Programmed for Success
February 1, 2008
Participating in one or more authorized dealer programs is unquestionably among the best strategies independent dealers can enlist in building their business. Such programs offer a wide variety of benefits, including access to exclusive products, discounts, marketing and sales materials, and technical support and education.
Dealer programs also enable participants to leverage the relationships and resources of sponsoring companies in generating leads and cultivating customers they might not otherwise have been able to acquire, as well as to better network with other independents at conventions and similar events.
“In the 10 years we’ve been in business, becoming part of an authorized dealer program was one of the best moves we made from a growth standpoint,” says John Loud, president, LOUD Security Systems, Kennesaw, Ga. “We’ve seen improvements in everything from lead generation to customer service.” Previously affiliated with another company, LOUD Security Systems has been a participant in the Honeywell First Alert Professional program for the past two-and-a-half years.
Program â€˜Flavorsâ€™Authorized dealer programs are offered by both monitoring services companies and manufacturers. The former centers largely on purchasing dealers’ monitoring contracts, in turn providing them with capital that then can be re-invested in growing their businesses through enhanced marketing, the addition of new personnel and similar initiatives.
Some monitoring services firms require program participants to sell all their alarm monitoring contracts. Monitronics, whose Authorized Dealer Program also adds capital to affiliated dealers’ coffers through the sharing of revenues from monitoring agreements and what marketing program manager Robin Poulides deems some of the highest multiples in the industry, falls into this category.
Other companies in this space allow dealers to retain ownership of at least a portion of the monitoring contracts they sign or permit them to repurchase “relinquished” contracts sometime later. Dealers enrolled in the Security Associates International (SAI) Authorized Dealer Program can sign over only some of the accounts they sell to the company. In addition to assistance in raising capital, cooperative marketing dollars and training, the company propels program members’ growth through IT support, says Jim German, senior vice president. SAI also engages in negotiations with different manufacturers, opening doors for program participants to take advantage of discounts for equipment purchases. Another player, Criticom, has a Cash Advance Program designed to aid dealers in bolstering their bottom line by financing their contracts instead of buying them.
One dealer claims his affiliation with a program offered by a monitoring services company was instrumental in allowing his operation to flourish despite a shortage of capital. “The company, with which we’d had a long relationship, bought more of our monitoring contracts than it had originally needed to so as to free up our cash to undertake a big marketing push when it became clear that our customer base was too small,” he observes.
Meanwhile, authorized dealer programs put into place by manufacturers foster dealers’ success by increasing the volume of customers coming into the fold and the sale of product to existing accounts. According to Loud, some of the biggest benefits of his affiliation with the First Alert Professional program are derived from educational components of the program, such as company-sponsored events where participants learn about best business practices and share ideas with each other. “For example, at one event I attended, there was a presentation on how to build consumer business by ‘working’ home shows,” Loud recalls. “We hadn’t done much promotion to residential end-users to that point, so we went to the session. We later invested $15,000 in a 10-foot by 20-foot home show booth, which not only won a ‘Best Booth’ award for us; it helped us surpass our goal of signing eight monitoring agreements with 22 agreements signed.”
Loud says he has since applied what he learned at the session to appearances at several subsequent home shows. At one show, he signed 17 monitoring agreements with residential customers and was so deluged with business that he closed down his booth an hour early to handle the existing traffic.
The event Loud attended was presented under the umbrella of Honeywell First Alert’s Dealer Development Group (DDG). Donna Namorato, marketing manager, says the company has had “great success” with a “Take it from the Top” video series in which dealers who are experts in a particular area of business are interviewed about their successes. “We’ve produced videos on customer service, marketing at home shows, insurance and telemarketing, to name a few,” she notes. “Our dealers are willing to share their ideas with the entire network.”
GE Security’s GE Security Pro program has a similar component, featuring GE Security Pro conferences where dealers can share best practices amongst one another. The company claims the program is unique in that dealers set its direction at special dealer roundtables set up for this purpose, and the GE Security Pro Web site is used to provide the company’s management team with feedback about the content.
