Should your central specialize?

Monitoring has long been a meat-and-potatoes kind of business, the solid, undisputed staple in the security industry since the day Edwin T. Holmes, a former hoop-skirt manufacturer from Boston, opened the first central station at 194 Broadway in New York City in the 1870s. But as the industry and competition for accounts grow, some companies are changing up the tried-and-true by specializing services for diff-erent verticals. Although medical monitoring companies carved out their own niche in the industry quite some time ago, some monitoring companies are taking the idea one step further and breaking out into even smaller subsets. Securitas Systems, with a central in Woburn, Mass., coincidentally based not far from where Holmes got his start, is one of them. Said Scott Hucksoll, director of national accounts, Securitas Systems USA, "The monitoring business has always been very simple, basic and very dispatch-oriented. We want to change that industry tradition, and having separate monitoring centers for retail, banking and commercial is, in our estimation, a step in the right direction." Currently, Securitas Systems is broken into three vertical markets: retail, banking and commercial. "As we grow we expect to continue to segment our business into additional verticals like petrochemical, health care, education ... our goal is to keep breaking verticals off as the business expands," said Hucksoll, though he admits, "In order to specialize, you have to be the right size--when you're small, it's necessary to have everything consolidated; you still need to have economies of scale. You've got to have the account volume to justify dedicating the personnel for each vertical market." At his company's central, "Creating this type of specialization limits the need to train each operator on every system or product that we sell across each of the verticals." Securitas Systems' operators are expected to provide technical support as well. "We pay a bit more per operator and lose some margin dollars, but we think it makes a big difference for our customers," said Hucksoll, whose company's opertors attend manufacturer trainings on alarm panels, get basic electronics training and have a troubleshooting course in addition to core training. "Specialization is our market strategy. I think the rest of the market will ultimately head in a similar direction, at minimum our competitors will segment by system type, where they're setting up monitoring centers that specialize in fire, intrusion, interactive access control, or remote video." At Rapid Response in Albany, N.Y., chief executive officer Russell MacDonnell has also found a way to segment out his business. "For many years we've segregated operations in two ways: We divide it based on operator skill level and based on the type of company we're monitoring. For high-end complex integration work, we separate into 'pods' with specially trained people. Another would be residential in a separate pod. We're going to be doing it by type of technology, as well." McDonnell explained, "Today we're seeing a lot of people get into video. And we're having to support a number of levels of video technology. You're going to see more standards in field equipment, and more sophisticated technology. You'll see centrals investing in software that make it uniform and simple for the operator." Rapid Response rarely creates a pod for just one company. Rather, it creates pods based on the type of company it's servicing or partnering with. "Three high-end commercial integrators, those are assigned to a pod, and the operators become intimately familiar with those customers because they're not answering signals from the entire subscriber base. We also have GPS technology, which requires an operator with a certain skillset to interface with a subscriber or dealer. " The plain vanilla system, said McDonnell, might be assigned to more "general experience people." "The more we can group and specialize with a smaller base of people who are familiar with the type of technology, the better. Monitronics does a mix of residential and commercial alarms, but "we have a VIP group, some of our government and corporate accounts," said monitoring center director John Ramette, "We do 30-35 percent commercial, and the VIP group is a much smaller slice of that. We separate those out with special operators who have more industry experience. We have them scattered throughout our central station so other operators can hear their conversations and get mentored by them. Most of those [operators that deal with our VIP accounts] are multi-year, more seasoned veterans." In addition, "There's a different level of attention to some of the specifics with our VIP group, special needs they have," said Ramette. "The operators' ability to communicate and understand quickly and react to specialized situations is part of their training. We do the training so that they can more fully understand why these accounts exist, their importance, and why they might be unique to that subset." Westec Interactive in Des Moines, Iowa, specializes in retail outlets and restaurants, but also has some municipal accounts."Retail and restaurants have been our bread and butter for the last decade," said Andrea Herbert, manager of marketing and communications for Westec. "Over the last year and a half, we've branched out into hotels and municipal and government buildings." Westec currently monitors around 4,000 accounts in the United States and Canada at its C3 monitoring center in Des Moines. Said Herbet, "Retail has more internal theft issues. We have a group called audit specialists, who will review video from our monitoring center and correlate with POS transactions." Westec also uses its monitoring as a marketing tool, enabling customers to study traffic patterns and end cap sales." "We have a really small attrition rate, for the most part everyone sees great value in our service--we save our customers thousands of dollars per location. I think they're all pretty happy," said Herbert. Happy clients are loyal clients, and specializing services to serve them is one way for a central station, provided it's large enough, to differentiate itself from the pack. "Clients can get lost in a giant unspecialized monitoring center with millions of other customers," said Securitas Systems' Hucksoll. "If you try to be everything to everyone, I think you're losing that specialization; you're losing the understanding of what the customer really needs."