Steady and rapid growth in the dealer program market, like the kind Security Networks, SDM’s 2012 Dealer of the Year Honoree, has had in recent years requires more than a good marketing program or exciting services. Security Networks, West Palm Beach, Fla., prides itself on an average of 40 percent growth year-over-year for the past eight years, its president, Richard Perry, tells SDM. But even greater pride comes from knowing that growth is a reflection of what Security Networks does to cultivate the businesses of its dealer affiliates.
Security Networks has built a base of 300 affiliate partners. The company currently manages nearly 200,000 accounts, of which roughly 95 percent are residential.
In the past, Security Networks grew through bulk acquisitions as well as its affiliate program. However, over the past several years, it shifted its focus completely onto building its affiliate base and prioritizing the growth of those affiliates’ businesses — which helps Security Networks grow in turn. Security Networks is ranked No. 12 in the SDM 100 with $7 million in recurring monthly revenue (RMR).
Perry notes that there are a number of companies that utilize the dealer or affiliate model. He says that as the company built its own program, the management team paid a lot of attention to what had been done well in the space and what had been done poorly.
“There were a couple of things that stood out to us. One was the importance of building the spirit of partnership with our affiliates,” Perry says. “When we built our program, we designed it so that we spend really all of our time focusing on how we can help our affiliates grow their business.”
For example, the company built a sophisticated Web-based management information system called Affiliate Services Information System (ASIS) that is designed to help its affiliates track essential data, help them get funding quickly, and allow them to leverage that data to get referrals or find which customers are paying their bills on time, for example.
Gary Franklyn, vice president of business development at Security Networks, points out that one of the big advantages the company has in attracting and keeping partners is the expertise of its leadership on the affiliate side of business. “We’ve been in the shoes of our affiliates. I think that gives us a unique perspective. We know what they go through on a day in and day out basis.”
Still, a company growing as quickly and persistently as Security Networks will experience some growing pains unless it reinvests internally. “We’ve got a number of initiatives we put in place to manage our growth,” Perry explains. “One of which is training. We created a training department: SN University. And recently we brought on board a director of training. We’re taking our training process within our company, whether it’s our call center personnel or our field service personnel, and we’re formalizing it.” As the company adds customers, it must add employees to continue carrying out its mission to exceed its customers’ expectations daily. Whenever a new employee is hired, there is an established and proven path to getting them trained and ready to interact with customers.
Security Networks also runs a service quality department focused on monitoring phone calls and grading the operators — all part of the company’s focus on having great interactions with customers and end users. The operators are held to high standards; they’re vetted against each other and rewarded financially and professionally for having higher call scores.
Perry comments, “We want to make sure we put the right programs in place so the operational side of our business keeps up with the sales side of our business.”
Part of Security Networks’ outstanding growth this year came from a new market it entered just about a year ago: Puerto Rico. The company managed to exceed its own high expectations by hitting its annual volume projections within three months of entering the market.
The decision to expand to Puerto Rico came straight from its affiliates. “We had a lot of demand,” Perry explains. “We actually had affiliates in the program flying to West Palm Beach to do presentations to us, which is a little different. There is a lot of competition and there just weren’t a lot of options for dealers within the island.”
There is also a high perceived need for security in Puerto Rico, Perry adds. “They have a high crime rate. One thing we don’t need to worry about is someone deciding they don’t need a security system.”
Another big advantage is the company’s ability to get in front of technology trends to offer innovative products and services. The challenge in doing so is in being quick enough yet careful enough to make sure the products have been thoroughly tested before they are available to affiliates. To walk this fine line, Security Networks has a carefully developed internal vetting process for new product and services. In addition to beta testing, the company considers factors such as viability of the technology, projected customer demand, financial strength of the technology provider and projected profitability after deployment.
“One thing we never want to do is to offer a product or a service to our affiliates that is going to end up hurting them in the long run,” Perry comments. “So while we want to be leading edge, we’re slow enough with respect to the vetting process. We need to make sure that it’s a company and service that works and will be around.”
The newest value-added service that Security Networks will be rolling out to its customer base is an e-signature platform. According to the company, it will be the first dealer program to offer a fully-integrated e-signature solution for its affiliates. Perry notes that what sets this solution apart is the integration with Security Networks’ proprietary software for truly simplified transactions.
Security Networks leverages its qualities as an innovator who understands affiliates’ business and has the focus to help them grow in its comprehensive marketing program to recruit. “You name it, we’re doing it to attract new affiliates,” Perry comments.
Retention Via Information
The final piece in Security Networks’ sustained growth puzzle is in end user retention. The company’s attrition was reduced from 9.6 percent in 2010 to 7.8 percent in 2011 and continued declining in 2012. This decrease in attrition is thanks to a retention strategy the company continues to build.
Last year, the company created a “seal” team that is specifically focused on working with end users who are within the last 12 months of their contract and are calling to cancel. This team is dedicated to reminding — or re-selling — end users of the value of their security system and why they got it in the first place. The team also has authority to make special offers.
The company is also enhancing its retention program through data mining; that is, analyzing large sets of data to find patterns. Through data mining, Security Networks hopes to turn out actionable data about where and why cancellations come from. “We have a lot of data available to us,” Perry says. “But it takes a lot of work to put it in a form that’s useful. Our business is a business of lots of small transactions. We have 200,000 customers and we’re adding 4,000 to 5,000 customers a month. That’s a lot of data. And they’re in multiple markets around the United States so you have a lot of different customers that are with you for different periods of time.”
For the company, these measures to enhance its retention program are only the beginning. “We feel like we’re really only on the second or third inning of this initiative,” Perry says. “We have a lot of planned improvements yet to make. But the early results are very encouraging.”