For some dealers, help on the technical training front is where authorized dealer programs are very useful. Such is the case with Act Now Alarm, Clinton Township, Mich. Dean Belisle, co-owner and vice president, says he accepted Honeywell’s invitation to join the First Alert Professional program three years ago with the belief that it would kick up his marketing effectiveness a notch. He was correct, but the dealer gained just as much from several on-site visits from company representatives to teach his staff the workings of First Alert’s product line. “You cannot get that on the phone, and there are no university programs for the security industry nor manuals to follow,” Belisle states. “The gain from training cannot be underestimated.”
Greg Kern, president of The KERN Group, Peoria Heights, Ill., corroborates Belisle’s comments, noting that knowledge gleaned from regular technical programs available through his firm’s enrollment in GE Security Pro have helped his company execute a number of very lucrative implementations. Among them was a digital video surveillance system installed for the Greater Peoria Mass Transit District in Peoria, Ill.
Still other dealers favor the marketing push afforded by partnering with a manufacturer or manufacturers in an authorized program arrangement. “The most notable advantage we’ve seen is the instant name recognition of a national billion-dollar organization,” asserts dealer Chris Wise of Security 101, which has offices in Atlanta, Ga.; Fort Lauderdale, Fla.; Birmingham, Ala.; Mobile, Ala.; Charlotte, N.C., New Orleans, La. and Eatontown, N.J. and is an authorized dealer for DMP and Honeywell as well as a Microsoft Certified Business Partner. “We use the authorized logo on our vehicles, business cards and Web site,” Wise says.
Youâ€™d Better Shop AroundWhile dealer programs clearly offer myriad advantages, carefully investigating each possibility before making a commitment to participate in one or more such options is the only way to fully leverage these benefits. “As the old song goes, ‘you’d better shop around,’” German says.
According to Belisle, dealers must start by asking themselves if they truly believe in the product a program is designed to help sell or support. “If you don’t like the product, it becomes very difficult to be a part of the program and avail yourself of all its elements,” he asserts. “Only if you like the product should you look into what the program offers in detail. The bottom line for me is that even the smallest effort of a dealer program, like private labeling of keypads, is helpful and holds value.”
Dealers’ own strengths and weaknesses, and how well each program being considered addresses them, also rank high on the list of criteria. One reason Loud switched to the Honeywell First Alert Professional program from another program was a need for better sales and technical training for LOUD Security Systems’ teams.
Loud and other sources also advise looking at the target dealer audience of the companies whose programs are being evaluated. As Loud explains, some companies prefer to ally with larger dealers that may require less “hand-holding” than their smaller counterparts, and the benefits they offer may not jibe with the needs of smaller independents. “A poor fit in this regard could be disastrous,” he says.
Wise agrees, adding that it is essential to carefully examine companies’ corporate culture and philosophy, including what provisions have been made to assist and support affiliated dealers when they are experiencing business or other difficulties.
Checking references comprises one of the best ways to ascertain the degree of help and support a company will provide under the umbrella of its dealer program, experts concur. If a reference chose to stop participating in a given program, find out why. If the dealer is still a part of a program, ask for anecdotal evidence of how the company stepped in to assist in solving a problem, bolster a sagging piece of business, and the like.
Equally important is the question of whether program members are permitted to commit to multiple authorized dealer programs, or must limit their participation to just one. Some companies, for example, Active Vision Inc. and Alarm King, offer dealers the option of affiliating themselves with other entities. However, others, among them ADT Security Services and Alarm Capital Alliance, require exclusive participation in their programs.
Sources interviewed for this story advise that deciding whether to consider or eliminate a program is a matter of balancing the perks touted by the company against any restrictions on affiliation with other firms. If the advantages of a program (for instance, more competitive multiples or funding) outweigh the disadvantages (such as the company’s first right of refusal on all accounts sold in that program), then keeping it in the running shouldn’t be a problem.
Finally, don’t forget about finances and contract turnaround. Specifically, sources counsel dealers to look at how reliably and how often capital provided to participants is paid out (again, check references). In the case of monitoring contracts, ascertain the amount of money to be paid upfront by a program that offers a certain number of multiples.
“Programs of all kinds can be a boon to dealers,” Loud concludes. “The key is to understand the ins and outs to find the right one and enjoy all the benefits.”