5.22.20 – SSI – CHARLOTTE, N.C.
Dealers, integrators and market analysts predict enormous demand and growth for security and related solutions coming out of the coronavirus tunnel. Current hardships are also addressed.
The electronic security industry has certainly seen its share of market disruption in recent years surrounding technology, business models, economics and competitive pressures — but nothing on the level of the COVID-19 crisis. The ramifications and “new normal” resulting from the pandemic and lockdowns even figures to exceed the impact and aftermath of 9/11.
Indeed while the challenges have been daunting for practitioners throughout the security systems channel as well as their customers, the demand for professional security and safety solutions is likely to deepen and accelerate.
Those effects have already been seen, as adaptive companies like Wayne Alarm Systems of Lynn, Mass., are introducing offerings to meet new market needs emerging from the coronavirus crisis.
Company President and SSI Industry Hall of Famer Ralph Sevinor says Wayne Alarm is now providing what the firm is calling do-it-together, or DIT, systems to residential and small business customers that leverage the rising popularity of do-it-yourself (DIY) products.
In this scenario, which some are alternatively calling do-it-with-me, or DIWM, the dealer/integrator ships the system to the customer and guides them through phone call, video or text chat or other communications an easy installation process.
If applicable, as it is in Wayne Alarm’s case, the dealer then provides monitoring services and generates recurring revenue. This model is likely to grow as homeowners and small businesses look to minimize outsiders coming onsite.Related:How Central Stations Are Contending With COVID
On the commercial side, Sevinor says his company is testing out the use of thermal cameras to help facilities keep track of elevated body temperatures as they enter a building. “I think we are going to see a lot more of that as well as access control and video growing,” he says. “The temperature cameras are very impressive when you see them working. There are new opportunities for us. We are all going to need to adapt moving forward.”
In addition to DIT, the pandemic experience has certainly added several additional acronyms to the security industry’s alphabet soup. Here are just some examples: WFH (work from home); PPE (personal protection equipment); and PPP (Payroll Protection Program). The latter has helped numerous security and alarm companies retain all their employees during the lockdowns, or at least lessen the blow with temporary furloughs or reductions of hours.
Another major boost to the industry was being designated as an “essential” service, allowing technicians to continue their fieldwork ― even if the mandatory use of PPE, disinfecting and distancing stunted their time efficiency.
“Being an optimistic manager, I think coming out of this we will have a much lower rate of cold and flu outbreaks, which should be helpful for everyone,” says Alert 360 President/CEO Richard Ginsburg, also an SSI Industry Hall of Famer. “I also think our workforce will focus more on their health in general. It is all about flexibility with employees, customers and vendors. What worked or was standard operating procedures even three months ago may need to be looked at differently now and moving forward.”
To fully assess the effects of this extraordinary event among the systems installation and monitoring community, SSI interviewed a dozen dealer and integrator executives as well as market analysts. Participating in the roundtable that ensues are Jeremy Bates, president, Bates Security and Sonitrol of Lexington; Bill Bozeman, CEO, PSA Security Network; John Campau, president & CEO, Comtronics; George De Marco, managing partner, DECO Ventures; Peter Giacalone, principal, Giacalone Associates; Bob Harris, president, Attrition Busters; Matthew Ladd, president, The Protection Bureau; John Loud, president, LOUD Security Systems; Kirk MacDowell, principal, MacGuard Security Advisors; and John Nemerofsky, CEO, SAGE Integration.
These industry leaders speak to recent business and operational adjustments, getting back up to speed, what the future looks like, advice to best weather the COVID-19 storm, the challenges they face, and the promising opportunities before them.
Explain the ways the lockdowns and COVID-19 crisis have either directly affected your company, or those of other dealers/integrators and monitoring providers.
Jeremy Bates: The crisis has forced us to be more creative in how we approach almost everything we do, from having everyone work from home to learning the safety precautions we all now take as well as our approach to marketing and selling. As luck would have it, in 2019, we had moved our phone system and several other programs to the Cloud, which was critical in our ability to continue provide services in a seamless manner to our customers.
