SW24's 'game-changer': No long-term monitoring contracts

NEW YORK—SecureWatch 24 is entering the residential intrusion market with what it calls a “blast from the past” for the security industry: no long-term monitoring contracts, with customers owning their equipment and paying up front to cover installation costs.

SW24, based here, specializes in property surveillance and facilities management. Its main business is video monitoring, with more than 22,000 cameras installed at more than 2,000 buildings in the New York City area. The company signaled its intention to get into intrusion monitoring by developing the Fusion Centre, a 25,000-square-foot central station in Moonachie, N.J. It is scheduled to open in early 2013.

For the past 25 years, residential security companies have been willing to lose money initially to gain customers and then break even months later via monitoring contracts, said Jay Stuck, vice president of sales and chief marketing officer for SW24. That economic model is no longer sustainable, he said.

“It's kind of ironic. We're really looking at moving back to the days when you were profitable right out of the box,” Stuck told Security Systems News. “Based on what we're seeing in the marketplace, we think that the time is right for a brand-new paradigm.”

Stuck said 36-month contracts have become standard and that some companies are locking in customers for five years. He said proprietary research has shown that many customers resent the long-term obligation, which led SW24 to offer monthly monitoring for residential and small-business clients.

“It is giving the customer what the customer wants, and that is freedom and flexibility,” Stuck said. “By going on a month-to-month agreement, which can be canceled within 30 days, we're very confident that our customers are going to be satisfied with the level of service they're getting from SW24 and there's not going to be a need for a long-term [contract].”

SW24's research has also shown that customers won't have a problem paying more up front as long as they understand the value of the service. They will own the wireless equipment outright and can move it when they want to, Stuck said, and all of the company's intrusion packages include Alarm.com interactive features.

The new marketing initiative will be launched in the New York metro area in October and then be taken nationwide. To bridge the gap between now and when the Fusion Centre opens, the company has added intrusion-monitoring capability at its 1 Penn Plaza headquarters.

Stuck called the new approach “a game-changer” and said the industry would be watching closely to see if it succeeds.

“I think that everyone is complaining about how they're not making money until 36 months into a contract,” he said. “And I think now is the time for us as an industry to redouble our efforts at customer satisfaction and giving them what they want, and this move is all about that.”