Ken,
In response to Mike Zemering's post on 03-20-14 about the 2G sunset, I would like to
add another option for dealers to consider. I encourage dealers to view this as an
opportunity. I would be honest with customers about the reason for the change out,
but if I were an alarm dealer I would position myself to upgrade the customer's system and add Interactive services. In the process of changing out the 2G unit and
adding the Interactive services, the dealer should have the customer sign a new 3
year agreement. If the service is good, most won't think twice about signing a new
agreement.
I would offer this change out at no cost to the customer (for those that can afford
it or who have access to cash to fund the initiative) and I would start now and space the installations out until the sunset date so that the financial impact is not too egregious. This accomplishes several things: 1.) It secures a customer for 3 more years and when a door knocker (summer is coming) hits them up for Interactive services, they already have a recently signed contract and Interactive services, 2.)
The profit from the higher RMR for the Interactive services will service the debt from the installation, 3.) The dealer's equity is increased without even signing more customers because he or she has raised the RMR on all the takers, and lastly, 4.) Customers with Interactive services have higher retention rates so the dealer is taking proactive steps to minimize attrition.
Granted, not all customers will take the Interactive service but I think dealers
would be surprised how many would, especially when offered a no money down option. I think Vivent has proven that model! Regardless of the path a dealer chooses to change out the 2G units, I highly recommend taking action now. As a wholesale central station, we cringe at the "do nothing" option because that puts unnecessary risk on the dealer and the central station. It is unconscionable that the dealer could have known about this event for over 4 years and taken no action to notify the customer and just wait for FTCs to show up on the keypad. That said, there will always be some that take no action and claim ignorance when pushed by the customer to get the communications working. Those customers are likely to shop for dealers more in the know about current events.
Thanks again Ken for such an interesting and edifying forum. I wish you and your
readers all the best.
Mark Matlock
SVP - UCC
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Ken
RE: 2G radio Sunset
Maybe it’s just me, but I don’t see a problem with this. I see opportunity. Opportunity for dealers to migrate old and stagnant monitoring only contracts to a lease. There’s no doubt that the radios either need to be replaced or upgraded. The question is who is going to pay for it? If you insist on charging your clients full price, they will be upset. After all, you were the one that selected the equipment for them. Why didn’t you select a different one? (Obviously nobody has a crystal ball). Or advise them when news first hit? Point being that while it isn’t your fault, you need to look at it from the client’s point of view.
Seems to me that this opportunity can create additional recurring revenue for dealers by replacing the radio with another one that’s owned by your firm. It’s also a great time to have your clients sign a new contract, possibly with a longer term. Give your clients a choice. Either sign a new contract (5 years?) at an additional $10 or $15 per month, or have them pay for a new radio installation. And there’s nothing wrong with charging them for a service call and a portion of the cost, or upgrade the radio when you’re called for other service. Offer them a free battery change while you’re there or charge them a reduced fee. Something to increase the perceived value to them for this. Let the client know you are absorbing part of the cost. Good will goes a long way towards client retention.
I continue to invest in my business. Given the choice of leasing or outright sales, I always prefer to lease. If you can afford to purchase the new radios, you can schedule replacements over time to lessen the immediate financial impact. Keep in mind that you’ll be reaping the rewards for the additional fees long after the radios are paid for. And you will be increasing the value of your firm. Chances are that your clients know other people in this situation. If you offer the right deal, you may end up with referrals because your competition isn’t doing the right thing.
You can also provide a choice of new radio communications to your subscribers by offering a choice of solutions. And don’t forget about TCP/IP alarm communications. You don’t want to go back to them in six months to advise them that now their Telco lines are useless as well. The plain truth is that everything becomes obsolete at some point. Particularly in our business. How many relay panels are still out there? Still using Ademco 100 boards? While these old workhorses have some real benefits, I would offer that you haven’t maximized business opportunities that exist in your own client base.
It also may be a good time to have a discussion with them about additional services. How about video? Automation? Remote locking? Sign up for an I-ACS dealership and get an additional $35 a month of revenue for 2 access control doors and a camera, on every account. With no cost to you for parts, and a very low price to the client.
Mitch Cohen
BRIC SECURITY
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