Security System: sales and marketing
Feb 1, 1998 12:00 PM, Howard Friedman
It has been said that alarm systems fall just behind life insurance andcemetery plots as one of the three most difficult things to sell. Formerly,much of the buying public regarded alarm systems as intimidating,complicated and ineffective and perceived them as necessary only forbusinesses and the very rich. Commercially, security systems wereconsidered a necessary evil-needed by businesses to protect against majorlosses and required by many insurance companies before coverage would begranted.
Residentially, alarm systems were found in a tiny percentage of homes.Although their numbers were limited, residential alarms were usually morepopular among those with higher income levels, more education and youngchildren. As the number of VCRs, personal computers and even exercisemachines grew, security systems-the very things that could protect theseinvestments-lagged behind.
It wasn't too difficult to see why. At the time, most people would behard-pressed to name an alarm manufacturer or installation company. Itwasn't until the mid 1980s when First Alert, the popular smoke detectorcompany, attempted to remedy the situation by employing actor WilliamConrad to endorse its products. The campaign was highly successful for bothFirst Alert and the security industry in general. Perhaps more than anyother current strategy, this event succeeded in promoting an awareness ofresidential safety.
Today, the industry is vastly different. Alarm systems are known assecurity systems, and ads for security systems now proliferate innewspapers, magazines, radio, television and even on billboards.Residential sales are up significantly. Most people can now cite the namesof popular alarm manufacturers and installation companies. Competition iskeen, and the industry is healthy. What has accounted for this renaissance?
Before answering this question, it might be interesting to engage in ashort review of security's history. Although it's a little-known fact thata New Englander named Edwin Holmes is largely credited for inventing theburglar alarm, an even more obscure detail grants, to an Augustus R. Popeof Somerville, MA, a patent dated June 21, 1853, for the "development of anelectromagnetic alarm." Little was heard from Pope after that, except thathe sold his patent to Holmes, an aggressive entrepreneur who, by trade,owned a notions store and manufactured ladies' hoop skirts.
With Pope's patent, Holmes sought to promote the concept of electricalsecurity. With no equipment suppliers and the deep distrust of electricityheld by the common citizenry, Holmes had his work cut out for him.Eventually, he found Hinds and Williams, the only electrical supplier inthe country, which eventually became Holmes' new commercial neighbor. Atthe time, Hinds and Williams, the chief supplier of fire alarm call boxesfor the city of Boston, agreed to make bells, electromagnetic contacts andsupply voltaic cells (otherwise known as batteries) and wire to the newcompany.
Unfortunately, Holmes' attempts to sell his security system in Bostonfailed. He blamed New England's relative tranquillity, and in 1859, herelocated to New York City where, he believed, most of the nation'sburglars "did their business." However, his attempts at promotion met withsignificant obstacles, largely because no one yet regarded electricity asviable. By his own account, people refused to believe that "a bell mountedin the attic would sound an alarm when a basement window was opened". As aresult, Holmes saw fit to develop what must have been the first alarmsystem demo case, a mini-exhibit he lugged from door-to-door among NewYork's wealthiest citizens.
Sales climbed as word of the new contraption spread. Spurred on by hismoderate success, he delved deeper into the business and developed latchingbell circuits, zoning, fault identification, alarm memory, auto arming anddisarming, and automatic illumination of violated areas. Holmes built analarmed jewelry safe which, via a direct-wire hookup to the policedepartment, could silently report attempts at tampering. He stagedwell-publicized events and offered prize money to anyone who could breakinto the safe without being detected. These promotions became media events,and his success grew. By 1872, Holmes Electric Protective could no longerfill the orders that came in from businesses like Tiffany and Co., Black,Starr, and Frost, Arnold Constable and Lord and Taylor.
With his son, Holmes subsequently opened a central station at 194 Broadway.It's a little-known fact that Thomas Watson, chief engineer to telephoneinventor Alexander Graham Bell, once worked for Edwin Holmes as an alarminstaller. Equally surprising is that Holmes became the first president ofNew York's Bell Telephone Co.
Since the days of Edwin Holmes, alarm technology and the businesssurrounding it has grown by leaps and bounds. More than 100 years later,there were dozens of equipment manufacturers, scores of central stationsand thousands of alarm companies selling and installing security systems.Those that survived gained the experience and the finances to promote salesin nearly all markets. The largest of these were national organizationsoperating in many regions of the country. Smaller, independent companieswho enjoyed a presence and a positive reputation in their respectivelocales also did quite well. A proliferating segment, known astrunk-slammers, were one- or two-man companies. With good word-of-mouth andneighborhood advertising, many trunk-slammers prospered.
Many alarm dealers befriended home builders with offers to pre-wire newresidential construction for the lucrative possibility of providing alarmsystem installations to the development. Some lucky and aggressive alarmcompanies got contracts with construction companies; most, however, didnot. Locksmiths, who wanted to grow their business by entering into a newmarket, took advantage of the many security installation and sales seminarssponsored by leading security equipment manufacturers. Among most of thesecompanies, however, little was known about marketing and advertising, withmany promoting sales by encouraging and relying on referrals while waitingfor the phone to ring. Others printed flyers, did mass mailings and tookout larger and larger Yellow Page ads. Certain manufacturers got involvedand developed cooperative programs, which would split the cost ofadvertising with the alarm companies that faithfully used their products.
