Dealer of the Year

SDM Dealer of the Year 2009 Honoree: Not the Norm

This year, as hundreds of companies all over the country shrunk and cut back, one security company in Provo, Utah, did something unusual. APX Alarm Security Solutions Inc. (APX) grew by more than 30 percent. The company also made plans to cut the ribbon on a brand-new 125,000-square-foot headquarters. APX kept customer service strong as it grew, receiving a coveted J.D. Power and Associates certification for the second year in a row. The company’s executives and employees also contributed or committed some $300,000 to charitable causes. For its strong growth, world-class customer service and commitment to giving back, SDM chose APX Alarm Security Solutions as its Dealer of Year Honoree for 2009.

Chief Executive Officer Todd Pederson started the company 10 years ago in Provo, a city nestled in the mountains of north-central Utah. The home of Brigham Young University, Provo is the sort of quiet, pretty place that frequently appears on national lists of best places to live.

APX focuses exclusively on residential alarms. Though each account is smaller than a typical commercial security system, Chief Operating Officer Alex Dunn says the company’s focus on homes give it a sense of purpose.

“Our mission is to protect families,” Dunn says. “We are really proud of the service we provide because it makes a real difference in those people’s lives.”

The dealer grew steadily until about three years ago, when it decided to expand into a full-service company.

Fueled by a $50 million credit facility from a group of investment companies led by Goldman Sachs, APX expanded its sales, installation, service and monitoring capabilities.

The investment paid off. From 2006 to 2007, revenues grew 137 percent and nearly doubled again last year, to $103.8 million.

Dunn attributes a large part of that growth to a decidedly low-tech marketing model: Door-to-door sales. Though the company’s full-time workforce is about 1,000 employees, every summer that number swells by 5,000 as salespeople fan out across the country looking for new customers.

“We’re not waiting for people to call on a yellow page ad or what have you,” Dunn says. “It’s not the easiest thing to find people who want to do that … (but) face to face makes a big difference in selling.”

The company acquires 80 percent of new customers through this “summer sales” model, with the other 20 percent coming from traditional telemarketing techniques.

While APX maintains a full-time technician in each of its 100 markets throughout the country, they work out of their homes. The seasonal door-to-door salespeople are deployed using e-mail and Blackberries. The approach helped APX bring in hundreds of thousands of new customers, and its numbers grew to an estimated 375,000 this year.

The larger, more diversified customer base also means the company is less dependent on a handful of valuable accounts, making it more resilient during a recession.

“I think the good thing is with hundreds of thousands of customers you deal with, you don’t have any kind of ‘super-customer,’” Dunn says. “We really like the residential market and we’ve kind of cracked the code on getting customers signed up.”

Despite the greatest recession since the Great Depression, APX’s revenues grew by another 30 percent this year, to about $135 million, placing APX as No. 7 on the SDM100. With that growth, though, comes the challenge of maintaining top-quality customer service. To do it, APX follows up on its installations and makes sure to its customers are well cared for.

“We are very focused on making sure the quality of the customer service we are providing is the best in the industry,” Dunn says.

APX inspects 22 percent of its new installations by a different person than the one who did the initial installation. If it doesn’t meet one of 31 criteria, it gets fixed.

“We make sure the customer understands how to use it and it meets all of their expectations. As we have grown quickly and are doing these installs, we want to make sure they are done well,” Dunn says.

After the installation, APX stays hooked in with customers through its call center, which has been recognized as one of the best in any industry by J.D. Power and Associates for two years running. It was one of only 40 in the country out of about 75,000 to be certified as an outstanding customer service experience.

The Provo-based call center handles more than 3.5 million telephone calls and e-mails from customers each year. J.D. Power ran a detailed audit of all its internal practices, including recruiting, training, employee incentives, quality assurance, and management, along with a random customer survey.

“I think the J.D. Power and Associates certification is third-party verification of the quality of customer service we provide,” Dunn says. “It’s easy to think you’re doing a good job, but to have an identified, trusted source come in and verify that reinforces the excellence in customer service we think we’re providing.”

Introducing new customers into the industry and then delivering the highest quality customer experience reflects well on the industry and lifts the benchmark for continual improvement in the residential security space, APX says.

To provide great customer service, APX uses some novel techniques. For example, it maintains a list of customers who have not armed or disarmed their system in the last seven days.

“We give them a call just to make sure everything is going O.K. with the system and they know how to use it,” Dunn says. “We’re reaching out proactively to the customer.”

Maintaining those ties leads to some of the best customer retention rates in the business, and according to APX, more than 93 percent of APX customers said they would recommend the company to a friend.

The explosive growth also meant the company needed a new building. In December, it will open the doors to a new 125,000-sq.-ft. facility in Provo, which will bring together operations now on about 60,000 square feet in several different locations.

The new location also gives the company room to grow. “We’ll be able to support a million customers out of the facility we’ll be moving into,” Dunn says.

APX had a strong year. But of all its accomplishments, one of its proudest was its continuing service to others. The company operates a Web site, www.APXGivesback.com, as part of its commitment to providing a way for APX employees to live out the company’s culture of serving others. The Web site is a gathering place for employees to see what the company is doing, inspire them by showing them what has been accomplished and to give them a means to suggest new ways they can serve.

To “give back” is a way of life at APX, and it shows. The high percentage of employees who participate is hard to ignore. Employees can choose to donate their commissions to APX’s foundation, and they often do. Employees and executives gave or committed $300,000 in 2009.

The company also paid to bus 90 of its employees to Texas after the Galveston and Houston areas were devastated by Hurricane Ike. The volunteers dug 75 families out of the rubble, not all of them customers.

APX has also started a pilot program in its local community of Provo, Utah to provide security systems to victims of violent crime or domestic violence at little or no cost.

It addition to its dedicated involvement in community service, APX is also involved in the industry, participating and contributing to multiple industry organizations such as the Electronic Security Association (ESA), ESA’s Young Security Professionals, the Security Industry Association, the National Fire Protection Association, the National Alarm Association of America, the False Alarm Reduction Association and 20 state security associations.

APX also sees its development of a universally affordable and dependable residential security system as a contribution to the industry by bringing new customers into the industry that may not have otherwise understood their need for or the value of a home security system.

In the end, Dunn’s advice to other companies looking to emulate APX’s success is to pick an area and own it.

“Focus on what you’re good at or what you want to be good at,” he says. “Focus on what you want to the best at. We really focus on providing the best service to our customers.”

At a Glance

APX Alarm Security Solutions Inc., Provo, Utah
Visit at: www.apxalarm.com
Customers: 375,000
Revenue: $135 million in fiscal year 2009
Market focus: Residential