Bill Bozeman: The COVID-19 crisis is affecting all integrators, but some more than others. Some have been significantly impacted, seeing revenue run rate reductions as high as 40%. Others have not been impacted and that has depended on existing customer base and the vertical markets they serve. Vertical markets like transportation, hospitality and airlines have been hard hit. Integrators that serve these hard-hit verticals are seeing a big impact.
John Campau: It definitely forced us to stop and evaluate everything in our business. I have been here at Comtronics for 34 years, and have never been faced with challenges like we have in this environment. We have been aggressively embracing change the past five years due to industry-related challenges, but this pandemic has forced us to change the way we think about our business altogether, our customers and our employees.
George De Marco: Depending on the geographical region, dealers/integrators have had to modify all aspects of their business, from selling, installing, to servicing customer accounts. Those companies that are not aggressively filling their sales pipelines are or will be experiencing lower revenues in the coming months. Prior to COVID-19, for many companies, there had been a shift from a residential to a commercial focus. I think this has been accelerated by COVID-19 as existing DIY companies are taking advantage of systems that don’t need to be installed by others.
Monitoring companies are rethinking the impact of monitoring from home. Will this become the norm in the future for monitoring services, distributed monitoring services? There are huge implications for this type of a model, especially in reduced infrastructure costs and increased geographical employee reach. Dealers and integrators that monitor their own accounts are evaluating migrating monitoring services to wholesale monitoring companies.Related:Contending With the COVID-19 Crisis: A Security Business Continuity Roundtable
Peter Giacalone: It varies by region. Monitoring centers as well as installing companies are affected differently pending the limitations mandated in their state, county or city. Some in New York City have been removed for security installations and threatened with fines if they returned. Others in South Carolina are staying busy with installations of all types, and in some cases are busier as businesses are using this downtime to implement some upgrades and expansions.
Bob Harris: While many end-user customers have been forced to close their businesses, smart security companies have sent out informational bulletins on the importance of security while a business is closed as well as offered flexible payment options for those experiencing financial hardships during this crisis. Many dealers and integrators have applied for and have received PPP grants from the government to be able to maintain high level operations and employees despite any associated accounts receivable declines as a result of any drops in revenues, sales and operating expenses.
Matthew Ladd: The Protection Bureau was locked down due to COVID-19 and the Pennsylvania governor’s restrictions. Although we are considered an “essential” company, many of our clients were shut down, thus it hit our projection number greatly. We ended up with over 110 projects on COVID-19 hold and our service department was only able to perform emergency service calls. Our entire inspection department was greatly impacted as well. We ended up having to furlough 30 employees until we were able to secure the PPP loans from the SBA.
John Loud: As a whole, we quickly had to set ourselves up to have much of our staff working remotely and from home. We were not set up for this ahead of time so we had to improvise everywhere, create new processes on the fly, adjust information flow, and set up new expectations for all employees. Our sales teams had to learn how to immediately shift info virtual facetime sales, essentially teaching the customer how to look for the necessary information and combine that with what our reps can see over the camera in order to make a sale.
Our administrative teams had to be flexible in their positions day by day as many worked from home limiting communication. CDC guidelines ensuring our staff was not sick had to be put in place to ensure we didn’t get customers sick. New emails and customer calls were put in place before any service or install to make sure there was nobody sick at a jobsite to protect our employees. Our installation team had to become comfortable working with a potentially new danger, now wearing with masks, gloves, and other PPE. All meetings became virtual as technology was quickly adopted and tested.
Kirk MacDowell: There was no universal response in terms of handling the crisis. Some companies showed stellar leadership in this time of crisis, leading the charge with employees and customer engagement as well as looking for ways to outmaneuver the effects of the virus on their business. Others were so focused on the issue that they became paralyzed and had a hard time focusing on the mission of looking forward. Companies with solid strategic plans altered them and pushed forward.
John Nemerofsky: We were fortunate that we were prepared for and had the ability for all of our back office to function remotely. Finance, AR, AP, HR and executive management remained active. Our operations team stayed fully utilized as we were considered an “essential” part of our clients’ security operations. Our project teams created a weekly challenge of logistics and scheduling. We took advantage of this time to get employees training and certifications in key areas such as project management and OSDP.
