Business Roundtable: Cover Story
Hurdles Aplenty, and Optimistic All the While
In an exclusive roundtable, executives from four installing security firms reflect on the current state of the industry as well as their respective regional markets. Find out which technologies excite them, the challenges that keep them awake at night, and how they are positioning their companies for success in 2014.
by Rodney Bosch
January 10, 2014
Threats from national marketers with awfully deep pockets. Scufﬂing with vendors that allow their products to be discounted on the Internet. Painstaking efforts to transform the culture of a decades-old organization.
Coping with technology obsolescence and maintaining relevancy with a new breed of customer. These are just some of myriad difﬁculties installing security contractors face each and every day. Remaining optimistic, and even successful, in the face of it all requires unﬂinching decision-making and a deft business hand.
Each year SECURITY SALES & INTEGRATION’s convenes a group of executives during Honeywell’s authorized dealer convention to sit down and discuss their particular challenges and successes. The intent is to foster an open forum that provides SSI readers insights into what other companies are experiencing in their respective markets and the hurdles they are navigating. This latest roundtable took place at Honeywell Connect 2013 in Los Angeles, which brought together for the ﬁrst time members of the First Alert Professional (FAP), Commercial Security Systems (CSS) and Honeywell Integrated Security (HIS) networks.
In the ensuing conversation, John Campau, president and CEO of Comtronics in Jackson, Mich.; Kevin Stone, COO of Doyle Security in Rochester, N.Y.; Ronnie Whiddon, vice president of Custom Security Systems in Baton Rouge, La.; and Joseph Menke, president of Scottsdale, Ariz.-based Electronic Security Concepts, detail their strategies for 2014 and how they deal with the trials of operating successful companies. Find out how each of these security industry veterans are responding to internal challenges as well how new technologies and services are helping them meet the demands of a marketplace in continuous transition.
|Held at the recent Honeywell Connect 2013 convention, SSI conducted a roundtable interview with four executives from leading installing contractors. From left: John Campau (Comtronics), Kevin Stone (Doyle Security), Ronnie Whiddon (Custom Security Systems), and Joseph Menke (Electronic Security Concepts).|
Let’s begin by having each of you recap your company’s performance in 2013.
John Campau: 2013, like 2012, was quite a challenge. The big thing we are struggling with is to change our culture at Comtronics. We can have the greatest strategy, but culture beats strategy every time. I recognize that and so I am trying to get our employees to embrace technology. We are trying to change our culture because this industry is moving so fast.
I have been in it for 30 years and I have seen more change in the past ﬁve years than in the previous 25. It is just the whole idea of embracing technology, accepting the fact what we are learning today will probably be obsolete in a year. It is that crazy. Getting people onboard with that has been a challenge. I have lost some really good, long-term people as a result of technology, quite frankly, leaving them in the dust.
Did we have a good 2013? Yes. Our numbers are up 27% over the year before. We are moving in the right direction, but with 100 employees it’s just a lot to move.
Kevin Stone: We had a very solid year. Our installation revenue was up signiﬁcantly. Our recurring revenue was also up signiﬁcantly. Home automation is deﬁnitely a part of it. We also have gotten more into managed access control. We are selling managed services. We are selling a lot more maintenance agreements. We are selling signiﬁcantly more RMR per customer than we have in the past. That continues to ramp up and has for several years.
We deﬁnitely had some challenges. We battled the economy a little bit. We also had a lot of HR issues. We lost an employee unexpectedly to death and that caused quite a ripple effect in the organization. Finding people is a challenge. You hear unemployment is pretty high and so you’d think you could ﬁnd people pretty easily and that is just not the case. We have added some great people and we think in the end we will be a stronger organization because of it, but no question it was difﬁcult.
We also expanded into another market. We bought two ofﬁces in Albany, N.Y. and see a tremendous opportunity there.
Ronnie Whiddon: We had a good, strong year. John and Kevin did a great job of explaining the challenges of the alarm business. The burglar alarm side is still a real strong business for us. We are doing more and more of the home automation, but it seems like that’s all you hear about. But we are not seeing a ton of demand. People still want a burglar alarm. They still need a security system; they still want a ﬁre system and access control.
