Any ideas on possibilities for terminating a home security contract
early would be appreciated,
--Greg
>Subject: Options for cancelling ADT Security Contract
>From: gr...@livengood.com (Greg Livengood)
>Date: 19 Mar 2002 17:29:40 -0800
I think you've misinterpreted one thing. ADT ** is ** providing you with a
service.
I think what you meant to say was Since you are not availing your self of
the sevice you ....*agreed* to pay them for, you don't feel as if you should
have to pay them anymore. Unfortunately, alarm monitoring service isn't like
electric power to your home. That is .... If you don't use it ... you don't
have to pay for it. It's more like cable vision ..... even if you don't watch
TV, you still have to pay for the service. It's just that with the alarm
monitoring ..... you agreed to pay for a fixed period of time.
>
>
Jim
Remove the Qzapp to email
After you reach a certain age, there's nothing left to learn the hard way.
Yes, continue paying until Feb 2003
> The rep on the phone said that there is no possible way, but I did
> ask for her to mail me the contract. I don't use the service, and I
> would prefer not to pay ADT since they are not providing me with a
> service. Seems simple enough.
No, they ARE providing you a service, you are choosing not to use it
"Greg Livengood" <gr...@livengood.com> wrote in message
news:9cfb179f.02031...@posting.google.com...
The first is, you signed a legally binding contract and unfortunately as Jim
correctly implies, you are obligated to live up to your end of the bargain
whether you
now feel you need the service or not. Such is life; we all make choices, and
as unsympathetic as this might sound, that IS the bottom line.
The second is something that always gets me in trouble with my peers, but
something that increasingly I feel strongly about. Why did you feel you had
to allow yourself to be locked into the industry standard long term contract
in the first place ? Ok, if you didn't buy your system fully right up
front, then it is acceptable, but if you did fully purchase it, or if you
already own your system, signing a long term contract is totally unnecessary
(or should be anyway) to obtain monitoring services. In these cases, long
term contracts are
nothing but self serving "dinosaur thinking" perpetrated by our industry to
serve only our interests at the expense of customers. There is NOTHING in
it for you the consumer !! There are lots of companies around that will
provide service on a month to month basis, and the only reason that this has
not caught on (and likely never will) is because it is not to the
benefit of the industry. It puts the customer totally in the drivers seat !!
(last time I looked, the definition of a contract is a binding agreement
between two
parties to the mutual benefit of both. And there's sure nothing in it for
the customer !!)
I don't feel particularily charitable towards my own industry tonight, so
for once I'm going to say it as I REALLY feel it, and let the chips and the
flames fall where they may !! Long term contracts (provided the customer has
paid for his system fully up front) are nothing but industry self-serving
bullsh*t !! This insidious practice is perpetrated by the large companies
because they don't seem to have much faith in their ability to keep their
clients long term without one, and the rest of us go along simply because
"that's the way it's always been done". And hell, why change a good thing
when our customers
allow us to do this to them anyway? (I know all the conventional "business
reasons" why it supposedly must be done, but they don't hold any water IMO)
However, if this ever did catch on, I imagine it could only improve the
industry overall. Companies would have to pay far more attention to
their customer's service wishes, because if they didn't they would be
history "toute de suite". And frankly, that is EXACTLY how it should be !!
Give lousy service, and you deserve to lose your customers !! Give good
service and you don't need a contract to keep them !! (and yes, it really IS
that simple....)
The longer I'm in this industry, the more I see how this option is being
(more often than not) abused to the detriment of the buying public. But
nothing will ever change until that same buying public insists that it
change. And they can only do that by voting with their pocketbooks ! Real
change
will come about only when companies start to lose business to other more
"progressively thinking" companies who are prepared to provide monitoring
services without long term contracts, sure in their ability to serve their
clients and keep them happy without any strings attached.
My apologies if I sound a bit harsh, but next time shop around a little more
astutely, and don't sign one of those onerous agreements.
(and my apologies to Jim... we disagree strongly on these points, so I've
probably
just given him a bad case of indigestion....:)))))
RHC
"Greg Livengood" <gr...@livengood.com> wrote in message
news:9cfb179f.02031...@posting.google.com...
"Robert Campbell" <rh.ca...@homemetal.com> wrote in message
news:cqUl8.11940$zG....@news02.bloor.is.net.cable.rogers.com...
Dean
Dean & Barbara
1988 Cherokee
1999 Grand Cherokee
2001 Coleman Timberlake
2 Girls, 2 Dogs
WaveM...@yahoo.com
The only point on which I disagree with Robert is that I believe that the
widespread use of long-term contracts will decline in the future, being used
mainly for those customers who want a "free" system. As more and more
alarmco's wake up and realize that providing customer service is the way to
prosper, more will eschew the long-term contracts and the others will be
forced to fall in line. The public will demand it.
The big boys are interested only in gaining accounts, and will probably
never change. People who are serious about security and want excellent
service will begin to realize that they need to move away from them.
--
Jack Stevens
alarman2...@yahoo.com
remove NOSPAM to reply
"chu" <secu...@rose.net> wrote in message
news:u9gbu9b...@corp.supernews.com...