What steps did you take to maintain close ties with both personnel and customers, or do you recommend for dealers/integrators and monitoring providers?
Bates: From the very beginning we were very deliberate in making sure we communicated well to all employees. As we were developing our work-from-home model and developing all our safety protocols, we felt it was important to keep the team up to speed on our planning and progress. Since implementing WFH there have been a series of “all call” virtual meetings with the entire company, supplemented with emails and as well as employee newsletters. Each department also conducts a morning video call to touch base and then we have management all calls throughout the week. All this is done to make sure we are keeping a good pulse of what is happening in the company and if any of our planning needs adjustments. We have also asked managers to reach out to other team members individually just to check in, not necessarily about work, but to see how they personally are doing through all that is going on. Keeping employees informed and comfortable with all steps we took was important from Day 1 and continues to be so today.
For our customers, we have continued to send our company newsletters but also special announcement emails regarding the precautions we have been taking during this time. This information is also posted to our websites in all markets as well as on all social media. We have also had several employees not comfortable with going to customer sites stay at home making calls to our customers to check in with them, update information and generally answer any concerns a customer may have, which has been well received. I am happy to say we have also received positive and appreciative feedback from customers when they see our technicians implementing the different safety protocols we have asked them to take at customer sites.
Bozeman: In times of crisis, it’s always better to communicate more than normal because everyone is scared and needs reassurance. Integrators should be reaching out to their end users now more than ever. Fortunately, we have the technology to do that with video conferencing, etc. It’s imperative not to go dark. Make it known that you are there to help with their security. In the case of PSA, we have partners specializing in various offerings that help with specific COVID-19 issues such as thermal cameras, the STEPS program to get America back to work, remote video surveillance, etc.
Campau: We have incorporated Teams calls and Zoom calls in our daily management of Comtronics. Many of our 200 employees are working from home, and this is something that quite frankly we never allowed before this virus hijacked our economy. Our leadership is in constant contact with our staff; and our sales and support staff are required to make calls every day to our customers to assure them that we are here for them. We are updating emergency call lists, selling LTE upgrades and taking advantage of every sales opportunity.
De Marco: Communicate, communicate, communicate. It’s a great time to step up your social media campaign and freshen up your website and let your customers know you are alive and well and that you got their backs. For your employees, you’ll need to think about cleaning protocols that keep your employees safe and healthy at work. For your customers, you’ll need to provide your sales and field personnel disinfecting products and protective gear that give a level of confidence and concern for customers before your employees enter their homes and businesses. While they are on the premises, they must adhere to a high standard of personal hygiene, and before they leave, disinfect the products they installed or serviced and the surfaces they touched. This may seem excessive, but it may be a new normal we just have to do.
Giacalone: Published communications with personnel and customers must remain constant with updates and reinforcement. Implementing best practices to keep personnel and customers safe and healthy must be in place and enforced. The obvious steps of gloves, masks, hand washing, disinfecting, distancing, etc. are all a start. Depending on business structure, constant monitoring of the obvious metrics as body temperature, symptoms and contact tracing needs to be part of every business’ new procedures. This is necessary for premise-based staff as well as staff that are mobile.
Harris: With employees spread all over the place or working from home during this crisis, here’s a handful of creative things to consider for amplifying enthusiasm: 1. Recognize their efforts; 2. Mentor them and reinforce company team culture; 3. Give them agreeable tips on time management; and 4. Create problem-solving groups and follow through with solutions they develop. Rewards and recognition, when appropriate, go a long way toward keeping spirits high. Customers recognize when employees are engaged. It is equally important to use whatever means at your disposal to reassure your customers and to be there for them in terms of any financial, service or security issues they may experience. After this is all over, they will remember who stood with them and who did not.
Ladd: With those employees who were on furlough, we made sure that management was in touch with them at least weekly. We provided daily COVID-19 updates via email for all our employees, so they knew what steps we were taking to provide a safe work environment. The entire office was wiped down with disinfected wipes and sprayed daily. Additionally, we held manpower review virtual calls three times a week. For clients, we set up a team to contact as many of our clients as we could to find out their COVID-19 status. Also, before any manpower was dispatched, we had a specific questioner to find out what steps they were taking to provide a safe work environment. All employees were outfitted with masks, disinfectant wipes and gloves.