The strong part of the business was probably video and it is becoming commonplace in residential applications. Fifteen years ago I would have never thought we would install as many camera systems as we do in homes. This is not high-end residential. We are talking about very affordable starter camera systems for people. It is becoming commonplace to do a lot of residential cameras. We have always done commercial camera systems. Some large and some small, but in our market it is the smaller systems we sell the most of.
As far as challenges, with IP cameras and networked systems it’s training people and getting them up to speed. The whole evolution of the industry, the products are changing constantly. That is a pretty big challenge for us. 2G radios is another one. We have already started changing those out and we have a long way to go. The sad part is we’re changing to a 4G radio, but it has a shelf life too.
Joseph Menke: It has been really challenging the past few years for us because of the economy, especially housing in Arizona. We had a fantastic 2012, and I think we are the right track [in 2013] compared to , just a little above. I am very pleased with that. We essentially expanded in the verticals we have always played in, so we wanted to increase our ﬁre.
We have done more integration in government, which is our strong part anyway. We have had some really good Homeland Security grants that we performed. And education has been a very big force. We brought on a couple of new school districts in 2013. We have done a lot of cameras, a lot of access control, a lot of managed access, which is becoming more and more popular than traditional access control. All in all we are happy the way 2013 came out.
We do ﬁre inspections but more and more we’re doing installations. We brought on Silent Knight’s high-end line, the Farenhyt line, which seems to have really helped us out. Central Arizona College has been a huge installation for us. That started three years ago and we had to kind of integrate our own emergency notiﬁcation system.
We used to be around 60% commercial, 40% residential. Now it is like 80-20. Five years ago we had several new home builders pumping out houses all day long; we were doing home automation and structured wiring, which was a really big piece of our business. Now home builders aren’t pumping out houses like they were before. So we have really ramped up our commercial end. We were always strong on that too; it’s just that residential is not that big a piece any longer. If there are no houses being built, you have to ﬁnd something else to change your business model.
What is your business outlook for your company and the industry in 2014?
Campau: It is very positive for several reasons. One thing I particularly love about our industry is that it is wireless and it is affordable. Security used to be for people who had money. Now it’s really for everybody. It is very affordable. We are putting in alarms for $200 and $300 all day long. We do the integration too, but the piece that is interesting is it is affordable and wireless. We are also a Verizon Wireless premium retailer. We have ﬁve retail stores. We have been in the cellular business for 15 years. What is really cool is we sell a customer a cellphone and then we lock them in with accessing their alarm system via an app. They manage lights, cameras, locks from their cellphone.
We’re really not selling alarms anymore. We are selling a lifestyle. That is what we tell all of our salespeople to promote. Lifestyle is a big part of the alarm industry now. So what is my outlook? Extremely positive. I love the industry more than I ever have. I embrace technology. We are riding that bandwagon [of interactive services being marketed nationally]. It actually makes our phone ring because we are the local guy. We have been around 55 years. We promote ourselves as the custom and the family-owned and operated business. We hold our own.
Stone: I see a very positive outlook for 2014, both for our company and the industry. With the threats from cable and phone companies there is also tremendous opportunity. These are multibillion-dollar corporations that are going to spend a lot of money on advertising and increase exposure signiﬁcantly more than our industry ever could. As long as we can position ourselves to be the experts in security, and keep that message top of mind, we are in a position to deliver a third message. It used to be that security systems were standalone; that was the message, that’s what we talked about. Now its thermostats, lighting control, cameras and a lot of other things.
From my perspective the alarm industry has a distinct advantage. It is a lot easier to convince a consumer that the security provider is able to install thermosets and cameras, etc. The cable and phone companies are going to have a much more difﬁcult time convincing the consumer that they are the right option to install security. Their service has never been good over the years as a rule, at least in comparison to our industry. Their attrition rates are also really high in comparison to ours. They have some signiﬁcant challenges, but with the increased exposure we will ride that wave of awareness and will be there to provide products and services for our customers.