I recently ran into trouble because one of my customers defaulted on a very
large camera system installation. I needed money in a bad way. I went to
the bank and borrowed against my contracts at 60% of their value. Without
contracts you can't do that. So as a business, it is in your best interest
to use long term contracts. This is one more way that your customer is
guaranteed that you will be around another twenty years to provide your
excellent level of service.
While I am giving out advice, another thing I learned the hardway is to
ensure that all my accounts are programmed to dial numbers that I own. This
keeps the accounts as mine and makes sure that the monitoring station that I
use can't jerk me around. For example, I plan to have one phone line per
100 accounts. The phone line is then forwarded to the monitoring station of
my choice. If I want to change monitoring stations, I just change the
number the MY phone lines are forwarded to. I can download the account
numbers should they be in conflict at the new station. This also saves me
the trip to the premises to physically change anything. I only mention this
because my current monitoring station wanted to raise my wholesale
monitoring rate from $4.00 to $7.00 on the first of April. When I told him
I was moving all my accounts away on that day, he changed his mind and asked
my to pay $5.00 which I agreed to.
Cheers!
"Robert Campbell" <rh.ca...@homemetal.com> wrote in message
news:cqUl8.11940$zG....@news02.bloor.is.net.cable.rogers.com...
I had my accounts at a CS that was sold to Holmes and subsequently to ADT, I
swung my accounts to a new CS and notified all my customers of the new CS
number in a mailing and on an insert with every invoice, some five years later
I still have the occasional irate customer call asking when and why I sold to
ADT, why I didn't tell them and how come ADT claims that they don't monitor my
alarm but they still dispatched the police.
Doug L
Robert (Skinner)
I prefer not to pay the 800 charges though so I have my trusty Microsoft
Office to manage my mailing list so with the click of the button I am
printed and ready to mail. I would guess that I would have at least thirty
days to warn my customers of the changes. I would go with your idea if I
get much bigger. (I hate to increase overhead)
"VSS DOUG" <vss...@aol.com> wrote in message
news:20020320124036...@mb-cr.aol.com...
Nor do I need capitol to run my business. Since I get all my system sales
money up front, I have oodles of cash for anything I need so it matters
naught if I am unable to use the accounts as equity. If I did need cashflow,
any of my wholesalers will carry me for 30 days interest free, since they
know they will NEVER get jiggered !! My market niche is also such that I
will never need a large amount of cash to buy the equipment needed to
complete
any job. Those kind of jobs I would likely "pass" on anyway as too big to do
properly.
I'm also getting pretty picky on types of jobs and even the types of
customers I take on, since I have
far more work than I can handle as it is, and it only seems to be increasing
!!
At the risk of sounding somewhat arrogant, while the rest of the crowd
around here are fighting amongst themselves for accounts they can put under
long term contracts, I'm swamped with work from more astute shoppers who
know a far better deal when they see one.
As the saying goes, there are many ways to skin a cat !!
RHC
"Robert Skinner" <rgsandas...@sympatico.ca> wrote in message
news:WO2m8.14146$Ff3.1...@news20.bellglobal.com...
I have had offers by other companies to purchase my contracts. They have
offered me between 20-25 times the monthly multiple for all my customers
that were under a fresh contract. The offer for monthlies was $.50 on the
dollar for one year. For me, I would like to have the contracts but still
offer the small dealer approach.
I don't think that either of us is wrong, just different. I can see and
respect your view.
"Robert Campbell" <rh.ca...@homemetal.com> wrote in message
news:Iz7m8.4807$_L....@news02.bloor.is.net.cable.rogers.com...
I can fully understand those other companies offering you the rates they did
based on the contract terms, because they too are caught up in the
traditional way of thinking. Nor is my way of doing it for everyone. I
can't ever see the Borg doing this; it would bankrupt them, and / or their
"bean counters" would have a heart attack....(grin)
I suspect for most dealers, your approach would generally be a better way to
go. I have been asked by clients to have them sign a long term contract, but
I always decline their offer. After I explain things , they generally see my
way, and quickly realize there is nothing in it for them. The one client who
didn't (and he was a real odd duck), I sent to another company. The only
time I'll ever offer a "low up front price, long term higher contract" is
for selected clients who I know well, usually have about a dozen systems
from all their relatives, and they may be opening a small business for
themselves. As a favour to them, I do it, but only as a "lease to purchase",
and only after explaining how much more this will cost them in the long
run......
I would much rather have less per month coming in regularily (with more
business than I can handle), than go the traditional way with more coming in
each month (but have to continually fight tooth and nail with the 300 other
dealers in town). Also, good honest dealing with clients gets you the very
best word of mouth referrals regardless of contract term. But if you offer
month to month, they will really beat down your door......
However, as you say Bob, there are many "different strokes for different
folks"..
Regards,
RHC
"Robert Skinner" <rgsandas...@sympatico.ca> wrote in message
news:348m8.16510$V94.1...@news20.bellglobal.com...
