With changing social, economic and business environments, security professionals need to adapt to new market strategies and offerings. Identifying the right next gen products and services can have a positive impact on the customer pipeline, improve the customer experience and keep customers loyal. 

New Markets: SMB’s – Expanding Opportunities with New Services 

As the world experiences a digital transformation and a renewed reliance on broadband services, small to medium businesses (SMBs) are poised to invest in their physical security and network system. According to Parks Associates, 21% of SMBs report a need for products and monitoring services that deliver safety and security for their employees and business. Currently, one-half of SMBs have a security system, with 45% of those systems being professionally monitored. During the session, “New Markets: Expanding Opportunities with New Services” members from Parks Associates will share insights and address the following: 

• How remote work arrangements have exposed new security vulnerabilities and increased the need for cyber security solutions 
• How security providers can benefit from offering value-added services that include on site security and monitoring services, advanced threat detection, wi-fi and network configuration, and other services 

Industry Introspective – Challenges, Trends and Opportunities  

The pandemic has changed the world, and its effects will be lasting in the near future. Regardless of the industry, change happened, touching each one in different ways. The security industry wasn’t immune to the effects of Covid. However, many dealers and integrators flourished during the pandemic, as they adapted to change and were aggressive in their approach to tackling the new normal. Profound and practical applications are being applied to innovative technology and services, especially as artificial intelligence and machine learning gain more acceptance. The delivery of security services is being affected by remote working models, cost of higher wages, reinvention of supply-chains, new applications of technology, and critical protection of information security. During the session, “Industry Introspective – Challenges, Trends and Opportunities” Micheal Barnes of Barnes Associates, Inc. will cover: 

• What pandemic-induced consumer and business behaviors are not going away  
• The industry trends and challenges that will affect your business and how to prepare for tomorrow – strategically, operationally, and financially. 
• The business attributes and metrics buyers will be focused on     
• How to capitalize on next-gen products and services and monetize them 
• What you must do to stay relevant and on top of your game 

“These sessions will provide a glimpse at how security professionals are navigating today’s business environment and protecting their customers against evolving threats,” says ESX Chairman George DeMarco.

“It is vital for ESX to provide a platform for security professionals to come together to exchange ideas and best practices. It’s how our industry gets stronger — by learning from one another. That’s why ESX 2022 is #SecurityConnected.” he continues.

The complete listing of educational programming, including NEW leadership sessions, can be found here.

ESX Passes range from free options to $699 for the new ESX Executive Pass. Prices will increase April 1. Visit ESXweb.com/register for more.

At some point this year, the status of the pandemic should change to endemic stage, unless a new variant creates a major health concern. If we enter the endemic stage, Covid-19 will then become a part of our daily lives, like the seasonal flu, requiring us to get used to it. As dealers and integrators adjust to the new normal, I believe that the remainder of this year will bring less of a worry about Covid-19 and give way to other concerns, such as changing consumer expectations, access to products, labor shortages, and product and wage inflation. All organizations will modify their travel, health, and safety protocols, based on their risk tolerance of the pandemic’s status.  

Changes in the Workforce Landscape 

In addition, hybrid remote work options will remain a highly desirable choice for employees, as they have become accustomed to remote work alternatives. The place of work is rapidly changing, and many employees believe that the time is right to seek other opportunities that may provide higher wages, better work-life balance, improved career path, a more aligned business or life purpose, or the ability to relocate to another community. All of this is having a profound impact on every employer in the electronic security industry, as they realign their organizations to accommodate expectations of the current and future workforce.      

Expand Product & Service Offerings 

End users want the products and services we offer, which was proved last year. Many dealers and integrators experienced an exceptional growth year, especially those that had a higher risk tolerance in their growth strategies. I believe this year will require a similar risk tolerance, as other business risks come up front and center to replace the challenges from the pandemic. I anticipate this year will bring significant opportunities for organizations that are prepared to tackle the post-pandemic economy. However, being a one-dimensional burglar alarm provider may limit your growth potential, rather than offering complementary products and services that drive subscription fees (RMR) and higher profits.  

End-Users Are Adopting More Technology

The pandemic has caused an emerging change that will accelerate adoption of the digital life by people. With that, there is a broad appeal of remote processes that embrace tele-everything and smart products and apps for living and working in the digital world, greatly changing work structures and family life. This emerging change offers security professionals the ability to reinforce themselves as the trusted source and technology expert, helping end-users get and experience what really matters to them. End users want technology to easily control and manage their homes and businesses, and to keep them connected remotely, giving them a greater sense of safety, security, comfort, and convenience, including situational awareness that brings understanding or anticipation of needs. Until the integration of connected devices truly becomes ubiquitous and seamless, end-users will need dealers and integrators to manage the installation process and customer service support.  

A dealer or integrator that strives to understand the changing needs and expectations of its existing and future customers will be able to fine-tune their brand messaging and promise, select the right product and service offerings, and help differentiate themselves from the competition. 

Security professionals who are interested in taking a deeper dive into the industry’s trends should register and attend ESX 2022 in Fort Worth, TX, June 14-17. Over the course of 3.5 days attendees will experience industry-leading education programs, best practices, and more. It is where the industry gathers, and you don’t want to miss it.

The supply chain encompasses everything from sourcing the raw materials to the eventual product delivery. Many of the basic building-block chips go into the products the industry sells to consumers, businesses, governmental agencies, etc. Unfortunately, the chip shortage will likely get worse before it gets better, with some experts saying that it may not return to normal until 2023.

