Pro 1's Pinnacle purchase parsed

Marrying a brick-and-mortar model with door knocking has rewards, but there are challenges as well, says a company owner who uses both models.
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Wednesday, January 30, 2013

LANCASTER, Pa.—Protection 1 is not breaking new ground in acquiring Pinnacle Security assets so it can integrate Pinnacle’s seasonal selling model with Protection 1’s brick-and-mortar approach, says the owner of a traditional security company that already has added summer sales to its mix.

“We’ve had three successful years at this and my message is anyone can do this,” said Patrick Egan, president and owner of Select Security, a super-regional based here that first added a summer sales program in 2010. “Any traditional company should look at this as an additional channel when managed right.”

Egan stressed that “managed right” is the key, because he said the seasonal door-knocking approach “is a different animal.” He explained, “The rewards can be great … but I just caution, it is an entirely different compensation plan and it’s a different management style and it certainly is a different sales style.”

Protection 1 recently announced the purchase of select assets of Pinnacle, one of Utah’s leading door-knocking companies.

Repeated attempts by Security Systems News to reach Protection 1 and Pinnacle officials for comment by deadline were not successful.

But Protection 1 President and CEO Timothy Whall said in a prepared statement that Protection 1 plans to combine its “established brick-and-mortar model” with Pinnacle’s “seasonal selling model.”

“I’m flattered that Tim thought so much of the Select program that they’re copying it,” Egan told SSN.

His comment was tongue-in-cheek because Protection 1, which says it's the largest full-service provider of business and home security in the nation, is much larger than Select Security.

But Select Security has made a name for itself in the industry as a small company that has successfully married the two models. In fact, Egan is slated to talk about that subject next week at the 18th annual Barnes Buchanan Security Alarm Conference, scheduled for Feb. 7-9 in Palm Beach, Fla.

Egan said that in a presentation about Select Security, he will be talking “a little bit about how we integrated [door-to-door sales] in a very, very small way. We’ve had a very successful program and a very successful integration, and I’m making the case that small independent companies can have a door-to-door sales program to add accounts effectively and economically.”

He said that door-to-door can be more cost-effective than bulk acquisitions of existing accounts.

Egan said that if you can “go into a market, create 1,000 new accounts that are all auto debit, with no manual billing, all the same control panel, all on cellular, all with interactive, all with a much higher RPU, revenue per unit, and you can do that cost-effectively, it challenges whether I want to go buy 1,000 accounts in my backyard, arguably paying $22 to $24 a month on [accounts with] old technology that are not interactive and have manual billing. It really makes the case that says, ‘Wow!’—if you can do it.”

The “if you can do it” is the challenge that Protection 1 and other traditional companies face in entering summer sales, Egan said.

“This is not easy,” he said. For example, Egan said, “don’t expect that you can run a local ad and find someone willing to do door-to-door sales, because it’s a work ethic that is hard to find.”

He said that’s why most security companies recruit in the Utah Valley, where Egan said an ideal sales rep is a clean-cut Mormon college student with experience going door to door doing missionary work.

In 2011, Select Security opened a data entry and recruiting office in the valley, in Orem, just a few miles from Pinnacle Security and between Brigham Young University and Utah Valley University. Egan called the area “the mecca of door-to-door salespeople because of the work ethic.”

However, he said a problem with seasonal sales is that some companies have had problems with sales reps who haven’t behaved ethically. Numerous complaints have been lodged against summer-sales companies by state attorneys general and the Better Business Bureau.

Pinnacle is one example. Over the years the company has been accused in a number of states of deceptive sales practices. Last fall, Pinnacle agreed to pay a $1 million fine in a long-term settlement with the state of Illinois for such alleged violations as “slamming” customers and even hiring felons as sales reps. 

Egan said it’s not just Pinnacle with problems, but the whole door-knocking industry, which he said “has some maturity issues.” For example, Egan said, “it still is throwing out huge numbers for signing bonuses and stealing a team from here and there, and some of the remaining companies have been very aggressive.”

He said “things are going to have to change,” and standards that traditional companies have set in the alarm industry must be applied to the door-knocking model. He said Select Security also is focused on building sales reps’ loyalty by promising them long-term employment.

Egan expressed confidence that Protection 1 is up to the challenge.

“Tim Whall is a very bright guy and they obviously see the door-to-door residential program as yet another channel,” Egan said. “… It’s a very good strategy for Protection 1 to want to quickly ramp up a door-to-door sales program and that is one of the fastest ways to do it, by acquiring a management team [and sales reps].”

Also, he said, Protection 1 has a distinct advantage in having brick-and-mortar offices throughout the country. “I’m certain they’re going to direct teams where they have a concentration of accounts to add additional revenue in markets that they’re already in,” Egan said.