Comment on Is RMR enough to survive in alarm August 16, 2024

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on Is RMR enough to survive in alarm
August 16,  2024

Comment on Is RMR enough to survive in alarm from article on August 3, 2024

Ken
          For some, the alarm industry is increasingly becoming a race to the bottom. Companies often enter the market to exploit what appears to be lucrative cash flow from selling mass accounts. Many of these companies disappear only to re-emerge later, attempting to reclaim and resell accounts under a new brand. I have witnessed this done multiple time and In the current competitive landscape, businesses feel compelled to offer more free incentives to secure sales. However, this focus on basic, minimal packages with some added features is wrong as it overlooks the fabric of our industry and the essential aspect of home security—thoroughly assessing risks, needs, and concerns to design a system tailored to the customer.
          Years ago, I sold AT&T high-end systems. The ad that attracted me said "have your cake and eat it too" We were priced between $3,000 and $5,000. When customers pushed back on price, I would say, "If it cost $10,000 and saved a family member in a fire, would it have been worth every single penny?" This approach seldom lost a sale. At that time, we offered financing, making the combined cost of the system and monitoring affordable, resulting in an attrition rate of less than 2%. Unfortunately, financing for this model has disappeared due to misuse by less scrupulous players and the only other options are people that want to leverage the account through control over a period of time.
          Our industry lacks adherence to comprehensive design guidelines, leading to many consumers experiencing a false sense of security while primarily responding to price points. Although we are not certificating systems the guidelines were written for a reason. Despite now operating in the mass market, we adhere to UL Guidelines in system design—Basic, Expanded, Total, and NFPA Part 72 for adding smoke detectors. The sale process is challenging due to market pressure for minimal system offerings, and consumers often focus solely on price without understanding the differences and hesitant based on the upfront cash outlay. However, those that do not provide the consumer with a real review identify threats and concerns are taking the low road. Kind of like a doctor discovering his patient has a terminal disease not explaining it and prescribing make you feel better drugs. Our industry is one of trust and we have an obligation to point out the threats. Take the high road and do that. Attrition or creation multiples will not be your worry.
          DIY is more about marketing than real protection and most consumers are unaware that some DIY products lack essential safety listings and lack of design standards and do not recognize the potential cost of failure as it can costs more than money. The consumer is competing against themselves in a sense. I recently read a misinformed article suggesting that alarms are ineffective and self-monitoring from companies like SimpliSafe is much better; never even mentioned the issue of inability to answer a phone call 24/7. Frustratingly, the comment section was disabled, preventing me from sharing a professional view and how misleading the article was.
          Companies can achieve success by offering systems that solve real problems through comprehensive reviews and maintaining monitoring at a lower cost than low-down, no-down options if the industry reintroduced financing. Customers who cannot pay for the system upfront could pay monthly, and once paid off, they would benefit from lower monitoring rates. This approach, combined with the customers' investment in their systems, would reduce attrition and enhance overall security making you profitable and the customer more secure.
Brett

Response

          Thanks for your insight and experience.  The life safety industry is more competitive today than years ago and more regulated.  The stakes are just a high though the lawsuits seem to have adjusted with inflation and the times.  Not just lawsuits, but fines and penalties from oversight agencies.
          The alarm industry needs balance between profitable sale and installation and RMR.  Both will generate the revenue needed to operate, but only the RMR will be creating the equity and sell.  Because you can’t wait an entire career to cash in you have to balance with profitable jobs, especially if your RMR has not tipped from red to black to cover your operating expenses.
          This is an industry that has built-in need and the public recognizes the need.  With police protection becoming less, not more, reliable the alarm industry is all that more important, if not essential.  Follow best practices; have a great work ethic and stay at it.  Success will come and if you’re already there, enjoy it, you deserve it.
          BTW, if you need help, I’m a phone call away.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com