Dealers and integrators are integral in the delivery process, installing products and providing ongoing customer support services. As a result, if there is a supply chain bottleneck at any point, such as labor and semiconductor shortages, transportation delays, or price inflation, this disruption can cause growth challenges for dealers and integrators in 2022. However, I believe these challenges will be lessened in the second half of 2022, if these key risk factors are addressed:

1. Materials: The demand for products that use computer chips will continue to outstrip the supply side until semiconductor manufacturers resolve it and move to a more resilient supply chain process.
2. Labor shortages: This is requiring dealers, integrators, and monitoring centers to rethink compensation packages, professional development, and employee retention programs for new and existing workers.
3. Consumer Demand: Labor and semiconductor shortages are causing cost inflation, which needs to be passed on to end-users. As a result, end-users may elect to delay or postpone projects if costs continue to skyrocket, potentially muting growth.

As supply chain disruption begins to subside, I believe the growth outlook for the electronic security industry will become more normalized as we enter a post-pandemic economy. In this next phase, consumer and business behaviors towards technology are changing along with their expectations, including privacy and information security. This will impact those companies unprepared for the next phase.

Security professionals who are interested in taking a deeper dive into the industry’s trends should register and attend ESX 2022 in Fort Worth, TX, June 14-17. Over the course of 3.5 days attendees will experience industry-leading education programs, best practices, and more. It is where the industry gathers, and you don’t want to miss it.

Session Highlight: Powerful Ways to Grow RMR by Exploring New Opportunities 

As the COVID-19 pandemic overtook the nation, nonessential work was put on hold, and customers became anxious about budgets, many security installers and integrators saw their businesses suffer. But those whose customers were contracted for subscription-based services weren’t as concerned – their Recurring Monthly Revenue (RMR) helped them weather the COVID storm.  

In an ESX Virtual Education Session, Preventia Owner Aaron Whitaker and the president of LOUD Security Systems, John Loud, shared their experiences with RMR business models and how to get employees and customers on board.   

Even if you can’t provide these services yourself, Loud said, you can partner with companies that do. Manage the billing and relationships and sell it to your customers as a customer service add-on. 

Opportunities for RMR:

• Cloud access
• Water detection and shutoff 
• Monitored smoke detector
• Life safety facility mangement
• Sprinkler systems / hood systems
• Guard dispatch
• Ankle bracelet monitoring
• Environmental monitoring (gas, water)
• Bank panic buttons
• Cybersecurity

Creating a Solution that Leads to RMR
“The long-term gain is that RMR that creates equity and stability in the company,” Whitaker said. As such, Preventia has designed their entire business around RMR. “We first look for what problem we are solving and see how we can make the customer happy while creating a solution that leads to RMR,” Whitaker explained. This is not only for the benefit of the business, but for the benefit of the customer as well, since security customers are increasingly asking for integrations. Whether it be smart home and video solutions, cloud video, or cloud access control, customers place huge value on being able to manage everything in one app. Subscription-based services are a draw for them. Because there are free options on the market for the aforementioned solutions, “Integrators have to drive value around these solutions and charge customers for it monthly,” Whitaker noted. 

Engaging Your Advocates 

On the commercial side, your biggest advocates for a security subscription are likely to be in the IT department. “We engage with IT as soon as possible,” Whitaker said. “IT values time: if it saves them time, they will pay money for it. Get on the IT budget.” 

Get comfortable having conversations with IT and “Be prepared to go beyond security,” Whitaker advised. Instead of just talking about the usual benefits of keeping a business secure, bring up the value of a cloud-based, integrated system. Owners and managers can make sure employees are getting to work on time and that things are running smoothly. One restaurant owner Whitaker cited loved that he could log in remotely to make sure the restaurant looked great and check that orders were going out in a timely manner. 

Getting Your Team on Board 

When you’re simply installing equipment, you’re making one sale. But when you’re adding security as a service, you’re doubling that sale. Take a look at how you’re compensating your sales team, Whitaker recommended. “Any good sales rep will work to maximize the compensation plan they have. Are you rewarding the equipment and installation more than the RMR?” Preventia has shifted their compensation plans so sales reps get more money for selling RMR. Loud added, “Think of how you can turn your commercial sales team into an opex rather than a capex.” 

When you migrate to an RMR model, management and leadership need to be built out accordingly to support the growth. “If you’re asking someone to pay you monthly, they’re expecting service on the backend,” Whitaker said.  

Loud commented on how RMR has changed his hiring and training processes. “Everything we look at in the hiring process is about customer care. I realized early on that I need folks who are customer-focused first, then we can easily train them how to install.” 

Reducing Attrition 

RMR reduces customer attrition because your relationship become more valuable to them and also stickier – it’s harder for customers to disengage if you’re providing multiple services. Loud, all of whose residential clients are on an RMR model, encouraged companies to start with their existing customers. “Go back to your base,” he said. “They trust, know, and like you, and they are paying you already.” He also suggested that companies that are providing subscriptions increase their rates regularly, and that they consider getting into access control if they aren’t there already, since it has “a lot of opportunity for RMR.”  

Though selling on an RMR model may feel unfamiliar at first, looking for opportunities to add subscription services benefits your customers as well as your business. They will enjoy the convenience of having a one-stop-shop for their security and security-related needs, as well as only having to manage one monthly bill for those services. Your business will become financially stronger in the process, helping you more effectively manage any uncertainty in the years to come.