'Make sure mobile is part of the solution you offer'

A smart revolution quietly occurred this year—one that's dramatically changing the security industry.

As of February, a Nielsen report showed, about half of all Americans with mobile phones—49.7 percent—now own smartphones. And the number of smartphone owners is rapidly growing. Nielsen said that only 36 percent of mobile subscribers owned smartphones last year, and that more than two-thirds of those who bought a mobile device in a three-month period earlier this year chose a smartphone.

And smartphones, because they enable the use of mobile apps, are changing the profile of the residential security customer, said Jay Kenny, VP of marketing for Alarm.com, an interactive services technology provider based in Vienna, Va.

“There's a new expectation among people who are active smartphone users. They expect to have an app [for everything] and they're accustomed to always-on service. They don't care if it's 2 in the morning—they can always access email or do what they need to do,” he said. “That's the same expectation that's being applied to other services that they're purchasing today, and that expectation is being applied to security systems.”

In this changing landscape, Kenny has a simple message for security alarm dealers: “Make sure mobile is part of the solution you offer.” Not only are mobile apps something that customers demand, but such interactive services also are an important selling tool and drive down attrition rates, he said.

Kenny discussed mobile apps at a seminar at ESX in June titled “Mobile Apps for Security & More,” and also in a subsequent interview with Security Systems News. SSN also talked to three security companies—one a traditional alarm company, one a summer-sales-model company, and one that combines the two sales approaches—which all agreed that mobile apps must be part of a successful security business today.

“I think companies that do not pay attention to interactive services will not be here three to five years from now,” said John Loud, president of the Georgia Electronic Life Safety and Security Association and owner of Loud Security, a traditional-model regional alarm company based in Kennesaw, Ga.

In the past, security was solely about intrusion prevention. But now, interactive services have made it much more.
 
It still starts with security, Kenny said. “There's an arm and disarm,” he said, “but then there's a general awareness. I can check at any time to see if I left a door open or what's going on at home. I get alerts, I get information back when my kids get home or somebody opens the door, I can view a live video feed if I get a video alert, I can turn my lights on and off, and I can adjust my thermostat right from the phone. Locks are a huge interest … the ability to actually turn the deadbolt from your phone.”

“What this is doing,” Kenny continued, “is starting to change the perception of what security is. So instead of being solely about intrusion and intrusion prevention, it's now about: I feel more secure that somebody got home on time, I feel more secure because I know what's going on in my home. And then we're extending it to these mission-critical services in home energy management. And the mobile device is the thing that's driving that adoption, and driving the interest in using these additional services.”

Loud Security introduced interactive services in the middle of last summer, and Loud said the addition has made a dramatic difference in just a year.

“It's very interesting,” he said, “as we look at our average monthly recurring revenues versus a year ago, we're up 60 to 70 percent from last year.” Some of that he attributes to some new marketing efforts. However, he said, “some of it is absolutely related to the interactive services.”

Loud said that since mid-2011, “we have a much higher penetration of people using cellular or Internet communication devices instead of landlines. So, once they go to that opportunity, it creates the interest to discuss interactive services. And we really feel that interactive services begins a whole different relationship between the subscriber and their alarm system.”

Kenny said that data from Alarm.com, which launched its first mobile app in 2009, “shows that people who are using mobile devices are more engaged with the system. They stay longer, they value it more and it becomes more part of their life.”

Patrick Egan, president and owner of Select Security, a Lancaster, Pa.-based traditional alarm company that added a door-knocking program to its business two years ago, also said his company is embracing the “interactive customer.”

“Think of that residential customer five years ago. He didn't get anything from us but a bill,” Egan said. “OK, maybe he got a newsletter, we might have mailed a newsletter out, but we didn't hear from him unless there was service call.”

Select Security began offering interactive services in 2010, starting with Honeywell's Total Connect. Now, Egan said, customers are “getting an alert from Select Security every day saying [for example], 'System armed, system disarmed,' and they go to our website. So we're driving traffic to our website, where we're increasing special offers.”

He said Select Security expects to add about 2,000 new systems this year, and all are interactive. “This year, 100 percent of our residential systems are on cellular and all with apps, every one,” Egan said.

At Orem, Utah-based Pinnacle Security, a summer sales company that has a strong relationship with Alarm.com, Kevin Woodworth, VP of installations, said that five years ago, “we had a 34 percent take rate on interactive services. That means the rest were traditional landline services.”

Today, he said, “we're just over 90 percent [take rate on interactive services]. It's been huge for Pinnacle.”

He said interactive services and mobile apps are great sales and closing tools. “The salespeople are more able to position it as much more than intrusion, and that really seems to resonate with customers as well. They really expect more than just intrusion today,” Woodworth said.

He said that “rather than walking up and selling traditional security, [sales reps] are really selling peace of mind and staying in touch outside the home.”

Pinnacle's existing customers also are calling to add interactive services when they switch to cellphones as landlines disappear, Woodworth said.

Egan and Loud said their companies are actively targeting their legacy customers to offer them interactive services.

“I have thousands of legacy customers on non-interactive telephone line panels. They've got to go. This is not an option [as landlines are being phased out],” Egan said. “We are calling aggressively and making appointments and if we can get an email address we're emailing.”

A recent email effort resulted in four upgrades in a day, he said. And Egan said that while Select Security typically charges its legacy customers about $25 a month, those same customers are now willing to pay $50 a month for the new interactive services, because they're saving money giving up their landlines. “We're just moving the money from Verizon, Comcast and Cox to us,” Egan said.

Loud said some of his customers learned about interactive services from commercials that the telecoms and cablecos—recent entrants to the security market—are running, but contacted Loud Security to get the services from their local provider. “I guess it comes back to owning your local market,” he said.

Also, Loud said, his company just printed 10,000 postcards it's planning to send out to long-term customers to tell them about the new services and say, “You're eligible for an upgrade. Give us a call, let us come see you.”

Egan said, “Interactive services is where we're headed. If you're not offering it, you're behind the eight ball. I pity the guy today who is out selling a residential alarm and, God forbid, hardwiring it, and then connecting it on a phone line. That is way, way yesterday.”