Perhaps you are hoping to parlay your experience with other companies in the industry into the start-up of your own security dealership. Either situation may be a motivator to examine the advantages of joining a company’s authorized dealer program. Such programs are maintained by equipment manufacturers, financial services, monitoring companies and other dealers and installers.
A brand name to recognize
Sometimes the advantages of dealer programs are not immediately apparent. That was the case for Denise Mueller, CEO of Rancho Santa Fe Security Systems, San Diego. Because her dealership had been in business since 1978, she thought only newer companies would need a dealer program. However, when one in the mid-1990s offered innovative wireless technologies, she signed up with it.She recommends going with a strong brand name consumers recognize. “Now we want to have this logo everywhere and utilize and piggyback on the name recognition,†she reports. “That in and of itself gives credence to who you are.â€
Avi Dorot, president and owner of Fire Burglary Alarms Inc., Rockville, Md., agrees. He asked his 18-year-old daughter about brand names in the security industry and she only recognized one immediately.
“This is the value of name recognition, especially with harder and harder competition,†he counsels. “It makes a big difference at the end of the day.â€
Barry Simmons, president/CEO of Security Solutions Inc., Raleigh, N.C., says the best advice he can offer about dealer programs is ensuring that the one you pick has the best-known brand name in your market. “You utilize that brand awareness and recognition,†he insists.
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For the long haul
Longevity in the marketplace was the advantage sought by Craig Metzger, president of GuardMe Security, Matewan, N.J., when he shopped six years ago for a financial dealer program.
“The number-one reason we decided to go with one program was because their long-term goals were closely aligned with our long-term goals,†Metzger explains.
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Financial support
Three keys to a worthwhile dealer program cited by Preston Coffer, president of ProLine Security, Boca Raton, Fla., are: advantageous financial terms for the dealer, timely payments by the group, and support and training.“It’s good to talk about multiples and attrition or retention, but if you’re not supporting your dealer, if all you do is sign him up and turn him loose, it’s not if the group will go out of business, but when,†Coffer warns.
For security dealers who sell their accounts back to their program as he does, Coffer recommends picking a program whose requirements remain consistent. Advantageous multiples and revenue sharing also are important requirements for a dealer program, he thinks.
Coffer tried for several years to retain his own accounts, but after calculating the costs of maintaining them, he thought it would be easier and less expensive to sell them to a program.
Among financial advantages Coffer thinks are important to receive from a dealer program are aging reports, which indicate whether customers are paying their bills in a timely fashion, holdback reports and “cure†lists, which indicate that bad payers now paying their bills regularly have been “cured.â€
“This feedback I get saves me money,†Coffer points out. “They seem to understand that if you drive your dealer out of business, ultimately you are out of business.â€
“Other programs seem to think if the dealer stumbles, they can find another dealer,†he laments. “But the industry has finally realized there are only so many people like me out here. That seems financially driven, but it is as much of a philosophy as it is dollars and cents. Let everyone make a fair profit and not strangle your dealers.â€
Selling accounts to his dealer program has enabled Dynamic Security, Palm Springs, Calif., to expand into new areas like CCTV more quickly, maintains Rick Strand, vice president.
“Being paid upfront makes a great deal of difference,†Strand points out. “How do you run a business with no money? If you can sell and install systems, you’re making money within a week or two, and that’s consistent money you can count on to come in as long as you’re doing it.
“I was amazed to find out it works and it works pretty well,†Strand says of his program’s financial model. “We went from nothing to turning $1 million in our first year just from knocking doors.
“We would never have been able to do this expansion so soon, but we built a good sales staff and can pay them on a weekly basis, and you don’t keep salesmen unless you can pay them,†he stresses.
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Marketing materials with an edge
Professional marketing materials are another reason to join an authorized dealer program. Mueller’s group listens to dealers and creates innovative marketing concepts that tie into a national television advertising campaign, she maintains.If the group advertises on national television and then makes the commercial available to dealers to put their tag line at the end, “That is worth all the coattails they’ve spent nationally,†she points out. “It has the effect of us paying for all the ads.â€
John Colehower, managing director of Matrix Security Systems, Wilmington, Del., is enthused about the results from a test in which Matrix participated, which was sponsored by his authorized dealer program, by a company offering Internet search technology.
