The security business hasn’t been the same since interactive services came along. Many customers find great value in being able to interact with their systems using their smartphones or a browser interface. As a result, security dealers not only have seen increased recurring monthly revenue (RMR); they’ve also found that customers who use interactive systems see value in those systems and are less likely to churn.
SDM spoke recently with representatives from several security dealers that have had significant success with interactive services to get their advice on how to maximize opportunities in this area.
Selling Interactive Services
Anderson, S.C.-based Blue Ridge Security Solutions sells what Dustin Reeves, sales and marketing manager for the company, calls “remote arming” capability to about 80 percent of new customers, yielding at least five dollars more a month in RMR, Reeves notes. Customers choosing remote arming also get some other capabilities, such as the ability to establish a geo-fence around their home that automatically alerts users if they forgot to arm their system.
“The conversation often starts about smartphone control,” Reeves observes. If not, salespeople ask customers if, for example, they were ever away from home and realized they forgot to arm their system, thereby setting the stage for a discussion of interactive services.
Corey Spano, senior security consultant for Baton Rouge, La.-based Custom Security Systems Inc., also notes that customers often bring up smartphone control early on in a sales call. “People ask if we have an app even though they may not know what it can do,” Spano comments.
If the customer doesn’t bring up interactive services, the salesperson first asks about the customer’s overall needs, and then brings up interactive services as an added feature, he explains.
A smartphone or mobile device is a key part of how salespeople demonstrate security system capabilities.
“We used to show customers a keypad; now we show you a phone,” comments J. Matthew Ladd, president of The Protection Bureau, Exton, Pa.
In demonstrating the interactive services of a security system, Spano says he always takes care to mention the ability of the system to automatically send a text message when, for example, a child arrives home from school. This capability keeps the system in constant use, Spano notes. And those who use their systems most frequently are least likely to churn.
We used to show customers a keypad; now we show you a phone,” — J. Matthew Ladd, president of The Protection Bureau, Exton, Pa.
Text messaging also enables customers who have basic cellphones rather than smartphones to use interactive capabilities, Reeves observes. While the majority of homeowners have smartphones, almost everyone has some type of cellphone. Tapping into text capability can expand the base of potential customers to whom dealers can offer interactive services.
Some dealers don’t charge a monthly fee for text-only capabilities because those capabilities may not require the services of a cloud provider. Nevertheless, it may be a good idea to set up customers for text capabilities to enhance their satisfaction with the system.
Another useful tip comes from Glenn Mertens, president of Jefferson City, Mo.-based Smart Solutions Inc. The demonstration that Smart Solutions does for potential customers includes a discussion of a smartphone app capability that enables end users to cancel alarm signals that they receive. As part of the discussion, salespeople explain how that capability can reduce false dispatches, which may entail fines in some towns and cities.
Beyond Basic Services
As for interactive services pricing, most dealers we spoke with use a tiered approach, charging $5 to $10 for basic interactivity such as remote arming and disarming and an additional $5 to $20 for smart home capabilities such as the ability to control lights, door locks, thermostats and video. Rather than sell interactive services as an add-on, some dealers bundle it in to the system price.
While many customers may sign on for basic interactive services such as remote arming and disarming, the percentage that will pay extra for smart home and/or video control is considerably smaller, dealers say. For example, about 30 percent of Blue Ridge customers purchase home automation, Reeves says. He adds, though, that the percentage is “rising dramatically.”
Blue Ridge salespeople refer to interactive capabilities as “lifestyle services,” Reeves explains. Salespeople use their own apps to demonstrate various capabilities such as the ability to control garage doors or thermostats by interacting with demo systems at the company headquarters.
Even though the majority of customers may not want home control capability, most dealers that were interviewed recommend at least mentioning those capabilities to potential customers.
“Make sure they realize you can do it,” Spano advises. Customers’ needs may change in the future and it’s important for them to know that a dealer can support those needs, he says.
Don’t overlook activity sensors when explaining interactive service options, adds Robert McDonald, general manager of Jessup, Md.-based Vintage Security. Contacts on liquor cabinets that alert homeowners when the cabinets are opened appeal to many customers, McDonald notes. He estimates that Vintage salespeople sell activity sensors for one out of every four or five jobs.
Video on the Rise
Tampa, Fla.-based SafeGuard America approaches interactive services marketing a bit differently from some other dealers, observes John Keith, vice president for the company.
“The video market has opened doors for us in businesses and residences,” Keith explains.
One of the reasons video traditionally has been a hard sell is that customers typically want recorded video and traditionally that was expensive and complicated. Keith notes, though, that SafeGuard now uses a camera that has a $10 SD-card built into it and end users can access video recorded on that card using a smartphone app.