Whiddon: I have no reason to believe that 2014 is not going to be fantastic. Our company is basically about slow, steady growth. We don’t acquire a lot of other companies, so we’re out there doing the same thing week to week. For over 35 years we have built a name and a reputation in our area. Yes, there are a lot of challenges. I agree that some of these new players [telecoms, cablecoms] have some big hurdles to overcome. But what they do have that we don’t have is millions of dollars to market themselves. That, too, I believe will create awareness. We believe we do it better, we just can’t do it nationwide. There are challenges to meet every day but that doesn’t mean the future isn’t bright. There is success out there; you just have to work for it.
Menke: We are excited. We have some new integrated contracts coming up. We are moving into a new facility, so we purchased a new building in north Scottsdale and we are going to consolidate our two facilities into one 9,000-square-foot facility. We are going to concentrate on the verticals that we did before, so health care, education, government. We are very service oriented. We have been in business for over 20 years; we have had two huge government contracts for 15 years that are going to upgrade in 2014. They are big, integrated access control and CCTV systems. We are very fortunate to have those.
For the industry, I think it is going to keep chugging along. I don’t want to say it but we are still waiting to see how this Obamacare situation is going to affect us.
What speciﬁc vertical or market niche excites you?
Campau: A vertical market for us would be bank security. We are really focused on getting more bank customers. We are doing managed access and managed video for several large banks now with 300 to 500 locations apiece. We are working more and more with the Honeywell cloud-based services. We manage the customer’s cards. We manage all their codes, we change add-delete. That is a big part of what I believe is going to be our future.
To prepare for this we are building a strong IT department. We have one now. We just had a woman who graduated from college joining us who majored in IT. We have four people on staff and that is all they do. Our customers like that because when we do a system, maybe they don’t have the support we do. We provide that as a part of our managed services. We charge RMR; it is a good deal for both parties. We come out with the product and the service and they get the beneﬁt of turnkey.
We have a banking customer that has 700 branches. They used to monitor their own systems. They outsourced it to us after a very difﬁcult bidding process with 15 different bidders. We won the contract back in 1999. That really was the beginning of what I identiﬁed as a market that needs our services. It is desirable to them to have what I sell. They are going to pay their bill timely. It is a fun industry; I really enjoy working with banks.
Stone: A couple years ago we launched a managed access control program and it is really poised for signiﬁcant growth. We think the fact that we have a central station that can make changes for customers 24 hours a day is a huge advantage. Companies are downsizing, they don’t have the wherewithal to take these systems on. It used to be they were managed by a security director — and they still are in some of the bigger places — but access control has become much more affordable for the smaller companies. We can manage it for them for a small monthly fee. That business has been ramping up for us signiﬁcantly for about three years now. We think it is going to continue to grow signiﬁcantly.
We also started a medical monitoring division a couple years ago. It started out as a PERS business. It has had signiﬁcant growth; in fact, from an RMR perspective it is the fastest growing piece of our business. There is a lot of opportunity out there for a lot of reasons. No. 1, people want to stay at home. The cost of going [to an elder care facility] is very expensive. From our perspective, in upstate New York at least, there are very few demographics that are growing. The aging population is one of the few. We are going to try and take advantage of that.
Kevin, can you explain how the medical monitoring division operates?
You have to focus on the right customer. If you take a retail approach it can be a tough business. If you focus on [health-care] providers, such as nursing services, and you almost become the backbone for those providers, they in effect become your sales force. The health-care providers are out there every day taking care of the seniors.
There are a lot of reasons to approach it from that angle. For a long time we stayed out of it because the life expectancy was about 20 months. That is just not enough to recover your investment to make any money. Now people are getting the systems earlier so they are keeping them longer. So, that number has bounced up pretty signiﬁcantly. Again, because of our model and the way we sell to the health-care customers we are the backbone for, we will sign multiyear contracts with them. It can limit your attrition.
Whiddon: I see the potential in 2014 for more the growth of the IP camera world. All these existing analog camera systems are out there. The customers are already sold on the idea that they need a camera system. Their analog system has beneﬁtted them for years and now you can come in and give them better detail and more features and some real usable information. I see that as a real strong business in 2014. It is about approaching existing customers and showing them the new technology and how affordable it is. With the hybrid system, they don’t have to rip and replace their existing system. You can make a few key changes and some parts and let them grow as the other cameras go out. They can make a switch into the IP world and never be sorry.
