NCA's Steins shoot high with rock-bottom rates

Stein's business model is to offer $9.95 monitoring with full-service alarm company back up
Wednesday, March 1, 2006

NASHVILLE, Tenn.--National Certified Alarms' father-and-son team of Jimmy and Shooter Stein say they've hit on a niche in the alarm business that's allowed them to flourish and stay independent.
At a time when large national companies are buying up many independent alarm companies, National Certified Alarms is expanding into new territories. (See related story this page.)
Jimmy Stein, chief executive officer, and his son, Shooter Stein, who was named president in January, have been in business since 1997. NCA's business model is based on cut-rate monitoring fees of $9.95 per month and a well-defined target market.
"We felt like with the step-down in prices with cable, cell phones and other industries that it was only a matter of time before the alarm industry took that hit," he said. "So we decided to go to the basement first. We say, 'We'll monitor your outhouse or the White House for $9.95 per month.'"
NCA's accounts are monitored by a third-party central station, C.O.P.S., of Williamstown, N.J.
This approach has netted the Steins 6,000 customers in middle Tennessee, 70 percent of which are conversions. NCA's customers are 80 percent residential and the alarm systems are fairly straightforward.
"We don't do complicated systems ... We want to reach mass America," the elder Stein said. To find customers, his approach is "rifle-oriented, meaning we target a small segment of the market, like a rifle shot. We don't do it broad-based like a shotgun."
Jimmy Stein said most of his sales come in over the telephone in response to radio advertisements.
Other companies have similar models, but most try to switch customers over the telephone, Stein said. This can lead to problems such as excessive false alarms. NCA technicians check out each alarm system, and make necessary upgrades or replacements, before taking on the account.
"If you convert accounts over the telephone, you leave your back door wide open to problems," he said.
Industry consultant Rich Anderson, of Phare Consulting in Boca Raton, Fla., likened the Steins' approach to the marketplace to the Wal-Marts and Targets of the world. "I think what he found is a way to under-price the rest," while providing what the public considers good customer service. "That's exactly how the Wal-Marts and Targets went into the market against the department stores," he said. "Sounds like it's working to me."