Nonetheless, the number of residential sales was still a sore point formany security equipment manufacturers, alarm installation companies,central stations and home- improvement vendors. The prospectof all thosehomes without alarm systems presented a significant untapped market and aprincipal challenge. Many companies soon got into a highly successful,self-generating market-that of the large number of retirement communitiesin both Florida and Arizona. At that time, the recently introduced medical-alert systems offered inexpensive personal security to those of advancedage or with medical concerns. Medical systems, in their purest form,provide a transmitter, which can be activated by a person in need ofmedical assistance. Once triggered, such systems may provide voicecommunication between the monitoring company and the subscriber. In amatter of moments, an ambulance is dispatched. In certain cases, thesemedical systems were included in traditional security systems-a win-winsituation for both the dealer and his customer.
This was a glimpse of the security industry as it entered the 1980s. Only10 years later, things would be radically altered with a new growth patternthat few had anticipated. It was because of the realization that strongmarketing techniques were called for to address the residential market thatthe infiltration of professional marketing organizations occurred. Someorganizations partnered with alarm companies; others bought them outright.Several oil companies even opened an alarm system division.Home-improvement organizations, also with a significant customer base,strong sales experience and lots of capital, also entered the securitybusiness and hired the necessary personnel. Soon, selling alarms became ascience, depending less on what equipment was used or a particularsalesperson's skills than on marketing strategies. Telemarketing became thedarling of the industry, with larger companies creating or engaging boilerrooms in which trained personnel would make perpetual outgoing calls totargeted segments of the community. With polished presentations,telemarketing led to additional sales which, in turn, created revenues forwider types of advertising in the mass media.
Some major retailers got involved in the movement by contracting localalarm companies, who subsequently agreed to participate in theirhome-improvement program tailored to security. In so doing, certainproducts and services were standardized, and competitive pricing wasdeveloped. The retailers' sales personnel was trained in security concepts.Through the use of the retailer's name and by high profile, in-store andtargeted media advertising, residential leads were gathered, qualified andoften converted to sales, which were passed on to the participatinginstallation companies.
As a result of this movement, even phone companies got into the act. NYNEX(now Bell Atlantic) and Sprint made early unsuccessful overtures in thisdirection, but it wasn't until the late 1980s, when AT&T entered thesecurity business, that many people took notice. Inspired by the burgeoningmarket for residential security and knowing the clout that the AT&T namewould have, the company developed its own residential security system atBell Labs and publicly introduced it in 1987. In this capacity, AT&T waslike any other alarm manufacturer-producing the product and selling it tobona-fide alarm dealers. To promote the system, AT&T collected leads byconducting demonstrations in selected phone center stores, placingpromotional materials in the bills of selected long distance customers anddeveloping co-op advertising programs-all touting the benefits of their newsystem. AT&T staffers and consultants trained the participating alarmcompanies in effective lead generation and supplied suitable ad copy anddesign. News of the product appeared in some regional and nationalmagazines, and dealers with the means to run their own TV ads were suppliedwith several AT&T-produced commercials.
Today, it's very hard to open up a newspaper or listen to the radio ortelevision without some mention of a free alarm installation or a $99 alarmsystem. This movement was fostered by the high competition created in the1990s when many larger alarm companies purchased smaller dealerships,creating a network of identical branches sharing the same name and logo,style of vehicle, installer and sales uniforms, and company policies. Theirsheer numbers created greater purchasing power, allowing the systems theyadvertised to be both inexpensive and appealing, but rarely sold for theadvertised price. Experienced salesmen often convert the $99 system intoone costing 10 times as much. Along with high-profit monitoring agreements,this low-ball concept is working quite well for many companies.
As with many industries, the survival of the real craftsman who wouldinstall a carefully planned system under the highest of standards, has beenseverely threatened. In an attempt to counter the current movement, onesuch company in the New York metropolitan area touts that "cheap alarmsystems make for cheap security".
How the alarm industry will fare in the next century is not yet certain.Will alarm systems become the commodity into which personal computers haveevolved and make the industry even more formidable, or will the perceivedsafety engendered by low crime statistics cause residential sales toflatten? Will there be a backlash against the inexpensive cookie-cuttertype systems, or will it gain mass acceptance-the way so many things do?Time will tell.
Because selling alarm systems still remains a hard sell, particularly whenthe idea is to convert the $99 residential system to one costing $999, thealarm salesperson must be well equipped with facts, persuasion, wisdom andthe ability to bargain. Because cold-calling rarely exists, mostsalespeople enter a household with a lead in hand and try to convert thatlead by eliciting from the homeowner the reasons for his/her interests.Armed with supporting statistics on both crime and fire, the homeowner ismade to see that their concerns are shared by many. They're told it's sixtimes less likely that an intruder will attempt to break into a home with asecurity system. They're also told that, unlike the stand-alone smokedetector, system-type detectors trigger alarm annunciations, both insideand outside their home, and report the event to the central station whetheror not the subscriber is home. They use reprints of articles indicating howsecurity systems save lives and how they offer comfort to the travelingbusinessman who worries about his family and to the mother alone with herchildren. For the elderly and the infirm, the significant benefits of amedical system are touted, and similarly relevant statistics are produced.
A security survey is then conducted as the salesperson and his prospectswalk through the premises. They're shown how strategically placed detectorscan identify attempts at entry and how even marginal locks and hinges maycompromise safety. The salesperson is selling concepts, not equipment.Depending on the consumer, his approach can promote peace-of-mind,security, safety, the protection of valuables and even status. A goodsalesperson will always expect objections and knows that if each can becountered convincingly, the prospect will be brought closer to signing.What are the most common objections? Their price, not wanting to live in aprotected fortress, a fear of false alarms, the perceived complexity inoperating the system, the presence of a watchdog, and more. Good salespresentations are carefully crafted, well-rehearsed and prepared for alltypes of customers and their objections. Many think of themselves asperforming a public service. What do you think?