SafeGuard cameras also offer end users two-way voice capability, enabling the cameras to do double duty as a videoconferencing system, in addition to providing surveillance. Capabilities such as these have proven to be so popular that in addition to offering packages with security and video, SafeGuard also offers stand-alone video systems with up to four cameras with interactive capability for $20 a month.
Most purchasers opt for two cameras — one indoors and one outdoors, Keith says.
Once a customer has made the decision to purchase a security or video system with interactive capability, what advice do dealers have for getting the customer set up to interact with the system?
“I try to get them to download the app while I’m with them,” Spano comments. “It’s surprising how many people don’t know how to download an app.”
Spano says he tells customers, “Here’s the app. Let’s get it put on. When our guys get there, you’ll be ready to go.” Typically, the app downloads while Spano and the customer are completing paperwork.
It’s surprising how many people don’t know how to download an app.— Corey Spano, Custom Security Systems Inc.
Some other dealers say installers are the ones who help customers download the app. But regardless of who downloads the app, sources say installers take time to review how the app works with the customer. Installers also help the 10 percent of customers who want more sophisticated capabilities such as smart home scenes, notes Jason Cloudt, vice president of sales and marketing for Omaha-based Security Equipment Inc.
After systems are put in, dealers should be prepared to receive more service calls from customers who use interactive services, in comparison with customers who do not use those services. Several dealers note that customers tend to call when they get a new smartphone to ask how to put the app on. And customers with video systems may call when they change their Wi-Fi password because the camera no longer works correctly, Keith observes.
Reeves notes that dealers also may get calls from customers who believe their systems are not responding correctly to smartphone commands when the real problem is poor cellular coverage — an issue that those answering service calls should be prepared to discern by asking the right questions.
Security Equipment has a remote services team to answer calls about interactive services, Cloudt says. The company offers hosted access control and the team initially was established to answer calls about those services. Later, it was a natural fit to have that team also handle calls about interactive security systems, Cloudt explains.
“It was really us being able to provide the best service possible in the products we provide,” he comments.
With virtually all security dealers offering interactive security services today, gaining a competitive advantage can be critical. And in the interactive services market, gaining that edge may be a matter of focusing on best practices — from the sales call to installation to ongoing service.
Interactive Services Wish List
What capabilities would security dealers like to see in interactive services moving forward?
Here’s what our sources said.
Kirk Brundage, general manager of Link Interactive, would like to see manufacturers add the ability to control sprinkler systems to their interactive services.
Several sources, including Brundage and John Keith of SafeGuard America, say they would like to see interactive services integrated with the television. Potentially such integration could enable end users to use a television remote control to perform the sorts of capabilities currently obtained using a smartphone or browser interface.
Keith takes it a step further, suggesting a smartphone app might take on functions of the TV remote control. “It would be great if one app could do everything for you, including changing the channels on your TV,” he suggests.
Jason Cloudt of Security Equipment Inc. also likes the single app idea, but his concerns relate to other system capabilities. Instead of three separate apps — one for video, one for intrusion detection, and one from the central station monitoring the account — he would like to see a single app combine the functionality of all three of those apps.
Other dealers focused on changes that would be incremental improvements to existing functionality.
Dustin Reeves of Blue Ridge Security Solutions would like to see improvements in the wireless communications technologies that underlie interactive security systems that have wireless devices. For example, he wishes that Z-Wave had longer range so that it would work throughout more homes.
11 MILLION interactive subscriptions predicted in the U.S. this year. SOURCE: Strategy Analytics
Robert McDonald at Vintage Security would like to see video image quality improved. Security cameras are “playing catch up” in comparison with television sets and even smartphone cameras, he notes. “People see 4K television or iPhone video, then they invest in security and the quality is not quite the same,” McDonald observes.
McDonald also would like to see more open architectures so that more devices would work easily with each other.
A Growth Area
Subscriptions to interactive security services grew 29 percent during 2016 in the U.S. to reach 8.8 million, according to research firm Strategy Analytics. In 2017, that number will rise to 11 million, researchers said.
Interactive security is a key driver of smart home interactive services, Strategy Analytics said. Researchers believe security companies increasingly will be valued based on the percentage of total customers who opt for smart home capabilities.
For more information about interactive services, visit SDM’s website where you’ll find the following articles:
“The Security Cloud is Evolving: Here’s How”
“Five Key Trends in Interactive Services”
“Connected Home: Domestic Bliss or Distress?”
“Making Interactive Services Work for You”
“Security Dealers Find More Ways to Integrate Apps Into Their Businesses”