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Credit scores and attrition: Correlation?

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Monday, July 15, 2013

The quest to reduce the dreaded attrition rate remains a high priority for anyone in the monitoring space, and companies continue to explore new ways to predict and prevent cancellations. Companies don’t just track attrition rates; they look for clues, like usage patterns, that could yield information about whether certain customers may be more prone to stay or go. 

While usage patterns remain a valuable tool for evaluating customers and forming effective business strategies (conventional wisdom says upsell to active users, and reduce prices to the less engaged), it’s not the only predictor companies use. There is also a significant correlation between credit scores, or Beacon scores, and attrition rates, according to Michael Barnes, a partner in the consulting and advisory firm Barnes Associates, who in a response on the CSAA’s Accent forum, said his firm reviewed data on over 2 million accounts. Here’s a bit of what he had to say:

“Generally speaking, the correlation changes over four ranges of scoring. Below 600, the statistical experience is very bad. That is, the accounts have a very high cancellation rate. Between 600 and 650 the results improve dramatically, with a general inflection point around 620+/-, which is why so many dealer programs (and, in some cases credit facilities) have restrictions around this area of scoring.”

Barnes added that scores above 700, in terms of attrition and retention, tend to behave the same as scores around 800. Scores in the ballpark of 650 tend to have poor cumulative performance, with the rates of cancellation almost twice as high over the first four years, Barnes notes. Unsurprisingly, rates of “infant mortality’—cancellations within the first year of existence—were exceedingly high among those with sub-650 Beacon scores, according to Barnes’ data.

While the data sample is large enough to provide a thorough understanding of the relationship between credit scores and attrition, Barnes points out that some qualifications are needed, since a slew of factors can create exceptions. Some of these key variables include installation fees, services provided, pricing and payment method, and even geographic location.

The above graph, made for SSN in 2009 by the Edmonds Group, also charts the correlation between attrition rates and Beacon credit scores. 

NationWide Digital opens N.C. sales branch

The new office will meet the needs of the company’s dealer program, which has a strong presence in the region
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07/02/2013

HOLLY SPRINGS, N.C.—NationWide Digital Monitoring Co., a Freeport, N.Y.-based central station monitoring service, just extended its reach in the Southeast with the opening of a regional sales office here.

Greetings!

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Tuesday, July 2, 2013

For my “Monitor This!” debut, I’d like to use this space to introduce myself, now that I’ve completed my switch to associate editor at Security Systems News.

My name is Leif Kothe, and I’ve covered the security industry since September 2012, when I joined SSN as web editor. In that capacity, I covered—and learned about—most facets of the security industry, while also writing for other trade journals at United Publications, not all of them security-related. The position was as edifying as it was unfocused. As associate editor, I welcome the opportunity to zoom in on the central station side of things. And I am equally eager to cover the legislative topics of most relevance to the industry.

My wish is to make the transition as seamless as possible. In the interest of continuity, you'll find that we’ve kept many things the same. The blog has retained its title, it occupies the same spot on the homepage, and it will still cover topics germane to central station alarm monitoring.

With that said, I encourage those in the monitoring space not to hesitate to reach out to me, whether to offer news leads, or to simply introduce yourselves. In my brief time covering security, I’ve found the industry nothing but welcoming, and I look forward to exploring the industry further and hearing your stories in the process.

CPI reels in pair of CSAA awards

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06/24/2013

NASHVILLE, Tenn.—CPI Security Systems, based in Charlotte, N.C., won a pair of CSAA Excellence Awards at ESX last week, including the award for CSAA Central Station of the Year.

UCC, CheckVideo partner on monitored video services

Analytics key selling point for UCC’s network of dealers
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06/19/2013

SAN ANTONIO—United Central Control, a leading wholesale monitoring provider based here, has entered into a partnership with CheckVideo to offer advanced video services and training for UCC’s network of more than 500 dealers.

SIAC hands out Moody Award

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06/12/2013

FRISCO, Texas—Sharon Elder, vice president of sales for the National Monitoring Center in Aliso Viejo, Calif., is the recipient of the Security Industry Alarm Coalition’s 2013 William N.

New sensor takes aim at false alarms

MOBOTIX’s new analytic tested in adverse weather conditions
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06/12/2013

NEW YORK—MOBOTIX AG has begun equipping its video surveillance cameras with new motion-detection software that the company says can reduce false alarms by more than 90 percent.

SS&Si launches new reseller program for PERS dealers

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06/04/2013

DELTONA, Fla.—SS&Si, a dealer network comprised of small and midsized alarm companies, has announced that it plans to launch a new affiliate program for resellers of PERS devices.

Mace Security moves headquarters

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05/16/2013

CLEVELAND—Mace Security International is moving its headquarters from Horsham, Pa., to Cleveland’s Midtown neighborhood, according to a blog post from Cleveland.com.

Dynamark names new distribution partner

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05/13/2013

HAGERSTOWN, Md.—Dynamark Security Centers has named The Systems Depot, headquartered in Hickory, N.C., as the authorized distribution partner for the Dynamark Dealer Program, according to a company statement.

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