It’s beginning to get crowded in here…

Saturday, February 1, 2003

Managing Editor, Security Systems News

Take one look at our monitoring section this month (in case you missed the story on the front page) and you’ll see a few stories about new central stations opening their doors to serve the independent dealer. From Integrity Monitoring Services’ projected opening to National Monitoring Services’ incredible first year, it seems success is being borne out in the monitoring sector.

In fact, this type of news has been popping up in our monitoring pages with some regularity over the past year or so. From a slew of companies devoting more resources to contract monitoring to brand new companies popping up, this is certainly a sector that is garnering some attention.

Some involved in the wholesale monitoring realm attribute the growth to the cyclical change in the industry. When times are good, larger companies, flush with public or private money buy their smaller competitors, consolidate the acquired central stations and then suffer some account attrition to another smaller competitor as a result. Then, the smaller players thrive.

Is there room for everyone here? With estimates of the number of independent dealers hovering around 10,000 - and the penetration rates growing steadily but slowly, won’t this soon be a very crowded marketplace?

Dealers have long complained that larger companies – in all sectors of the industry – lack that personal attention given to the individual customer and that their customer base suffers from it. Is it impossible to be big and personal? Is size proportionate to the amount of customer service a company can offer?

What I have heard from many in the wholesale monitoring sector is, when dealing with your customer’s customers, service is the most important facet of your offering, the be all and end all of your business. The average alarm user, they say,needs to hear a reassuring voice on the other end of the phone when they are holding their terrified two-year-old on their hip while the alarm is screeching away at 3 a.m.

So how does a dealer pick a central station? What kind of characteristics do they look for? Are word of mouth recommendations more important or does price or special services weigh most heavily? When a larger company grows with acquisitions and is then able to offer lower prices as a result of more sophisticated technology, or lower per account costs due to higher volume of accounts, does that matter? After all, isn’t that why a company grows larger, to be able to offer more sophisticated services?

The large companies in the marketplace seem to take a beating sometimes simply because they are that, big. Does that size not work in the security industry?