It sounds like you had originally signed up for service other than ADT. ADT
has a habit of buying out smaller companies and then applying thier standard
practices to customers of the old business. For example, we had a customer
that bought a system from what was a small company, that over the course of
a year got bought out twice, the second time by ADT. The first time was with
a mid size company.
When the customer decided they didn't want ADT, they were sent nasty grams
and threats telling the customer that ADT owned the equipment. etc. when in
fact the customer paid for the system originally.
If this is the case, you may have a case, as when you signed up, you didn't
purchase ADT, but another companies service. If ADT bought this company
out, I think ADT has to legally get you to sign a contract to make it
binding.
If your original contract shows ADT as the service provider than you are
probably stuck with the arrangement.
Doug @ TEC Controls
"Greg Livengood" <gr...@livengood.com> wrote in message
news:9cfb179f.02031...@posting.google.com...
I'm familiar with the terms of the sale of a large monitoring company,
which had only month-to-month terms with its dealer-customers. The owners
got a respectable multiple for the accounts, but the catch was in how the
owners got paid: each month, the buyers counted up the cash the dealers
had actually paid them for the accounts that were on line on the closing
date, and then they gave half of that to the sellers. Needless to say, it
will take many years for the sellers to get their money, one monthly
payment at a time.
I think many buyers probably would rather not bother with such a long,
drawn-out payment program. And anything that reduces the number of buyers
will tend to depress the prices actually paid.
There are cases where companies with month--to-month accounts get sold for
a considerable amount of money--cable systems and telephone companies, for
example. But my sense is that only very large operations get sold that
way. The small dealer trying to sell a couple hundred accounts is not
likely to be able to make that kind of deal, because he doesn't have a
sufficiently large customer base to have a valid track record on things
like cancellations.
More importantly, the finances just don't work when the seller has month to
month contracts. Buyers often like to use borrowed money to fund their
acquisitions. Even ADT and Protection One do this. The bankers want to
see collateral for those loans. That collateral can be contracts, or it
can be the assets of the buyer. If the funding is dependent on the assets
of the buyer, the number of accounts a buyer can acquire is limited--and if
that same buyer is also doing month to month contracts for their own
accounts, then they can't borrow money on those accounts to fund their
acquisitions.
So month to month contracts limit the amount of funds available for
acquisitions, which means only cash-rich buyers can buy alarm companies.
Again, that limits the number of buyers and depresses the prices that will
be paid.
Now you may argue that all of this is irrelevant, that what really matters
is what's best for the consumer. Let me be blunt: I'm more important than
the consumer. I am not operating an alarm company out of a sense of duty
to the public; I am operating it to make money and provide for my own
future financial security and that of my family. I provide a quality
service and try not to take advantage of my customers, but ultimately, I
come first. When it comes time for me to sell my company, I want to get
PAID.
Suppose you have a company in a few years that has 1500 accounts, paying,
say, $25/month on average. Your MRR is $37,500. If you have contracts,
you might be able to sell for 30 times your MRR. That's over a MILLION
DOLLARS in your pocket.
Or, since you're on month to month contracts, you could send all your
customers a letter saying you're going out of business next month and go
find a new alarm company. That'd be throwing money away, of course. Or
you could sell your company, if you're lucky, for more like a 15 multiple.
Are you willing to throw away half a million bucks in the name of being
contractually nice to your customers? Not me, pal.
- badenov
Historically, I don't doubt what you say, but I choose not to lock my
clients in for many reasons, and the appeal of some sort of future huge
settlement amount would never convince me otherwise. If I were to be quite
honest about it, I would have to admit that making the most amount of money
in this business is not one of my prime motivators. Also, too much can
happen in this market to ever be able to look that far ahead with any
reasonable prediction of future monies to be gained. Frankly, I'd rather be
beating clients away from my door now, than be fighting with all the other
dealers out there that only squeak along because they adhere to restrictive
policies like long term contracts when they are not necessary. I see masses
of dealers only able to sell one account a week (if they're very lucky)
while I'm averaging 4 to 5 a week that walk in the door to me with no effort
or cost on my part (and I'm no better salesman than any of them are, nor am
I a better installer or businessman). I ask every client why they chose me,
and invariably it's either because of a referral, or because they like what
they saw on my website. And in virtually every case, they also like the
relative "freedom" of not being restricted by a long term contract. Most
have had a taste (or two) of the mass market bullsh*t artists from the Borg,
and have become completely turned off by it.....
As far as all the discussion of "acquisitions" and acquistion financing -
that's all very nice, but has nothing to do with running a "mom and pop"
operation. If I had wanted to be in a position where I had to be concerned
about such things, I would have taken my partner's advice 10 years ago, and
joined him in a major financial enterprise in this business. I have no
doubt, we would be one of the largest security companies in Ottawa today had
we done so. However, I didn't see that in my future then, or ever (having
just come from upper middle management of a large corporation where I was
completely turned off by such things - call it a life turning point !!)
On the face of it, what you say makes good sense, and I genuinely hope it
works for you and others who choose to go that route. However, should I do
so, it would begin to make me just like any one of the "faceless hundreds of
dealers" locally who drift in and out of this business monthly because they
have not been able to find any "niche" to sell in better than anyone else.
