Comtronics’ Success in DIY Market
Complementing Traditional Business
Discover the ROI, sales compensation and go-to-market retail and online strategies that are giving the company a competitive edge.
By Jason Knott · March 1, 2016
“If you can’t beat them, join them.”
That is the idiom to which veteran security integrator John Campau, president and CEO of Comtronics in Jackson, Mich., subscribes to in terms of addressing the do-it-yourself (DIY) and monitor-it-yourself (MIY) smart home security market.
(r-l) Comtronics President/CEO John Campau with wife and Executive Vice President/General Counsel Anne Campau and the company’s Cellular & More Grand Rapids, Mich., Store Manager L’Shawn Phillips.
Campau and his team have adroitly bundled a Honeywell-based “Comtronics Interactive Home Security Package.” The initiative includes a slew of creative ad campaigns with a defined retail, in-home and online go-to-market strategy, live demo display kits for the sales team and rejiggering their sales compensation plan to attack the DIY/MIY markets head-on with a highly competitive (and profitable) solution.
“We believe firmly that DIY is part of our future and not a fad. MIY is part of this too … we let people be more interactive with their system,” says Campau. But even though he is bullish on self-installation, Campau does not believe it will “take over” his traditional professional alarm installation business, or anyone else’s for that matter. He says even a newbie security company has “a strong industry future because he has to have trucks and technicians. We believe this is only going to complement our traditional business.”
What’s in the Package?
Comtronics has been in business since 1958 serving the state of Michigan. The company is already unique compared to most other security integrators because Campau also owns 12 Verizon Wireless stores across the state. Those retail customers are the primary targets for Comtronics’ DIY offering. But Campau insists this market opportunity is available for traditional security integrators even if they do not have a retail operation.
“This is driving business we’ve never had before; it’s driving opportunity we’ve never had before. Every DIY sale is another kit we would have never had in the market without this program,” he states.
So what exactly is it that Comtronics is offering? The free kit includes three door contacts, one motion sensor, one key-fob and a Honeywell L5200 alarm panel. The kit is housed in a specially made retail-oriented white cardboard box, about the size of briefcase, emblazoned with powerful marketing images depicting the functionality of the system (opening the garage door, lighting control, home security, climate control, etc.). The box has a handle so it can be carried just like a briefcase.
Inside the box is a custom foam insert housing the devices, an inside-lid sticker describing each device, and additional instructions and internal brochures. The system is preassembled and features include GSM Radio, WiFi and Z-Wave communications, a 24-hour battery, desk mount and a transformer prewired to the panel. The store also includes individual devices available as add-ons, such as additional motion sensors, thermostats, lighting control modules and IP cameras.
Inside each retail store is also an attractive demo display table that allows prospective customers to physically touch and feel the equipment. Every one of Comtronics’ 90 salespeople in the Verizon stores is trained (and compensated) for conducting demos.
DIY customers are required to sign a two-year monitoring agreement at $45/ month. The company is still fleshing out its exact MIY strategy, but among the options would be to charge a price point that covers the equipment cost (approximately $500) and require MIY customers to sign a contract for at least $15 per month (the minimum required to cover monthly Total Connect fees from Honeywell). Campau worked closely with alarm industry legal expert and SSI columnist Ken Kirschenbaum of Kirschenbaum & Kirschenbaum to develop the contracts.
According to Anne Walker Campau, executive vice president and general counsel, getting a contract signed even for a client who is refusing monitored security is vital.
“There always must be a contract,” she notes. “That puts all the liability and responsibility back on them.” Those MIY clients would then be methodically communicated with by Comtronics, revealing data about what times of year and times of the day homes are most likely broken in to, etc., to attempt to draw them into a monitoring contract.
Two-Phase Go-to-Market Strategy
Inside each of Comtronics’ 12 Verizon Wireless stores is an attractive demo display table that allows prospective customers to play with the home automation equipment.
The go-to market strategy has two phases. First, Comtronics is displaying the box in its Verizon stores for walk-in customers who saunter in looking for new cellphones. According to Campau, the box itself drives interest.
“We get those customers all the time that look at it ... they think it’s a beautiful kit … they love it,” he says. “They’re already making a decision to pay Verizon $200 per month for all-you-can-eat plans for data, text and voice.”
In addition to customers walking out of the store with the kit in hand, many of them request professional installation. “They don’t want to do it myself. They ask, ‘Can you send somebody [to install it]? We say, ‘Absolutely!’ We’ve sold 16-camera video systems to DIY customers. We’ve sold all kinds of access control systems and door systems because of DIY, so we’re selling above and beyond just what this kit represents,” claims Campau. The company will even do the installation for $100 for the client. Among the options Campau is exploring is waiving the $100 installation fee in exchange for an additional year on the monitoring contract.
Phase 2 of the sales strategy is online. The company also bought an 800 number to field purchase calls and built out a separate Web site with an E-commerce component and activation portal. The company is working with DocuSign to capture legally binding E-signatures. Of course, rolling out a nationwide online sales program means Comtronics must be licensed to monitor alarms in every state (if required) in which it sells a system.
This second phase also includes a social media and Google SEO component to the marketing plan. Also, Comtronics is extending the program so other integrators can become resellers of the kit and share the RMR. Campau says he already has 10 dealers from various parts of the country involved.
Comtronics also has well-done marketing collateral describing functions like Z-Wave lighting control and IP cameras for monitoring babies in their cribs. Even though Comtronics just rolled out Phase 1 of its DIY program last fall, it is already selling about 30-40 systems per month. That compares with selling about 100 traditional professionally installed monitored systems per month from its experienced, six-person in-home sales staff.
The company’s traditional alarm sales staff can also sell the DIY offering. “And they have,” remarks Campau, who says any sense that it is cannibalizing his traditional security business “is really a nonissue. Think about how much we spend [in marketing] to get a sale … $100? That’s to get a $45-a-month customer for two or three years. It’s a small price to pay for a referral, plus it gets everybody on the bandwagon.”
Calculating Costs and ROI
The business plan for Comtronics’ DIY solution is definitely subsidized. Campau calculates the equipment costs at $483.75 per job. To create the fancy box itself is another $16.25. The salespeople earn a $100 fee for a referral that turns into a sale, or a $200 commission fee if they close the deal on their own. The kits themselves are compiled in-house by staff in their spare time. The company’s breakeven ROI is about 11 months. If it adds in G&A expenses, it’s probably around 14 months.
Will Comtronics’ bold move represent a blueprint for other security integrators? Campau thinks it should. He recognizes that most integrators do not have retail showrooms like he does, but he believes that should not matter. Indeed, as part of the company’s Phase 2 rollout to online sales, Comtronics is extending an opportunity for other security dealers to also become resellers of its packaged kit.
Besides, “Every alarm company in essence already has a retail store … your Web site,” says Anne Campau.
Another misconception, according to both the Campaus, is “who” the customer is.
“It’s the people who are part of the $21 billion do-it-yourself industry. They’re these people that paint their own house, and that want to mow their own lawn,” says John. Referencing a wealthy cardiothoracic surgeon friend of his who replaces his own iPad touchscreen, he adds, “It can be a doctor … a really smart person, and it can be somebody who really doesn’t want someone in their home. The guy who puts his own kitchen in and fixes his own plumbing. There are millions of people. This is not a fad.”
Channeling his best Donald Trump, Campau emphasizes, “It’s huuuge. We think it is huge.”