Sizing up the competition

Go small for better service and big for better pricing? It’s not always that easy when comparing central stations
 - 
Tuesday, August 7, 2012

“Don’t look back. Something might be gaining on you.”

That pearl of wisdom from baseball legend Satchel Paige could very well be applied to the world of wholesale alarm monitoring. The competition is fierce and getting fiercer, raising the stakes for central stations of all sizes. Dissatisfaction over real or perceived problems can prompt a dealer to jump ship, costing a company a chunk of RMR and maybe even a bit of its reputation.

Success hinges on a combination of price, service and the application of technology, with shortcomings in any of these areas separating the haves from the have-nots. But are there fundamental differences between small, mid-sized and large monitoring companies that can tip the balance for customers? Is bigger always better when it comes to pricing, for instance, or smaller always better for customer service?

To find out, Security Systems News talked with three well-known members of the Central Station Alarm Association—CMS, Metrodial and Moon Security Services—to get their take on what they can offer their customers and how they differentiate themselves size-wise from the competition.

Moon Security, based in Pasco, Wash., handles about 7,200 accounts at its central station—5,200 of its own and 2,000 for 27 other dealers. The company’s customer base is concentrated in eastern Washington, northeastern Oregon and northern Idaho.

President Michael Miller said that while Moon Security is “on the small end” of the industry scale, there’s a simple reason why the company has been monitoring accounts since 1972 and why it has earned CSAA Five Diamond certification.

“Our mission is to take care of the client, and obviously when we’re monitoring for other dealers, to take care of them and their clients,” he said. “We do that and we do that well.”

Moon Security’s website features a long list of equipment and redundancies common to high-end central stations, but Miller isn’t afraid to point out that the company gives some ground to its larger competitors in this area.

“Let’s face it, some of the big-boy central stations are going to be able to do stuff that we can’t do,” he said. “They’ll have different IT departments than what we have, and we have a good one, but they have more dollars that come in to pay for more equipment and so forth.”

Where Moon Security shines compared to many of its larger competitors is in how it trains its operators, according to Miller and Tom Pitcher, general manager for the company.

“One of the complaints that we hear from dealers switching over to us is that the operators who were dealing with their alarms were three- and four-week trained … and really didn’t have a whole lot of industry knowledge,” Pitcher said.

Moon Security’s operators undergo a minimum of 90 days of training before they are allowed to answer calls on their own without a trainer sitting nearby, he said.

“We do put some extra emphasis on that rather than train somebody for three weeks, get them a license and put them in a chair and make them read a script,” Pitcher said.

When it comes to pricing, Miller cited the example of a dealer who had recently switched to Moon Security who was paying slightly more than he did previously. But the dealer was getting “three times the service,” Miller said.

“He was trying to take a weekend off and he didn’t have to worry about it because we we’re taking care of him,” Miller said. “So is it worth $1 more or $2 more [per account]? Price is not everything. It’s the service that you’ve got to hit, and hit and hit again.”

At the other end of the size scale from Moon Security is CMS, the largest wholesale monitoring company in the country with “well over 1 million accounts,” according to CIO Donald Young. While some may stereotype larger companies as providing better pricing at the expense of timely service, Young said that wasn’t the case at CMS.

“We answer 100 percent of our phone calls in less than 1 minute, and we’re happy to show the metrics to anyone,” he said. “We answer our calls with a live person; we don’t put them through an auto attendant prompting them to dial the department they require. And then we transfer less than 5 percent of our calls from the first person that answers.”

Young said the Longwood, Fla.-based company realized long ago that its real competition isn’t COPS, Rapid Response or Monitronics, but the “local mom and pop” that will claim personalized service and no transferring of phone calls.

“But guess what? There’s no one else in the office to transfer the phone call to,” he said. “So that handling of the phone call is the one moment you have to provide the value the dealer is charging the customer for.”

While holding their ground on service, Young said larger wholesale monitoring companies have a distinct advantage over their smaller competitors when it comes to providing the latest technology to impress customers.

“Whether it’s a Web portal, a hand-held app or interactive, we’re all constantly trying to outdo each other with these tools,” he said. “And these days, you have to provide those tools for the dealers because they’re competing against Comcast, AT&T Digital Life, all those home automation solutions.”

Size also has its benefits when it comes to redundancy, Young said. CMS has five central stations—in California, Texas, Kansas, New Jersey and Florida—that add to the company’s emergency preparedness through geographic diversity.

“All five centers can back up one another, so our redundancy is five times that of a standalone,” he said.

Near the center of the wholesale monitoring spectrum is Metrodial of Hicksville, N.Y., which handles about 50,000 accounts and 500 dealers. The company was founded in 1977 and focuses primarily on the Greater New York tri-state area.

Andy Lowitt, vice president of dealer relations, said Metrodial gives customers the best of large and small monitoring companies through a combination of technology and experience.

“We offer a large-scale central capability with a smaller-sized central station focus on customer service,” he said. “The services we offer are really industry-standard as far as Web access and Internet access to clients’ accounts, but we also have a staff here whose many years of experience allow us to handle customer inquiries and concerns immediately with a lot of thought.”

Metrodial is a CSAA Five Diamond central station. It also is certified UL 2050 and is approved by the New York City Fire Department, credentials a lot of smaller centrals don’t have, Lowitt said.

“The fact that we’re FDNY-approved means that we’re inspected every year by [the department], in addition to the usual UL inspections,” he said.

Lowitt said Metrodial has a leg up on many larger central stations by having established a 35-year relationship with local alarm dealers and by having a strong reputation among them when it comes to technical trouble-shooting.

“Our central station manager used to be an alarm installer, so he knows alarm panels backwards and forwards, as well as formats,” Lowitt said. “So we have the expertise from both the alarm side and the monitoring side put together, which is really helpful to dealers in the field.”

Small, medium or large, monitoring companies can face a perception from dealers that their central isn’t doing enough to keep them happy, which in turn leads some dealers to look for a new provider. Young, of CMS, said those concerns, fairly or not, usually center on price.

“They might think they’re getting ripped off because what they hear their friend is being charged, or they feel like they’re not being treated like they should because they have extra volume going into that central station,” he said. “They typically just explore price and not often do they have the appetite—and believe it or not, sometimes they don’t even have the knowledge—to compare how operationally one monitoring center is better than another.”

Pitcher, of Moon Security, said the best advice for dealers who might be looking to switch central stations is to use their industry contacts “to find out who’s doing it right and who’s having some issues.”

“[I recently] took a call from our largest dealer, and he’s got two friends in the same area who are competitors but friendly competitors, and they’re not happy with their central station,” he said. “He started singing our praises and then called to say ‘Can you send dealer packets? I’ve got two guys who are interested. And oh, by the way, if I get them to swing over, can I get a credit on my account?’ So we worked out an arrangement and he’s getting the information to them. Word of mouth with dealers who are using the central station is critical to [the provider’s] success.”