It could also be argued that if I joined them, I wouldn't even have the
accounts I now have to worry about !!!!!
Thanks for the sage advice, but I'd rather have major monies now, than hold
out for some future dubious "buyout"...
At my age, life's far too short for that....as the old Schlitz beer ad
said..."live life with gusto, because you only go around once".....
Besides, I've yet to see a burial shroud with pockets in it !!.....:))))
RHC
"Nomen Nescio" <nob...@dizum.com> wrote in message
news:e72eeddc7c6236f2...@dizum.com...
"Robert Campbell" <rh.ca...@homemetal.com> wrote in message
news:w9cm8.20679$oG11....@news01.bloor.is.net.cable.rogers.com...
Holy Mackerel, Bob... I hear you about the pockets in burial shrouds but
where do you find the energy to keep the missus happy?
She can cancel too ya know...and there goes that other half a million.
"Robert Campbell" <rh.ca...@homemetal.com> wrote in message
news:w9cm8.20679$oG11....@news01.bloor.is.net.cable.rogers.com...
This business is more fun than any other I can remember (and I've had a
few...). Truthfully, I don't look forward to the day when I must give it
up.....
RHC
"Mike Dupre" <mdu...@medi-call.ca> wrote in message
news:2Mlm8.391$nO....@news01.bloor.is.net.cable.rogers.com...
As you suggest, lets hope that consumers wise up and start to force the
issue.....
RHC
"J. Stevens" <no...@nothanks.net> wrote in message
news:un2m8.36780$Es6.1...@news2.west.cox.net...
One thing that usually happens in any open market is that
> practices which untimately are not in the consumers best interests
> ultimately disappear through competitive forces.
Exactly. We're just ahead of our time. :-)
>Subject: Re: Options for cancelling ADT Security Contract
>From: "Robert Campbell" <rh.ca...@homemetal.com>
>Date: Thu, 21 Mar 2002 23:38:22 GMT
>
>Jack, I hope I am wrong and that you are ultimately right ! But its hard to
>believe that any industry will ever willingly give up something that is so
>obviously in their own self interest, regardless of it's negative options
>for customers. One thing that usually happens in any open market is that
>practices which untimately are not in the consumers best interests
>ultimately disappear through competitive forces.
>
>As you suggest, lets hope that consumers wise up and start to force the
>issue.....
I think your premise has a flaw, in as much as most people don't by a number of
alarms systems so that they would gain experience in demanding short term
agreements. Most people will only have one or two alarm installations in their
life and if all the companies they contact, only offer long term contracts,
the majority of end users will sign. In other words, they can demand all they
want, but if they don't find the one company like you, who offers a one month
contract, they'll sign a long term. One little guy out there who is offering
only one month contracts may be able to make that particular sale and be able
to clean up after the fall out of people with bad experiences but ...... you're
only one person. You have to agree, that there are few that share your views.
So there isn't going to be any pressue on the rest of the industry to do what
you are doing.
Since the equity part of this business seems unimportant to you it's
understandable that you can thrive by feeding upon the transgression of the
mass marketers.
In any given area, one or two like you will not make any difference at all. To
think that the majority of alarm companies will forgo the equity of their lifes
work or will not be thinking about the day that they cash out of the industry
is silly. Not many would be willing to risk that just because one little guy is
out there doing what you do. If ANYONE **could** afford to do it, it would be
the big boys. But .... they'd never risk it and of course they couldn't do it
and offer "free" systems, anyway.
Robert, you've certainly found a niche, but your "hope" is simply..... just
that. You've said it your self, that you are not interested in selling in the
future and that you have other resources for retirement. So it's an easy
decision for you to make. Not so easy for the remaining 99% who are not in that
position.
Cynically speaking but true none the less, greed, of one sort or the other, is
what makes the world go round. You can have to much of it or too little.
Neither is of those two choices is correct as it is proven to lead to a demise
of some sort. Having just enough to keep the machine running is the trick and
everyone has their own measure.
RHC: There is no doubt that the majority of companies sign clients to long
term contracts for all the reasons you mention, plus the fact that "that's
the way it has always been done". Nor would I suggest that most companies
jump in and start doing it either; equity from years of labour IS important
to most company owners (whether or not what they feel the future holds comes
true or not).
They are not in the same position that I am in. That is why I stated
earlier, this is not the best option for most companies.
HOWEVER....it IS the best option for the customer. As such, as time goes on,
and competition heats up, more and more companies WILL go this route, if for
no other reason than it gives them a competitive edge over others demanding
long term commitments. Such is the effect of the forces of razer sharp
competition in a maturing marketplace.
I live in an area filled with affluent, high tech types who do
move a great deal. Several of my clients are on their fourth system as they
continue to buy new homes and come back to me for new systems. Many others
are on their second system for the same reason. These people talk to each
other; they are very sharp consumers, and word gets around either by word of
mouth or internal company news groups. This may not be the norm in the
country generally; however, I am not the only company doing it by far (in
this area anyway). Since its probably only the little guys who choose this
option, you're not likely to hear of them in the marketplace, since most
don't advertise, and thrive largely on word of mouth referrals. They simply
don't have the visible
presence of the ADT's, Voxcom's or Protection One's of the world who command
most of the public's attention, and who don't practice this way of operating
as we all know. But the little guys ARE there, and IMO this practice will
increase. And the consumer will be the ultimate beneficiary of it....
