Is it really all about price?

Opinions vary on choosing a third-party monitoring center
Thursday, February 11, 2010

YARMOUTH, Maine—A Feb. 1 story from Security Systems News on Long Island-based third-party monitoring newcomer Mason Monitoring’s $2 monitoring offer sparked some discussion as to what is the most important thing a central station can offer its dealers. Is low cost the most important thing you can offer as a central station? As a dealer, is price the deciding factor when choosing who will monitor for your accounts?

Mason central station manager Mike Cannatella said at the time there was a lot of resistance to change and acceptance of the status quo in the security industry. “The central station business is a funny business. You have a lot of old timers who are very comfortable where they are and are happy to pay five or six bucks,” Cannatella said. “They don’t want the hassle of having to move from one central to another.”

But is it really that simple? Can one compare the different services offered by all the different companies and the different prices paid by all the different alarm installers throughout the industry and say it’s comparing apples to apples? Not according to others who felt compelled to go on the record.

Bob Harris, president of Attrition Busters, said there was more to being competitive than offering the lowest price. “It’s easy to garner business by enticing people with cheap prices. Today, very few in our industry provide any serious or tangible training on ways to maintain enthusiastic relationships with clients,” Harris said in an email interview. “Regrettably, many alarm dealers are themselves losing customers to cheap and free competitors because they too have become lethargic on ways to nurture meaningful business relationships and how to differentiate themselves on value, quality and effectiveness.”

Harris’ Oct. 8, 2009 webinar with the CSAA addressed the danger of competing on price.

Mason marketing and communications technical consultant Steven Steed said providing more for less boiled down to value no matter who your clients were, how big you were or how long you’d been around. “What motivates people to move to another company? People stick with a company that gives them value. People are creatures of habit. We’ll give a dealer a list of what they get for $2 and they’re telling me, ‘That’s more than I get now for $5,’ so basically it’s a matter of dollars and sense. It’s a matter of more value for less.”

National Monitoring Center EVP Woodie Andrawos said focusing on low cost could land a dealer with a central that wasn’t willing to invest in self-improvement. “We don’t sell on price. Dealers have to—and do—look at a lot more than price. They need to look at the central station’s ability to provide them and their customers reliable service,” Andrawos said. “It’s important for dealers to look at a central’s ability to reinvest in itself and improve itself. I’ll tell you this much: In the eight years we’ve been around we’ve had to reinvest in ourselves numerous times. You cannot compete on price and still maintain an ability to reinvest in yourself.”

C.O.P.S. EVP Don Maden said there are too many variables in play in the relationship between a dealer and their third party monitoring center to simply say lower cost means better value. “We agree that some central stations probably are overcharging some of their accounts. I emphasize ‘some.’ It’s not ceteris paribus—every alarm dealer is not created equal. Some are highly residential, some are focused on commercial and at the end of the day it comes down to how much resource you need to service a specific alarm dealer customer,” Maden said. “I don’t think you can say, ‘I’m a $4 central station,’ or, ‘I’m a $2 central station,’ and be properly charging your customers.”

Robert Cohn, president of Chicago-based Programmable Systems, Inc., an installing dealer without its own central station, agreed price was not always an accurate reflection of value. Nor was it the final determining factor when choosing a third-party central. “We’re not the cheapest installer around, nor do we aspire to be. Nor can I imagine you would want the cheapest … If you’re catering your daughter’s wedding, you could get the cheapest deal by going to White Castle, but is that what you really want?” Cohn asked. “We tried less expensive monitoring and we tried more expensive monitoring, and both weren’t as good as what we’re using now. We went with the people who kept their promises.”

According to everyone SSN spoke with, it is ultimately the market that dictates who is a success and who is not.

Maden said each account was an individual dealer with a different focus, different needs and different values. “It depends on what you value as a central station and what the dealers are looking for. For us it is establishing reliability. At the end of the day, it doesn’t even matter about the multiple sites and the load sharing and the certifications and the listings,” Maden said. “At the end of the day, at two in morning, when the alarm goes off, people are scared and they simply want to know that someone’s there to protect them and cover them.”