Struggling central makes its move

SAI forges ahead with dealer program to recover its share of the monitoring market
Tuesday, June 1, 2004

ARLINGTON HEIGHTS, Ill. - In an attempt to push the company into the forefront of the industry, Security Associates International has implemented an authorized dealer program.
The program will purchase accounts and also offer monitoring and financing options, as well as a host of support services to participating dealers. The initiative will also give SAI the opportunity to move forward with its own goals. The company is focusing on recovering the percentage of the monitoring market it lost over the past few years.

“Our goal is to grow the business by adding higher margin, retail-type revenue,” said Ray Gross, president and chief executive officer of Security Associates. “We expect to do that, and will do that, through this dealer program where we let the dealers do their best.”

According to Gross, the program will give dealers the opportunity to focus on installations and sales while SAI focuses on providing its strengths.

Although the market is flooded with dealer program options, Gross said SAI had numerous conversations with some dealers who were having difficulty finding the financing, and the support system, they needed.

“ADT’s cutback on dealer funding had left a sweet spot in the industry with dealers who were looking for a home,” Gross said. “There is a ready market, looking for a partner.”

Gross said the program offers numerous incentives for dealers, but one of the most noteworthy is SAI’s promise not to compete with its dealers.

“They will never see a SAI truck on the street or an SAI technician,” he said. “We don’t sell, we don’t install and we don’t service.”

The approach is a departure for the company, known for playing a major role in the wholesale monitoring arena, according to John Mack, president of USBX Advisory Services.

“It certainly suggests a different strategy because they have been focused on the wholesale account side of the industry,” Mack said. “It is somewhat surprising because it requires a significant amount of capital.”

Gross said the company has raised the capital it needs for the program - through private sources - and it is enough that SAI can focus on expanding the program slowly. Even so, the ultimate objective is growth.

“Nationwide obviously is the long-term goal,” said Lou Sepulveda, senior vice president of dealer development.

According to Mack, the market has improved for dealer programs. Although ADT announced the expansion of the dealer program in March, the company may have to work hard to bring dealers onboard who were eliminated from the program during the cutbacks of 2001. For SAI, this could be good news.

“We’ve been working very hard for two years to get to this point,” Gross said. “We are very optimistic about what we are doing.”