builder marketplace, but we were struggling to do that profitably,” remembers Jim Callahan, vice president of sales. “A lot of people install equipment at no charge in the hope the customer moving in will sign the monitoring agreement.”
Ackerman Security analyzed the profitability of that arrangement and bought a company called Sound Technology to do low-voltage wiring of audio/video and home networking.
After realizing they could achieve their RMR goals more successfully in the commercial segment of the business, Ackerman Security sold the business back to the principals of Sound Technology, which was operating under the name of Ackerman Technology Group.
Ackerman Technology Group has since been bought by another company called the Home Shoppe, but the relationship with Ackerman Security continues.
“Anytime they sell a security system in those homes they’re working with, they sell us the monitoring account,” Callahan points out. “The advantage to us is when the dust settles, we’re getting the benefit of the RMR without having to do any of the work.”
Sidebar: False Alarm Reduction Efforts Are RealFalse alarm reduction efforts at Ackerman Security Systems, Atlanta, start with the central station and follow through with customer education.
“False alarm reduction is primarily a central station effort,” declares Jim Callahan, vice president of sales for Ackerman Security. “Tim O’Connor, the central station manager, and his team are responsible for a lot of the false alarm initiatives that take place. They are reviewing them on a day-to-day basis and forwarding them to the service scheduler as appropriate so we can contact those customers.
“Most alarms are false, and a very high percentage of them are user error,” he concedes. “We’ve created a lot of simple documents that are passed out at the point of sale. We’ve taken owners’ manuals for systems we sell and reduced them to a one-page sheet of the simple steps you use, so the people aren’t forced to read the owners’ manuals, which we know they will not do.
“We implemented a four-day orientation program to allow new customers four days to get used to a system prior to dispatching,” he continues. “Most false alarms occur within the first 72 hours of acquiring an alarm. It’s had a tremendous impact on reducing false alarm dispatches. We make that optional, but we’re finding 70 percent of the people do take it.
“One of the buzzwords is false alarm dispatch rate,” Callahan explains, adding that his dealership’s is 0.64. “The standard is one false alarm per year per customer. If you’re above that, the industry is suggesting you’ve got work to do. If you’re at that or if you’re below, the things you’re doing seem to be working.”
Customer education, equipment and design-flaw checks, and enhanced, second-call verification is keeping that false alarm dispatch rate low, he asserts.
Sidebar: The Ackerman Price Is RightWhen one customer puts a yard sign from Ackerman Security Systems, Atlanta, in a subdivision and residents realize Ackerman customers pay $18.95 monthly instead of $30 to $40, “You see Ackerman signs sprouting up in those subdivisions,” points out Jim Callahan, vice president of sales.
“In our business model, we’re charging an upfront installation fee, which covers our costs of labor, commissions and equipment,” he explains. “So we’re getting a fair price for installation of the equipment upfront, which enables us not to have to recoup that over time by adding $10 to $20 to the monthly rate.
“The advantage to the customer if they’re paying for it over time is not being forced into three- to five-year contracts,” he continues. “Once savvy consumers understand how the other game is played, we win more than we lose. That’s another reason our attrition rates are more favorable than theirs. If you’re giving it away, the customer has no loyalty.”
In times that are more challenging for residential construction, not depending on new home sales can be an advantage.
“We don’t do a lot of new construction, so we’ve been less impacted than those that may have a greater percentage of their business in new construction or housing, which for the foreseeable future will be very challenging,” Callahan observes.
Sidebar4: Revenue GrowthTotal Annual Revenue (in millions) % change from previous year
2004: $12.21 26
2005: $15.24 25
2006: $17.27 13
2007: $20.45 (estimated) 18*
2008: $24.35 (projected) 19**
Source: Ackerman Security Systems, Atlanta
Sidebar: Recurring Monthly Revenue (RMR)Total Annual RMR (in millions) % change from previous year
2004: $0.51 17
2005: $0.59 16
2006: $0.71 21
2007: $0.87 (estimated) 22*
Source: Ackerman Security Systems, Atlanta