The Big Idea with Ron Davis
Does Your Value Proposition Need Altering?
If you had just one really great idea you could share with the alarm industry, what would it be?
This month's BIg Idea comes from Trey Alter, CEO of Dynamark Security Centers, Hagerstown, MD.
ALTER'S BIG IDEA:
We are out of balance with what we charge our customers, which is making us vulnerable to attack from the do-it-yourselvers, the direct marketers, and all the others entering the alarm industry.
F HE WERE 30 OR 40 YEARS OLDER, or conversely, I were 30 or 40 years younger, I suspect Trey Alter and I would hang out together. We like and respect each other, and I've known Alter's father, Wayne, probably longer than he has. Trey Alter is President and CEO of Dynamark Security Centers, in Hagerstown, MD. The company is the second iteration of the original Dynamark company (which was founded by Wayne Alter and was one of the first, if not the the first, dealer programs in the industry) and based on everything I can see and have been told, the current business owns a great reputation among the dealers and communities they serve.
KEEP YOUR GUARD UP FROM ALL ANGLES
Rephrasing my usual "great idea" question in the spirit of talking to a Millenial, I asked Alter, "If you could share just one great idea about what dealers can do to succeed in the new evolving alarm industry, what would it be?" His response was immediate: "We are out of balance with what we charge our customers, which is making us vulnerable to attack from the do-it-yourselvers, the direct marketers, and all the others entering the alarm industry."
I agree with Alter. In chatting with him about his views of the industry and the changes that have been made, it became clear that his thinking differs from the mainstream. He believes that we charge too much, provide too little, and can't compete with what else is out there — until and unless we are prepared to offer the kind of customer support and service that has been absent too frequently.
Now to be fair, Alter doesn't think that we should reduce prices, or do anything that will reduce margins uless we can make up for it in quantity (think about Vivint). And even though we were discussing the residential market, this certainly can apply to other marketers (e.g. commercial, mini-commercial, PERS, etc.). While our industry has been pretty much obsessed about competition from the likes of ADT, Protection 1, Diebold and even Vivint, it's kind of like the army that is just watching its front, without looking out for the periphery and the backside. I think most of us were blindsided by the success of the DIY companies, the partnerships with major retailers such as Costco and Home Depot, the summer program marketers, and the bundlers such as the cable and telephone companies. And one day — voila! — they're here, they're doing a good job, they've reestablished price points, they are providing solid service and more importantly, providing consumers with protection.
THERE'S STILL PLENTY OF MONEY TO BE MADE
I've been traveling for business for more than 50 years. I have more than 5 million miles on one airline alone. My first employer insisted that we fly first class (back when it was only a 10% or 15% surcharge), unlimited drinks, lavish meals, flight attendants waiting on you hand and foot. Then, during the 1980s, service declined, profit margins dropped and many of the airlines literally went out of business (remember Eastern Airlines or Pan Am?). SInce then, little by little, we've accepted small changes to where some might argue we travel in less comfort than livestock. But oh, by the way, the airlines are making more money than ever. We may have been more comfortable back in the good old days, but we are still getting to where we need to go, with almost as much choice for departures, and probably at a price that is equivalent to or less than what we used to pay for airline tickets.
Our industry needs to make a similar quantum shift to survive. No, let me rephrase: dealers ned to make a quantum shift in order to grow. That's what's Alter was trying to convey. Many alarm dealers would never dream of offering a DIY opportunity. Russ Cerosimo, CEO at Guardian Protection Services in Pittsburgh, thought of that 10 years ago and has incorporated it into the business. What partnerships could you enter into that give you greater opportunity? Joint ventures? Parallel industries to the alarm industry?
Ron Davis is Security Sales & Integration's "What's the Big Idea?" columnist and contributing market analyst. He is president of Davis Group, a full-service consulting firm serving the security industry, which also includes GraybeardsRus. He has 35 years of industry experience, including founding Security Associates International in the 1980s.