Dealers say: Contracts are good; relationships are better

Wednesday, March 1, 2006

YARMOUTH, Maine--Respondents to a survey about alarm-company contracts commissioned by Security Systems News in December expressed a common sentiment: A well-written contract is important, and good contracts share some common components, but even the best contract can't guarantee that a customer won't leave.
"You can not make someone stay your customer with a piece of paper. We keep our customers the old-fashioned way, by keeping them happy. We almost never lose a customer unless they move," wrote Scott McMillan, of SMC Technologies in Abilene, Texas.
What makes a good contract? Respondents offered different tips: One dealer's contract lists "60-month agreement" in type face "five times the size of the rest of the type" at the top of the page. Scott Williamson, general manager of Family Guard Security Systems in Englewood, Ohio, said "plain language" is the key. "I've only had one of my customers claim they never signed a three-year contract."
Robert Hicks of Total Protection in Palm Bay, Fla., has his customers sign their initials next to the term of the contract "then we ask them to circle the initials and the term. This helps them remember if they happen to call and say they thought the term was different."
Jerry Feldman of SecureFree Security Systems in Marietta, Ga., makes two follow-up calls after installation, one a week later and one a month later, to, "make sure they understand the system and the contract."
Among the 101 respondents, the most popular "average contract term" was three-years, at 40 percent; 25 percent said a five-year contract; seven percent said a two-year contract. Twenty-eight percent chose "other."
The vast majority (86 percent) of dealers require a contract termination notification in writing; most dealers (59 percent) do not charge a contract termination fee.
"An acceleration clause requires subscriber payment for the full term of the contract. Customers who relocate are not charged for the balance of the unexpired term. Selling subscribers are encouraged to introduce new buyers to our company," Pete Orvis of Security Solutions of Norwalk, Conn., explained.
Those whose policy it is to assess a fee do make exceptions, "We will look at each client on an individual basis when considering an early termination of contract," wrote Thomas Riggio of Inner Security Systems in Lemont, Ill.
Some dealers insist that their contracts are enforceable, such as Ira Ehrenkrantz, president of Circle Security Systems: "We lease the communicators and explain in detail to the customers so there is no misunderstanding," he wrote.
Others believe trying to hold a customer is either fruitless or not worth the effort.
Dave Moore of Medina, N.Y., observed, "My customers deal with me because of the personal relationship, not because of cost or legal arm-twisting. If they want out, I let them go. It's not worth the bad feelings caused by collections."
Gene D. Riddlebaugh, who is president of the National Alarm Association of America, and has been in the alarm business for more than 35 years, said when you send a customer to collections, "most of the time you're beating a dead horse."