Especially for the small business owners, everything they have is wrapped up in that business. It allows them to stay connected to their livelihood. I see it as a very strong market. Think about something you have loved for years and now I am going to come in and show you how I can make it better for you. You are going to see more detail, record more information. When someone can afford it there is a lot of rip and replace. But it’s not for everybody. So we do a lot of getting them started in the IP world with a hybrid system and then you see it progress real fast. Our company is mostly 80% residential, 20% commercial overall. Most of our IP camera success is in the retail market.
Menke: Education is really big. I have worked with the Arizona School Facilities Board on actually producing the lockdown and the emergency notiﬁcation. We are concentrating more on that with school districts. I think that money is going to be there for Arizona for our neck of the woods. We feel very comfortable in that market.
On the government end, a lot of FIPS-201 and CJIS [Criminal Justice Information Services] regulations were put on hold for a while and now those are coming back up. In September 2014, [government facilities] are going to have to be compliant for those, so logical access is coming back into play. We are going to try and push the logical access control more. Logical access is using credentials, ﬁngerprints to access law enforcement tablets, Toughbooks, computers at their desks and squad rooms, and especially in their squad cars. We’re hoping with the CJIS regulations coming back that [end customers] will have to comply or risk lose their funding. We think it is going to drive some of that business. We have a big investment in that already so our technicians are trained and we are going to be pushing it.
FIPS-201, HSPD-12, Homeland security initiatives, that all fell off because no one had the funding. Everyone said, “We’re glad to be onboard, but give us the money for it,” and then of course no one had the money. We’ll see if those grants and other money is available in 2014 like they say it’s going to be.
What do you see has a challenge in the marketplace and how are you reacting to that organizationally?
Campau: I believe technology obsolescence is really going to continue to be a challenge going forward. I have experienced a lot of struggles personally in that area where we have equipment out in the ﬁeld and people are paying us $40 a month and they just expect that were are going to come out upgrade it.
4G? Eventually there is going to be a 5G. As soon as we ﬁnally get all of our 2G radios out of the ﬁeld and hopefully get the customers into 4G, I’m still trying to ﬁgure out how I am going to pay for that because those 4G radios are $150. And then we have to go install it so now it’s $200. If you have a thousand of those, do the math.
POTS versus GSM … a lot of our churn comes as a result of customers dropping their POTS lines to save money. Then a light bulb goes off in their head and they consider dropping the monitoring on the security system they’ve had for 20 years. We remind them they are getting credits on their insurance premiums, and we have a slogan that says, “If all it ever protects is your peace of mind, isn’t that enough?”
Training is another challenge, keeping our technicians and our salespeople trained. It’s back to that culture versus strategy; we sit around our conference table and we have these fantastic strategy sessions, but it’s getting people to embrace this culture of technology. It’s more expensive to play in the technology sandbox than it ever has been. Customers don’t want to spend any more than they have too. But at the end of the day somebody has to pay for the technology changes that we do in the ﬁeld.
Stone: I am going to focus on human resources. Finding and retaining people will become increasingly more difﬁcult as time goes on. Not only do we have to train them to do more things, but we have to also keep them up to speed with the industry changing and everything that’s going on.
The kids who are coming out of college today and the kids we are looking to hire are signiﬁcantly different to what we have hired in the past. They have grown up in a different environment. It’s to be expected — every generation changes — but they have different needs and different desires. An interview today looks and feels nothing like it did 10 or 15 years ago. I can remember candidates coming in and they would talk about what they would bring to the table and how hard-working they would be and how they were going to prove themselves on the job. Now they walk in and ask, “Am I going to get a car?” and “How much time off do I get?” That’s how we’ve raised them; it’s just a different perspective.
Do I like it? Not so much. Do we have to adjust and ﬁnd a way to keep those people happy? We absolutely do or we are not going to survive. I see it as a big challenge. You have to appease them to an extent. If you don’t adjust as an organization and make your company attractive to new generations of employees you are not going to get them. Somebody else will.