Loud: The sales team was tasked with calling their close customers to ensure that relationships and pipelines remained opened. Additional calls, emails and follow-up contact were created for each installation and service call. Additional mass communication emails and newsletters were created and sent. Outbound customer care check-in calls were ramped up for more communication and relationship building.
MacDowell: Communication is vital in whichever way you feel can bring you closer to your employees and customers. I suggest dealers/integrators mentally take a step back in time and use some old-fashioned marketing concepts, such as the U.S. Mail to send notes and letters to employees and customers. With limited access to the outside world outside of the Internet, it is nice to receive a letter or postcard. Companies should also place a video message on their website letting their customers know that they are an essential business and in operation to protect them. In regard to employees, daily morning huddles for 30 minutes with the entire company shows leadership and a commitment to ongoing communication.Related:How 3 Security Contractors Are Pivoting to Weather the Economic Storm
What have been the top hardships or challenges, or what do you believe them to be for dealers/integrators and monitoring providers?
Bates: The uncertainty of all this has been the most challenging thing, but we keep pushing forward and handling all the challenges that arise. We never expected to have to learn overnight how to have every single employee in all our markets work from their home and then still run the company providing quality service to our customers. Nor did we ever expect to learn so much about how to protect our employees and customers against such a horrible virus, but with a willing and able team of employees, that is exactly what we have done. We feel we have gotten through these first couple months and are now running the business just as well as we were before the pandemic.
Campau: We have sales offices in southern Michigan and Southern California. Michigan has been hit very hard by COVID-19, so it’s been a struggle convincing people to let us in their home to work on their alarm system, even though we follow all the safety guidelines. We are operating at almost full staff and keeping busy with our business customers, but business overall is slower than usual. Our customers are starting to ask for extra time to pay their bills and we are starting to see a slight increase in cancellations. This is mostly due to people losing their job and not using their alarm as much because they’re home all the time. On the other hand, our California market is doing well. We recently hired three technicians, purchased three new service vehicles and relocated our 15-year customer support manager in Michigan to our office in San Diego. We are especially busy with new construction and selling LTE upgrades.
De Marco: Companies that don’t adapt well may find the road forward to be very challenging. You need to evaluate your RMR. This may tell you how exposed you are to certain industries that may have a tough go of it during and post pandemic. This will help you evaluate your cash flow in the near term and give you a sense what attrition may look like in the coming days and months. It’s important for companies to develop a plan that identifies their current position and resources to get through this, what happens right after it, and what may be the new normal for doing business. This involves identifying what to do, how to prioritize resources and then how to proceed forward.
Giacalone: The current challenges are greater in cities in total lockdown that prohibit installations. In all areas, the unknown of cancellations of projects and monitoring due to business closures and consumers’ loss of income are a very big uncertainty that raises great concerns. Monitoring centers have a daily challenge of keeping their staff healthy and separated. This is a difficult task for most, unless a center has great additional capacity, which most don’t. To this end, many have resorted to allowing staff to monitor from home. Even UL has worked tirelessly to adjusted standards to allow for this immediate need in flexibility to accommodate secure monitoring. Utilizing UCaaS for telecommunications and secure VPN connectivity are essential to set the infrastructure for remote workers.
Harris: The health and mental status of employees will be of significant importance coming out of this crisis. How they were supported while all the craziness was going on will either make a positive or a negative impact on them when it is finally over. There is also a very likely possibility that some things will not go back to normal for a long time. How company ownership deals with transformation will also have a monumental impact on employees. Planning for the future is critical to stay ahead of this. Other challenges will almost certainly be customer related as some commercial clients may not survive the COVID-19 crisis at all. The same might be true for some homeowners.
Loud: When this started, the closings hit fast and hard. There was very little time to think and plan for the upcoming changes that everyone was going to have to make. One of the biggest challenges was to take a customer-facing service company and figure out how we can adapt and perform many of our services remotely. Relationships matter in our industry and they are more difficult to form over a screen.