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Corrections on attrition considerations / value of alarm services
August 2, 2022
Corrections on attrition considerations and value of alarm services from article on July 16, 2022       
            In my response on July 16, 2022 I suggested an example of alarm account attrition of 10% a year, concluding, erroneous, that such attrition would deplete the accounts in 10 years.  I wrote:
            "    I am not aware of any statistical study that suggests that alarm customers have a life span of 12 years, 144 months.  Certainly that’s not to suggest that some alarm customers remain customers for many years beyond that.  Theoretically a 10% attrition rate means you turn over 100% of your accounts in 10 years."
            I stand corrected, thanks to an unnamed alarm expert who prefers to remain anonymous on this one.
            The first year you do indeed lose 10% of what was purchased.  But each year thereafter you will lose, theoretically, only 10% of what you started with that year [again assumes we are not dealing with new accounts, only the purchased accounts].  If you do the math you end up with around one-third of the original accounts after 10 years.  Not a problem if you use the 
commercial Standard Form Agreements; they are 10 year term.

What's value of alarm services from article on July 16, 2022
            In that same response I also attributed a statement to Lee that was not entirely accurate, a statement with which he doesn't agree.  He called my attention to my mistake, and I think it's important to correct the record.
            Lee wrote:
          "Current market research suggests much shorter life with much higher attrition for millions of existing “deterrent” type customers, when customers learn of slow or no police response to their alarm site. Big risk for investors."
            I misinterpreted Lee's comment and stated:
            "Lee’s continuing message is that be wary of alarm customer accounts because sooner or later they are going to figure out that police response is so slow or non-existent, the alarm is useless."
            Lee doesn't believe alarms are useless; neither do I.  So now we got that straight.
            RE your Newsletter of July 16.  Your reply to my comment.  Again excuse my layman language.
I have never said, nor implied,”… police response is so slow or non-existent, the alarm is useless.”.  
            All alarm systems, including signs & decals, serve notification and deterrent value.  My observations and messages are intended to alert friends and colleagues, NOT the end user customer.  At what point does it become deceptive business practice, at the expense of the dealer/investor?   We believe, some Alarm Associations and their “model ordinances” are too self-serving, putting their membership and other stakeholders, including investors, at risk of deceptive business practices.  For example, we forget that most alarm contracts (RMR) are created via individual sales persons and their marketing support. Unfortunately, sales training and sales support materials, still include the Public/Private/ Partnership, providing the alarm industry special credibility with local police;  suggesting on-demand police response to the alarm site, as incentive/ motivator for signing the RMR contract.  And the sales transaction does not mention that most monitoring sources, not the customer, are considered to be the perpetrator of UPR/ Unnecessary Police Response, aka false alarms…  exempt from fines and fees generated by their own interpretation/ errors /omissions.  The customer is erroneously levied fines/fees by the muni for false alarms.  
We forget that the ordinance says the muni has full immunity if NOT respond to alarms, but is silent about loss of immunity if/when public resources are used for private purposes, like private deterrent alarm-site response.  WE forget most police departments have rejected the Model Ordinance, but endorsed its use due to pressure by the City Council for revenue purposes. (police departments report to the council, but have lots of escape clauses). Lots more detail upon request that suggests deceptive
Lee Jones

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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