Employees don’t stay with one company their entire career any longer. Now these kids come in and they will have had two or three jobs in an eight-year period. They are pretty proud of the fact that they have jumped around a little because staying in one place too long is viewed as getting stale. As an organization we have to be able to train people, bring them up to speed and expect them to move on to the next challenge. That is just the way they are wired. We are going to have to get better at hiring, better at training and retaining as long as we can. That will be tough. We have to adjust.
Whiddon: Going back to the communication path, this industry has no long-term solution. We have thousands of 2G radios we have to go replace. We have embraced IP monitoring, Wi-Fi monitoring, but there are serious drawbacks to that. The POTS line was incredible. In our area we had direct wiring and we had other solutions in case for the higher security applications, but you didn’t see a lot of phone lines cut. Now you see some, but it’s not as many as you would think. We would have a storm and unless the phone line was knocked off the side of the building, it would usually communicate. Nowadays, not so. A cellular tower will go down and you will lose a block of customers and you’ll have to immediately jump through hoops to get them on some other communications path.
The expense we are going through right now getting these 2G radios out is incredible. There are plenty of customers not willing to pay one dime more for it. And we’ll have to be back eventually to replace 4G. Why can’t the industry have a long-term solution for us? The technology is there.
Menke: One of our challenges is partnering up with a manufacturer and not having their products being sold on the Internet. It’s hard enough to compete against your competitors day to day, but then you quote things and someone can go and ﬁnd the products for the same price, if not less, on the Internet. That is a real challenge for us, especially when you get into bigger jobs. Everyone is going to shop. Corporate America has their IT guys and sometimes they think they can pull the job off. They are going to go out on the Internet and they are going to shop you right away.
It is a huge problem for us, trying to control the manufacturer and how they are distributing their products and selling their products and policing that over the Internet. We drop product lines because of it, because that manufacturer refuses to tell these people not to sell their products over the Internet.
What have you done internally as an organization to ramp up new technologies and services?
Campau: We have used the DICE automation system for 30 years. We have beefed up our central station in Jackson, Mich. We are there with our catcher’s mitt on waiting to receive all kinds of cool signals that we never used to get. We have made a $1 million investment; we have all new primary and back-up generators, all kinds of different power sources coming into our building. We like to give our customers the dog and pony show when they visit because we can actually show them why we are the best. That is how we are preparing for what I am about to tell you … wireless technology, but managed video speciﬁcally intrigues me. Our customers are relying more on our services than they ever have before. Why? Because 911 centers don’t have any money. Governments are going broke. Police departments are downsizing.
My ofﬁce is 60 miles away from Detroit. The city of Detroit, we all know, is bankrupt. Last year they implemented e-911, which is enhanced 911. I am particularly intrigued with managed video because it solves that whole issue of response. We are only as good as our response at the end of the day. So we put a lot of focus on managed video. With this technology we are providing a service the police cannot provide because there is a shortage of police ofﬁcers on the street. Detroit is requiring either a video veriﬁcation or an eyewitness before they are going to dispatch. While I am protecting my business by embracing this technology, we are protecting our customer’s property. Streaming video comes in, we identify a perpetrator, we call 911 and say we have conﬁrmed video and they [dispatch immediately].
Menke: Wireless technologies are great … video, access control, if the application is right, wireless lock. If wire can be bolted to the door, I’m not a big fan of changing batteries. But the technology has really ramped up where the batteries are getting longer life.
What I ﬁnd to be impressive that’s changed over the past few years are the different manufacturers playing outside the sandbox with other manufacturers. It’s been awesome, like ONVIF for instance. Manufacturers are ﬁnally getting it and releasing the APIs and the SDKs and making integration possible. Because we are service oriented we do a lot of different ﬂavors. That has been very impressive. That is where the industry is going; the more these companies start playing together are the ones that are going to prosper.
Stone: I am intrigued by cloud-based offerings. They have come into their own and they are solid. They have been around for a while but are more mainstream now. The business model makes a lot of sense. It is a lot easier to manage it and maintain it. It is not dispersed all over the place from a software standpoint. It’s really in one location.
The biggest challenge to ramping up for that is getting our guys trained in the IP world. We don’t have a lot of turnover as a rule, but our technicians don’t come with and haven’t had a lot of IP experience. They are taking classes; we are trying to get them there. But we have gotten to the point that when we are hiring technicians we are now looking for people to have a strong IT background. That has never been the case for us; that’s within the last year to 18 months. We have started a program at one of the state university campuses in New York where we go talk to about 100 students who are enrolled in the electronic technicians program.
