Security companies, others eye growth of PERS market

Industry insiders disagree on promise of mobile PERS and whether security companies have the edge in this market
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Wednesday, February 20, 2013

YARMOUTH, Maine—With the market for personal emergency response systems projected to grow substantially in the coming years, it’s easy to see why financial analysts and security companies alike are taking an interest in it.

Fueled by factors such as an aging population, the potential cost savings for seniors who stay in their own home, and the relative resilience of the market, growth is in the forecast for PERS. However, the projections tend to belie two important points: First, that it’s not easy for security companies to enter the PERS market, and second, the market is still defining itself from a technical standpoint. 

A potential challenge to entering the market, according to Josh Garner, CEO of AvantGuard Monitoring Centers, based in Ogden, Utah, is that the barriers are not the same as those for traditional security companies.

“The biggest barrier to entry in the security industry might be technical skills, or how expensive and complex it is to start up a central station,” Garner said. “The PERS industry is not complex and not technically difficult. The biggest barrier to entry in the PERS industry is finding a market channel.”

Garner said a lot of PERS startups or companies adding PERS devices to their security offerings underestimate how difficult it is to identify and establish a market. The upshot is that these companies often end up spending a lot of money trying to find a marketing channel, but not getting anywhere because, Garner said, “they don’t find the right vein.”

This is often a function of misperceptions about whom they’re trying to engage.

“A lot [of companies] think you’re going to be selling the devices to older people,” Garner said. “But it’s more their son or daughter you’re selling to, and sometimes it’s hard to find people who qualify, people who have a parent who lives alone.”

Just as the barriers to entry are a bit foreign from a security industry standpoint, so too is the competition. Garner said that, ironically, the people he’s seeing succeed in the PERS industry rarely come from the security side.

Security companies looking to enter the market can expect not only to compete with each other, but also entrepreneurs with backgrounds in other fields, like home health care. In some ways, a background in home health care can be a competitive advantage.

The reason? Access to customer data.

“They already have a customer list and database of potential users of a PERS service,” Garner said. “This is the reason those companies are able to overcome that marketing-channel barrier to entry.”

Though less a barrier to entry than a caveat, companies monitoring PERS devices need to have call operators who are aware of the fact that non-traditional security devices can yield non-traditional security scenarios. Confusion, dementia, orneriness, anxiety—PERS operators must be prepared to manage, and often comfort, patients in such states.

This is a major part of what makes PERS devices different from traditional security monitoring. Michael Bodnar, president of Security Partners, a wholesale monitoring company based in Lancaster, Pa., said it necessitates a different approach to training.   

“It requires a radically different approach to the monitoring side of the business,” said Bodnar, whose company distributes and monitors PERS devices. “There’s specialized training we provide to our staff, and we have our own educational vehicles for partners and dealers, and we’ll touch on these items regularly.”

Bodnar added that, compared to traditional security monitoring, there is an essential human element that PERS operators must possess.

“At a very basic level, it comes down to a human factor at the core,” Bodnar said. “We have folks who live at home—seniors—who rely on us to be there for them, not only if they have a health-related issue, but if they’re feeling anxiety or loneliness or if they’re fearful for their security.”

This regard for both health concerns and security issues demonstrates the blending effect PERS devices have had on the industry, how they’ve merged some aspects of the industry with that of home health care. 

While there are currently no additional monitoring credentials required by the industry to be a call operator for PERS devices, some companies tout their EMT-trained operators. It is a claim that may look good on paper, but which Garner says is not absolutely necessary to do the job effectively.

An attribute of PERS that makes it an attractive market for the security industry is not only the simplicity of the technology, but how easily the devices can be incorporated into an existing security or monitoring operation. But as simple as the technology is, there are limitations for some of the devices, particularly for the GPS-enabled units designed for use outside the home. 

As Garner explained, it's a Catch-22. GPS-enabled PERS devices tend to be more accurate when they're "pinging" satellites, he said, but currently they're not doing this as much in order to preserve battery life. They require a bigger battery than the ones they typically have, but bigger batteries mean bigger devices, and bigger devices are less palatable to consumers. Smaller, longer-lasting batteries, Garner said, will "help solve some of the problems that have kept [mobile PERS units] from completely exploding.”

While efforts are under way to make mobile units smaller, there's a divide in the PERS community about whether sales of such units actually will grow substantially.

"My contention is that if you can in get the car and drive to the grocery store, you don't need a PERS unit," said Mark Sandler, a principal with SPP Advisors, an investment banking firm in the PERS and security industries.

Mobile units aside, Sandler expects favorable demographics to ensure that PERS devices for the home become a strong RMR boost for bigger alarm and security companies.

Still, there is nothing like a consensus here. Garner believes that, when it comes to PERS, security companies still have to prove their mettle.

“The jury’s still out, but I hope our security dealers will be successful,” he said. “There’s a couple who are very successful but some are struggling because of that barrier to entry with the marketing vein.”