>
Jim: Since the equity part of this business seems unimportant to you it's
> understandable that you can thrive by feeding upon the transgression of
the
> mass marketers.
RHC: I don't exactly "feed upon the transgressions of the mass marketers" by
any means. Their approach simply highlights to thinking consumers that there
are other ways to go than either the "free system" approach, or both paying
a
full price for the system AND being locked into a long term contractual
commitment. And after ADT has come knocking on their door during dinner hour
one too many times, most are looking for ANYTHING else but that sort of high
pressure salesmanship. So people like this are then very responsive to the
same approach you and I take - one of straightforward selling based on what
is best for the client, not what is best short term for our pocketbooks !!
Jim: In any given area, one or two like you will not make any difference at
all. To
> think that the majority of alarm companies will forgo the equity of their
lifes
> work or will not be thinking about the day that they cash out of the
industry
> is silly. Not many would be willing to risk that just because one little
guy is
> out there doing what you do. If ANYONE **could** afford to do it, it would
be
> the big boys. But .... they'd never risk it and of course they couldn't do
it
> and offer "free" systems, anyway.
RHC: Agreed for the most part. However, the Borg wouldn't do it for lots of
self serving reasons that we've been over before. And we are not talking
here about the "free system" sales - only those situations when the customer
buys it outright
at the beginning AND still must sign a long term monitoring contract - a
double
whammy !!
>
Jim: Robert, you've certainly found a niche, but your "hope" is simply.....
just
> that. You've said it your self, that you are not interested in selling in
the
> future and that you have other resources for retirement. So it's an easy
> decision for you to make. Not so easy for the remaining 99% who are not in
that
> position. Cynically speaking but true none the less, greed, of one sort or
the other, is
> what makes the world go round. You can have to much of it or too little.
> Neither is of those two choices is correct as it is proven to lead to a
demise
> of some sort. Having just enough to keep the machine running is the trick
and
> everyone has their own measure.
RHC: I don't disagree with you about doing what is in your own best self
interest. That is only human nature, and frankly can be a good thing from a
personal perspective as you say provided it is tempered by common sense and
good business ethics. But market forces are constantly changing,
as are the concerns and buying habits of consumers. Most who sell my way are
by nature small companies who have no large presence in the marketplace. As
such, by their
very nature they are somewhat "invisible". Changes take place very slowly,
but word will get around eventually, and those who sell the "old way" will
start to take a hit. Maybe not in my or your business lifetime, but it will
come, if for no other reason, than it is in the consumers best
interest.......
I've often mused that I could set the industry on its ear up here by taking
a large one page ad in the Ottawa Citizen explaining some of these facts to
the buying public. It wouldn't be hard to simply copy a lot of what is on my
site, add to it a bit, and tell it like it really is. However, an ad like
that for one publication for one day costs $50,000, so there we have the
dilemna. Anyone who can afford to do so, really has no self interest in
doing it. And the little guys like me, who have an interest in doing it,
can't afford it...... So the public never hears it .......
Ah well, this has become a bit of a circular argument. Those who do it will
continue to do it for competitive reasons or because they feel they have the
best interests of customers in mind. Those who don't do it likely will never
be persuaded to do for, for reasons of perceived loss of equity. If the
buying public never pushs for it, then nothing will ever change......
I don't know about you, but my crystal ball is pretty murky these days......
Regards,
RHC
Sorry for the delay in answering this. I've missed some posts and some are
coming through out of order, if at all ....... the last few days.
>RHC: There is no doubt that the majority of companies sign clients to long
>term contracts for all the reasons you mention, plus the fact that "that's
>the way it has always been done". Nor would I suggest that most companies
>jump in and start doing it either; equity from years of labour IS important
>to most company owners (whether or not what they feel the future holds comes
>true or not).
>They are not in the same position that I am in. That is why I stated
>earlier, this is not the best option for most companies.
That, I feel, is the primary factor in your decision to take this approach.
>HOWEVER....it IS the best option for the customer.
I can't disagree with that.
> As such, as time goes on,
>and competition heats up, more and more companies WILL go this route, if for
>no other reason than it gives them a competitive edge over others demanding
>long term commitments. Such is the effect of the forces of razer sharp
>competition in a maturing marketplace.
That's where I think you are wrong. Think about it now. Here you've got two
people starting out in a first venture business. One has his investments and
retirement pretty well secured. The other person (more commonly) doesn't. If
the second person has to decide whether to offer short term contracts that will
just give him cash in and no equity or .....offer long term contracts and still
is able to do business PLUS .... build up his equity ......... What's he gonna
choose? Sure .... short term is great for the end user but weighed against the
loss of the equity ...... bad choice if he goes short term.