Have your more traditional-minded technicians welcomed the change to IP/IT?
Stone: Some have embraced it, some are open to it. They see it as a challenge and they enjoy it. Some of them are kicking and screaming and they are not too interested. We are big enough and have enough technicians that if somebody doesn’t want to embrace it then we’ll move on to the next guy. You can’t really make them do something they are not comfortable with.
Whiddon: We are training almost on a weekly basis. There is always something new to learn. What we try to do is take advantage of Honeywell, obviously, but we have so many technicians that we have to do it in-house. Usually we will ﬁnd a handful of technicians who take almost all new products and tear it apart and then they are in charge of training the rest of the technicians and bringing them along. Things change almost daily. Twenty years ago none of us saw this coming.
In the IP world, today you have to know what you are looking at and be prepared. We have been fortunate to have a good core group of techs that embrace IP and are excited about it and eat and breathe it. It works out well for us. But for the guys that don’t embrace IP, I can still use them too. They are burglar alarm guys and that’s what they want to do. We can use them and we’re glad we have them. They are indispensable.
From a competitive standpoint, what concerns you the most right now?
Campau: IT integrators are a big threat. It’s amazing how many times our salespeople will go up against a company’s IT integrator when we are bidding. For example, the IT integrators are leveraging their inside relationship, their trust, with the business owner because they are on their network. The IT integrator looks at that manager or owner in the eye and says, “I can put those cameras in. I will tie it right into your network. I’ll put it right on your phone and your iPad.” This happens to us every day.
We are about 50% residential, 50% commercial. We are out there selling managed access, managed video, monitoring services and all that. What we are doing is beeﬁng up our IT department. We are ﬁnding [IT-savvy candidates] at career centers, career fairs, universities, junior colleges and word of mouth. Our technicians get a bonus when they bring in a person that sticks.
Stone: I have to point out the phone and cable companies. The fact that they have jumped into this business and the resources they have is something that we can’t ignore. It has forced us to be on top of our game; make sure we have product offerings that supersedes theirs’ and is better than theirs’. [Doyle Security uses Honeywell’s Total Connect interactive solution.]
We have to keep that security message top of mind. I think that we have an advantage in that we are selling security. I think most consumers trust us to be able to provide interactive and lifestyle products and services. I don’t think it is so easy for [telecoms and cable companies] to make the same point the other way. We are doing what we can to get that message out there. We are starting to do more advertising to get our message out there.
Whiddon: AT&T is gearing up right now to come into Louisiana. What we have done is we started early on trying to run commercials basically informing our customers we can control your locks and your thermostats, and we can let you view into your house, and we can let you control your alarm system. We’ve been doing that for years. A lot of the time it’s just making the customer aware that you can provide these services and products. They have been with you for 20 years — we’ve provided them a good working alarm system — but now they see this advertisement and realize they can have these new interactive features. In fact, we did it before they did. We’ve been doing for as long as Honeywell has had a product there to do it. The challenge is educating your existing customer base what you can do for them. They have to be aware of what you do.
Menke: Our biggest problem is our ideal government sale … we design, we write the speciﬁcation, especially because we play in the government space. As that moves up to the bean counter it usually goes erratic. In our part of the world it has been very competitive — the economy has been down — to where distributors get involved. Distributors might try to get a box sale and take some of that part of the business or they are going to bring in an integrator that will play with them.
It’s just keeping what we’ve done so well for so long in the same model where we start that job – sometimes these last a year or two years before it actually goes to procurement – and then you get a chance to get that job. Keeping that in our ballpark is the biggest challenge for us.
What are you doing organizationally to deal with the uncertainties surrounding Obamacare and health care in general?
Menke: We have had a very good health-care provider. We have different plans because we have different ages of people that work for us. The health-care provider usually customizes that for us. So far we are being told that Obamacare is not going to affect us. But you watch the news every night. It is confusing. There are negatives and positives being reported and it’s difﬁcult to gauge exactly what is going to happen.
