What is the relationship between Beacon scores and attrition in the alarm industry.  [beacon score is a credit rating]  Are theref any statistics, studies or reports on the issue.  Some dealer programs that buy [or end up owning] monitoring accounts won't accept subscribers who don't have high enough Beacon score.  I am wondering if there is any solid basis for this decision.   Alarm companies who regularly finance or sell their subscriber contracts, particularly residential contracts, may have to provide beacon scores for the subscribers.   Alarm companies who install alarms for free or well below cost also have to be concerned with a subscriber's fulfillment of the RMR contract, typically for monitoring, but could also be for lease of the system.  The theory is likely that poor credit translates into a greater chance that the subscriber will fail to perform for the duration of the contract term.  Since completion of the contract term is an essential element of the anticipated profit alarm companies and those companies that purchase alarm contracts, need to establish some criteria to evaluate the risk of buying a contract and then waiting out the 35 plus months to recoup the investment.    I asked a few financial people to comment on the topic and the few responses are below.  Anyone have any info on this issue?
    I don’t know of any studies on this relationship.  Barnes Associates publishes attrition rates for the industry in their annual presentation at the Barnes Buchanan Conference but there is no mention of beacon scores anywhere in the presentation (I just checked).  
    I am not sure what a study of just attrition to beacon scores would get us.  My assumption is an inverse relationship where as beacon scores go down, attrition would go up.  I think what might be of interest is to take this study a step further to determine the effects of attrition on lower beacon scores of customers who paid $0 at installation versus those who made a small financial commitment, say $99 down versus those who made an even bigger financial commitment.  The problem is, where would we get the data?  Would companies be willing to share their data?  Let me know your thoughts.
Best Regards,
Raymond Lynn
(203) 266-6928
See post in The Alarm Exchange
Note - Ray will be participating in the Webinar on July 11, 2013  12 noon EST    Valuing the non RMR security integration side of your business 

    Beacon scores I think have a bigger impact on the purchase of accounts for the dealer programs as the funding relationship with Investors, Banks and so forth play such a significant role in our industry.
    Statistically, the impact of attrition tends to be reflected and is directly commiserate to the beacon scores of clients as well. I think the impact to the dealer programs simply is the hassle of having to insure the account apart from the original agreement (36/60) of a customer and it truly impacts the longterm viability of them.
Bobby Johnson
    Beacon scores aren't something that I have first-hand knowledge about because we generally fund on mature (9mos - 1 year minimum) in-house accounts.  As such we review their payment history rather than their credit score.  My sense has always been that amount paid at time of installation would be a good predictor of attrition, but I've never tested that out formally.
Jim Wooster
Alarm Financial Services, Inc.
866-204-9350 x12
See post in The Alarm Exchange


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July 11, 2013  12 noon EST    Valuing the non RMR security integration side of your business

    This webinar will focus on how you arrive at valuation of the non RMR side of your business - the revenue you receive from sales and non contractual recurring revenue. EBITDA and Enterprise valuation explained so that you can determine if it applies to your business evaluation

Panelists:  Barry Epstein; Mitch Reitman; Ray Lynn; Dennis Stern



July 18, 2013  12 noon  EST    Selecting an E&O insurance carrier

    This webinar will have a panel of insurance brokers will discuss Insurance Company  underwriting considerations for determining if the carrier will offer to insure you and how it prices the policy.  This webinar will enable you to better select an insurance company to insure your business.

Panelists:  Bart Didden; Kelly Izzo; Alice Giacalone; Rick Gumbar;



July 25, 2013  12 noon EST    Defending claims

    This webinar will focus on what you need to do when you become aware that your subscriber has suffered a loss and when you know of a claim against you.  Other topics will include what to do when you get a reservation of rights letter, or denial of coverage letter, from your carrier.  

Panelists:  Ken Kirschenbaum; Bart Didden; Rick Gumbar; Dennis Stern




August 1, 2013  12 noon EST    Yesterday is gone, tomorrow is here

This webinar will focus on what you need to do to keep competitive.  New technology and products

Panelists:  Mark Fischer; Keith Jentoft; John Hoffe; David Roos; Jorge Hevia



August 8, 2013 12 noon EST    Marketing your security and fire alarm company

This webinar will focus on marketing ideas to promote your alarm business.

Panelists:  Bob Maunsell; David Morgan; Bob Harris