Other trades people look at the people in the alarm business with total envy
because *they're* working their ass off, every day, bringing in the cash, and
paying the bills. And after all the years of doing that, they got a thriving
business going and when they want to retire ...... the company is only worth
the "good will" that has been generated. Every carpenter, electrician, mason,
etc, would give anything to have the kind of equity we have in our businesses.
HVAC and Telephone systems installers do the same thing we do.
Now here's a thought. IF this same second little guy used the "short term"
tactic to break into the business, build up a base of accounts and then
gradually began getting longer terms on his agreements ...... now THAT ....
would be a great way for someone to quickly rise in a locality and also achieve
some long term security.
But for some one to just do it and keep doing until ..... at the end they have
.... relatively ..... little ... compared to what it could have been worth
...... just because "it's the best option for the customer ........." That's
a bad business decision.
>
>I live in an area filled with affluent, high tech types who do
>move a great deal. Several of my clients are on their fourth system as they
>continue to buy new homes and come back to me for new systems. Many others
>are on their second system for the same reason. These people talk to each
>other; they are very sharp consumers, and word gets around either by word of
>mouth or internal company news groups. This may not be the norm in the
>country generally; however, I am not the only company doing it by far (in
>this area anyway). Since its probably only the little guys who choose this
>option, you're not likely to hear of them in the marketplace, since most
>don't advertise, and thrive largely on word of mouth referrals. They simply
>don't have the visible presence of the ADT's, Voxcom's or Protection One's of
the >world who commandmost of the public's attention, and who don't practice
this way >of operating as we all know. But the little guys ARE there, and IMO
this practice >will increase. And the consumer will be the ultimate beneficiary
of it....
You just gave a whole bunch of reasons why it wont happen and then come to the
conclusion that it WILL happen? I'll say it again in another way. Any business
that favors the client to the detriment of the business ..... that's a poor
business decision. And don't get me wrong here ...... remember ... I agreed
with you, that it's a "good" decision for you because it won't be a detriment
to you. Any other rational business man, having to make the decision between
the well being of the client at the expense of his future and picks the client,
says that he's probably not making other good business decisions either and
won't last or if he does, will regret making that decision.
Even as much as I will get for my business after so many years, now that I look
at the expenses of living and my (hopefully) life expectancy and all the things
that I'd like to do after retirement ...... I wonder if there will be enough to
continue the life style that I'm used to. Seems no matter what you've estimated
as a reasonable amount when you are in your 20's and 40's, by the time you
reach your 60's .... what you thought was alot of money ...... ain't so much.
The point is ..... if someone has the opportunity, such as we do in this
industry, to gain a little edge and a greater financial security in our
retirement, by damn ..... do it. Anyone who doesn't .... solely for the sake of
the client .... and could have .... will certainly regret it.
>> Jim: Since the equity part of this business seems unimportant to you it's
>>understandable that you can thrive by feeding upon the transgression of the
>>mass marketers.
>RHC: I don't exactly "feed upon the transgressions of the mass marketers" by
>any means. Their approach simply highlights to thinking consumers that there
>are other ways to go than either the "free system" approach, or both paying
>a full price for the system AND being locked into a long term contractual
>commitment. And after ADT has come knocking on their door during dinner hour
>one too many times, most are looking for ANYTHING else but that sort of high
>pressure salesmanship. So people like this are then very responsive to the
>same approach you and I take - one of straightforward selling based on what
>is best for the client, not what is best short term for our pocketbooks !!
>
Oh, I certainly agree with you about the sales approach, there's no question
about that. But, you can't tell me that if you were to use the sales skills
that I know you posess and experience and installation skills that you
apparently have ....and offered all that, with at least a one year contract
..... that you still would walk away with sufficent work to keep you out in
front ...... AND be building equity also ..... Again, that is, if you
needed/wanted it.
>>Jim: In any given area, one or two like you will not make any difference at
>>all. To
>> think that the majority of alarm companies will forgo the equity of their
lifes
>> work or will not be thinking about the day that they cash out of the
industry
>> is silly. Not many would be willing to risk that just because one little guy
is
>>out there doing what you do. If ANYONE **could** afford to do it, it would be
>> the big boys. But .... they'd never risk it and of course they couldn't do
it
> >and offer "free" systems, anyway.
>
>RHC: Agreed for the most part. However, the Borg wouldn't do it for lots of
>self serving reasons that we've been over before. And we are not talking
>here about the "free system" sales - only those situations when the customer
>buys it outright
>at the beginning AND still must sign a long term monitoring contract - a
>double whammy !!
It's only a "whammy" if you tell them it's a whammy. Obviously, if you *play
up* the short month to month agreement AND offer them the best system ......
what are they going to do .. (?) say "nah ...... I'll take your system but I
want a reeeeellly long contract" (?) Of course they're going to take you up on
it. If they're the techie thinking people that you say they are, ... they're
not getting away from the Borg because they have a long term contract ......
they want a good reliable, comprehensive system. Installed by someone who
*cares*. Someone who's the same guy that they'er talking to. Who's got all the
answers and will personally take care of them. THAT's what they're buying. Once
you've sold that and if you were to say ..... Oh and by the way .... I only
require a two year contract ...... what do you think they'd say? YOU're the
one that's putting the emphasis on the one month contract. I'd bet if you never
mentioned it, every person you did a sales presentation to would exect a longer
than, one month agreement and you'd hardly get a blink from anyone if you told
them you requied a one or two ..... or even three year agreement.