The company claims it can place security companies in the first three sponsored links on Web search engines in the dealership’s market area by identifying the area in which the search request originated.
Metzger of GuardMe also praises the marketing support he receives, which includes advertising, brochures and marketing know-how about areas of the industry in which investment has been successful.
Exclusive & discounted product
For some dealers, such as Mueller, having an authorized dealership provides discounts on equipment, early access to new designs, and exclusive models. In fact, Metzger of GuardMe is in a second dealer program because of the equipment that is available through it.To be able to offer exclusive products and be monitored by a reputable central station company makes it easy to present a security business in the best possible light to customers, Metzger concludes.
The discounts make Strand feel his dealer program is worthwhile. “You couldn’t go and buy it for what we pay for it,†he insists. “It’s a good break when you can cut your equipment costs, because that’s just profit.â€
Networking & benchmarking
Larry Matson of Matson Alarm, Fresno, Calif., praises his group’s “networking and camaraderie, meeting the dealers at our level and above it and bouncing off their ideas. It’s friendlier than meeting with [our] competitors. They try to strengthen everybody’s business.â€
Mueller agrees. “To me personally, the networking has proven to be the most valuable,†she notes.
Educational resources
Sales training is a key component of most authorized dealer programs. Simmons of Security Solutions said his program has trainers assigned to specific geographic areas. “I see a trainer in one of my offices every six to eight weeks and doing training with my folks constantly,†Simmons points out.
Strand relates that the training provided by his dealer program has helped him hire and start up new employees. “We’re adding four to 10 systems a week from firing guys up and getting them out to the field," he asserts.
A source of qualified leads
Strand’s dealer program sends his company sales leads that he maintains are well-qualified. “When we get a sales lead, we pretty much go out and sign them up,†Strand reports.The leads mostly are call-ins from the thousands of company signs in the field. “They’re real partners,†Strand says of his program.
Simmons’ program not only furnishes leads but also has partnerships with numerous companies such as the American Association of Retired Persons (AARP), insurance and real estate companies that can bring in additional business.
“These partnerships provide dealers with some reasonable ongoing lead flow,†Simmons explains.
Keep the service
Another source of income dealers who sell their accounts should consider is providing service for those accounts after they are sold.“We just took that on two months ago, and it’s an income all its own,†Strand explains. The program also pays a good rate, he maintains.
Coffer of ProLine points out that when a $100 alarm broke down and it cost $300 to repair it, historically dealers had to absorb the cost themselves to avoid losing the customer to a competitor. However, by selling accounts to a dealer program, the program pays the dealer for the repair. “That’s a windfall,†he points out.
Loyalty pays
Although some dealer programs offer benefits like group insurance, other advantages may be less tangible. Some dealers think that these advantages give them an edge over dealers who aren’t part of an authorized program.“You usually find out about [new] products earlier, and you’re closer into the loop and have a closer relationship with the management of the company,†points out Jim Coleman, president of Operational Security Systems Inc., Atlanta.
Dorot of Fire Burglary Alarms thinks that relationship with management is comforting to small and mid-sized independent security dealers but questions the practicality of it. “I don’t know if a person can have a relationship with 300 to 400 dealers, but the image somebody has in their brain is, ‘I am not alone.’ That has value,†he concedes.
Authorized dealer programs can bring a sense of exclusivity to a security dealership. “It allows you to differentiate yourself from your competition, but the more sophisticated programs start looking amazingly like airline frequent-flier programs,†Coleman concedes. “They are more programs to garner loyalty from the dealer population than anything else.
“For the integrators, if you’ve made the choice to be a dealer for one of the manufacturers, you can’t do that nonchalantly anymore – it has to be a commitment in terms of training and coming up to speed on the nuances of their system,†Coleman emphasizes. “So if you’ve made the commitment to carry a line or you find yourself flying on one of the airlines, why wouldn’t you want to sign up?â€