Campau: I did receive my ofﬁcial 2014 health-care premiums and the premiums stayed basically the same. We have a co-pay program where the employee pays 35% of [the cost] through co-pay. So if it is a $1,000 a month, they are going to pay $250 per month toward that. My premium didn’t move for 2014. Overall net my insurance did go up but really the penalty is for the people who aren’t taking my insurance. That’s where it impacted me. When it all nets out my premium went up about 8% to 10%.
Stone: We offer health insurance at Doyle and we pay approximately 50%. We are seeing a 13% increase this year; that is what has been delivered to us so far. We have looked at the plans and are trying to offer some that have higher deductibles, higher co-pays but you can only do that so many times and pretty soon it’s not a good plan for your employees any longer.
The biggest problem that I see is if it goes up 13% and we have a 50-50 split, and we are not raising wages 13%, so our employees are getting less of a paycheck. The employees everywhere are really feeling it. They are making less money year after year after year. This isn’t a new phenomenon. It’s unsustainable. We need major health-care reform; no question about it. I don’t think what has been out there is necessarily the solution.
Whiddon: We subsidize the employees’ health insurance. We didn’t have a big premium increase either. But the biggest change I see is those young, healthy males that choose not to participate. Those guys probably have the smallest premium to begin with and then with what we cover it’s not really a lot out of their pocket, but they will be forced to pay something. And they weren’t before.
How are you speciﬁcally leveraging your relationship with the Honeywell dealer program?
Campau: The support we get from being a Honeywell CSS dealer is phenomenal. It keeps us ahead of the technology curve. We just celebrated our ﬁfth year. The regional meetings, the break-out sessions, the Dealer Development Group [DDG] is phenomenal. Networking across the country has helped me grow my business outside of Michigan. We do business in 13 states and the only way we are able to that is by partnering with other CSS dealers. The DDG sets us up if we don’t know somebody in a particular market.
They hold my feet to the ﬁre with respect to metrics. Joe [Menke] and I are on the dealer advisory board for our CSS group. Part of our mission is to better those metrics, to focus on ways to grow the dealer group around the country. We are going to put more value on being a member of the group. We are going to go out and identify people to join the group who are really good prospects.
Stone: We are in the First Alert program. I echo everything that John said. The support has been tremendous. The Dealer Development Group has been fantastic. They have trained our salespeople and have done a lot of very specialized programs that have helped us to grow for sure.
It’s about the relationships as well with other dealers. I would not have met these three guys [roundtable participants] if I wasn’t here. If I have a problem or an issue or a question, I feel comfortable picking up the phone calling somebody up and asking “what are you doing about this?” Benchmarking is a big part of that. I participated in a regional meeting earlier this year and that was very much along the same lines – the benchmarking, people putting presentations on, there was a lot of great conversation in the room. It is a lot of really good conversation, very focused on the industry. People have the same challenges. The stuff that I am battling every day, somebody else is battling and they might have ﬁgured it out better that I have.
Whiddon: We have been involved in First Alert from its inception. It lets a small, local, one-branch company attach themselves with someone much larger. You learn so much. I have learned from listening to these three guys around this table. You get out there and you start talking to hundreds of dealers [who attend the conference] and you will always pick up something. We are very lucky in our area, we have a couple of reps who are close and are always willing to help. All you have to do is pick up the phone. It has been great for us. The DDG does all of our training.
Again, it lets us attach ourselves to someone much larger. Total Connect is one example. On every sales call even if a customer is not interested, the salesman will certainly pull out his phone or iPad and show the customer the cameras at his house. This is a part of the security business now. I don’t know of a marketing piece that we have that doesn’t have [Total Connect] on it. We run it on every television commercial. We run it on radio advertisements. Honeywell did a private label for us, so instead of calling it Total Connect we call it CustomLink. Everybody gets told about it.
Menke: We are members of CSS and HIS. I’m thrilled with it. They started CSS because there was a need for the dealers that weren’t First Alert members and dabbled more in integration and not solely alarms. Over the years CSS has evolved, its more commercial. It’s just fantastic. You go from the Ademco branding to the Honeywell branding. The resources are fantastic. I couldn’t be more pleased. I leverage it for marketing as well. All the tools are there. The DDG is great.