As you know, I require a five year agreement because that's the going term in
this area. There are some who routinely offer less but they are in the
minority. As far as I know, I've never lost a sale because of the term of my
agreement. As of late, I'm filtering sales by raising my prices, just so I can
do the cream of the crop jobs. But even with the proliferation of the Borgs I
still get my five year agreements signed. Oh and I understand that a number of
the big guys have reduced their term to 3 years. But once I tell the client
what they're going to get from me and what they're not going to get from them
...... I get the sale. And ...... If I've got the choice between getting the
sale with a five year agreement and a one month agreement ...... guess which
one I'll take? Under certain conditions and/or if I really want the job, and
they "need" a lesser term. Or, if they ** ask ** ..for a lesser term ....
"Well let me see now there *IS* a "minimum" ( my minimum) term of one year
that can be allowed but ..... following that .....all agreements are for a five
year term" (said, matter of factly) I can understand someone's (depending how
strong the referral was) possible reluctance to go five years at first. But as
soon as the year is up ..... they get renewed for five years .... no less. No
one has ever cancelled, either. Why? for the same reasons your accounts don't
cancel. Show up on time. First tools in are the drop cloths and the vacuum
cleaner. Good clean installations. Client asked to get involved with making
decisions on where to put things. Care and concern about furniture, curtains
blinds and drapes. Don't track dirt in on your shoes. No finger prints on walls
or windows. Up to two hour training. Follow up telephone calls after the
installation. Trial period hookup to central so everyone can get used to
talking to central. Newsletter keeping them informed of the latest and of
changes in the industry. Always get back to them quickly when/if they should
call. You know .... all the things that you do for your clients. Only I have
the equity of five year contracts ...... and you don't.
That doesn't make a hill of beans. If the companies don't sell it ..... the
consumer can't buy it. And any company that does sell it, with out other
resources for retirement, is a fool. As long as that's the normal state of
affairs or until another source of income occurs it will remain that way.
By the way, you realize that your "method" is exactly what this industry was
like years ago, before monitoring became a source of revenue. The alarm trade
was just like every other trade. Everyone went out every day and sold and alarm
and installed and alarm and sold an alarm and installed an alarm. And at the
end of your career you had ....... sold and installed a lot of alarms. Back
then .... leasing alarm systems was the pot of gold. Only those companies that
leased systems were the one's who continued and became prosperous. The
companies that didn't, just disappeared when it was over. So .... the
continuous stream of income and the equity in installations is an ingrained
process and in fact is a necessity .. and .... call it tradition, if you
will, (but it's much much more than that) that is not going to go away.
>
>I've often mused that I could set the industry on its ear up here by taking
>a large one page ad in the Ottawa Citizen explaining some of these facts to
>the buying public. It wouldn't be hard to simply copy a lot of what is on my
>site, add to it a bit, and tell it like it really is. However, an ad like
>that for one publication for one day costs $50,000, so there we have the
>dilemna. Anyone who can afford to do so, really has no self interest in
>doing it.
Of course not. Any who could afford it, didn't get there by doing such an
unprofitable thing. So why would they ever even consider it?
>And the little guys like me, who have an interest in doing it,
>can't afford it...... So the public never hears it .......
Yep.... that's my point.
In a like manner, I've wondered what would happen if some one got a big panel
truck and put a great big message on it that said:
ALL ALARM SYSTEMS HOOKED TO TELEPHONE LINES CAN BE DEFEATED BY CUTTING YOUR
TELEPHONE LINE
And below that advertise:
WE CAN ELIMIATE THAT PROBLEM
WE USE CELLULAR ALARM HOOK UP ONLY.
CALL US AT .....
I know I'd sell every system I quoted on. That is ..... for as long as I could
get away without getting shot by someone in the business :->. Now if you want
to do something unique in your area ..... you oughta try that out. I'd bet you
could get a five year contract on every system too. :-) Because everyone would
THINK that was a great deal. And why? Because that's what you sold them on!
Exactly what you are doing with the one month agreement. It's the "kicker" the
clincher. After all you say you're going to do for them ......that's what put's
the sale "in the bag" But .... only from "your" point of view. They'd probably
buy if from you no matter what term you asked them for.
>
>Ah well, this has become a bit of a circular argument. Those who do it will
>continue to do it for competitive reasons or because they feel they have the
>best interests of customers in mind. Those who don't do it likely will never
>be persuaded to do for, for reasons of perceived loss of equity.
I don't know how it is where you are but around here if you go to a alarm
company sale and someone doesn't have long term contracts ...... they get less
money for their accounts. ...... No doubt about it ..... thats a fact. In the
face of that .... any one who doesn't do it ..... designs their own financial
fate.
> If the
>buying public never pushs for it, then nothing will ever change......
They can't push for it when the majority wont offer it.
>
>I don't know about you, but my crystal ball is pretty murky these days......
I'm beginning to think that it's not a murky ball at all.
Damn tri-focals.
>Regards,
>RHC
Your post is an excellent, well thought out rationale why it is
probably wise for most companies to go the long term contractual route. It
is not my intention to respond to your every thought here; frankly, that
would be difficult, since I do agree with most of what you say looking at it
strictly FROM YOUR PERSPECTIVE. However, not everyone sees their business in
quite
such hard and fast ways, constantly building to an eventual sale as
inevitable, and
with its value based on such tangibles as contractual terms. The only point
where I strenuously disagree with you is that a business direction based on
any view other than a more or less selfish "end of business" self worth
assessment amounts to a "bad business decision". Every business worth it's
salt should start with a business plan that details where you want to end up
and what you intend to do to end up there. Where most intend to end up is
not necessarily where I want to go...
Perhaps our different approaches comes about more from how we got into this
business. You got in up front (I'm assuming) to sell electronic security
services in the conventional manner, and make a decent living for yourself.
I suspect
this approach mirrors how most people in this business entered. I did not
come in this way; instead, I entered it via the back door as a
semi-retirement business after a full business life of 27 years in a large
corporation, where I got angry and frustrated with the daily politics,
equivocation, moral compromises, and all the other sh*t that large
corporations are full of today. So even before I left, I swore I would run
my next business in the manner I saw fit, with the customer as my main
priority, rather than always being concerned about the bottom line at his
expense.
Perhaps naively, I thought (and still do think), that if I look after the
customer, they will look after me (in a manner of speaking). I had several
other businesses before this (even while working within the large
corporation) both of which were successful to a degree. However, they were
conducted at a time of my life where I didn't have my priorities in the same
order as I now do, and simply mirrored the same approach that I had to adopt
within middle management of this large corporation. As a result, they were
never more than a moderate success in both cases, and left me "unfulfilled"
(to use a modern
"yuppy" term.......)
So when I finally got smart and left, and extended my then sideline
locksmithing and window security bar
business into electronic security, I actually studied the business carefully
before
deciding upon the rates I was going to charge, and the policies I was going
to adopt. I chose to set myself up in a specialized niche where I could
easily excel against my less flexible competition. I also did a professional
cost assessment of a
typical alarm sale (using the same complex accounting tools we used in the
telephone company to set
rates), and looked at all the practices and contracts used within the
industry. One thing that became immediately evident was the stupidity of a
small entrepreneur entering the "free system" market without the very deep
pockets of someone behind him. The other was the totally unnecessary
practice of locking clients into long term contracts even when they weren't
amortizing the equipment in the monthly rate.
It offended my sense of fair play and still does !! A contract is by
definition an agreement between two parties whereby each guarantees the
other something in exchange for something of like value. A typical long
term monitoring contract is TOTALLY one sided in favour of the alarm
company. There is NOTHING - I repeat - NOTHING in it for the end user
customer !! And over the years, no one has yet to come back with a single
argument that holds water from the customer's perspective. Arguments that it
ensures one's business survival so one will still be around tomorrow to
service those accounts is not IMO a valid excuse to continue an industry
self serving practice that allows
widespread neglect of customer service. Nor does it give anyone the right to
transfer the customer's monitoring account to someone else that the customer
did not initially choose to provide service, as is so commonly done today in
the
"sale" of accounts. That customer contracted with YOU for service; not some
Borg company. And I strongly believe that the customer should always have
the right to choose his
supplier of choice (unless of course he has foolishly allowed himself to be
locked to one dealer and
HIS choice of central station through a restrictive, long term contractual
agreement.....)
I really believe that this industry will change over time (don't they all..)
and that consumers will finally tire of these self serving types of
practices that don't offer them anything in return for their "guaranteed"
business. In many areas of the country, as you say, there may well not now
be
many
companies that do things without these long term commitments. As
such, consumers for now may not have much opportunity to buy any other way.
However, nothing is forever, and the market forces of competition WILL
provide for this type of selling where it currently doesn't exist. When that
day comes, it will be the Borg that suffer most, not firms like yours or
mine - another reason why they would fight this tooth and nail !!
Jim, I can only hope it comes to your area after you have left the market,
sold
your accounts for those big bucks you've worked so many years to get, and
retired to the good life you deserve....
I am a little surprised that I seem to be the only person on this ng that
champions this approach. I know there are many that jump in from time to
time that say they market this way; however, few make an issue of it. Maybe
they
are simply being smart enough to keep taking sales away from those that
don't, and choosing not to draw attention to themselves.....(grin)
I doubt there is little more that you and I can say to each other on this
issue. Nor should you feel the need to "debate" the issue to further
convince yourself of the wisdom of running your business that way. What
works for you is what is important; however, there ARE other equally valid
ways of
doing business.
I wish you well and hope your "business philosophy" works out for
you. I know mine has been successful beyond anything I had hoped for.
Most of the time, I feel like I have "a tiger by the tail"................
RHC