Industry Insight

Opportunity Exists, But Obstacles Abound

• By Jeff Brummett
• Mar 01, 2006

SPEAKING with security dealers and systems integrators across the country, it is interesting to hear them talk about the state of our industry as it relates to video surveillance. Most are excited and express a high degree of optimism about the opportunities they see on the horizon. Yet at the same time, many of the owners and executives voice a considerable amount of concern and frustration over the difficulties their companies still experience as they continue to make the transition from analog to digital technologies.

Many of these dealers see enormous opportunity brought on by substantial technology advancements. These advancements have literally transformed traditional security products from strict asset protection products to legitimate business tools. These tools are used to improve everything from better customer service, to improved employee training and lower employee turnover costs. All of this, of course, is in addition to the strong traditional security benefits normally associated with video surveillance products.

Small-business owners love the freedom networked video gives them. They don't have to spend every waking hour at the shop to know what is going on at any given time. Remote video access of one's business is quickly becoming a staple of status among small-business owners. Larger companies with multiple site locations are quickly beginning to wonder how they ever managed their businesses without such a powerful tool.

Having products that clients actually get excited about has created opportunities to sell and market surveillance products to a far greater spectrum of potential clients than ever before. Today, clients look at surveillance products and see them from a refreshing "want" perspective. Life in sales gets fun when customers actually want your product. Both volumes and margins tend to go up as a result of an increase in demand created by the "want" factor. With no ceiling in sight for growth in surveillance system sales, it is easy to understand why so many dealers are jumping onto the digital video surveillance bandwagon.

However, in the midst of gleaming optimism, it doesn't take very long for these dealers to realize there are significant obstacles still lurching about that can prove very frustrating when trying to figure out how to find a niche, create market share and become that go-to company for high-tech digital video security solutions. Obstacles abound even for companies that have provided video surveillance for decades.

Finding a Sophisticated, Easy-to-Use Product
First, there is the obstacle of finding a stable product that is both technically sophisticated and easy to use. Ideally, dealers would like one product capable of handling jobs from high-end applications to the more basic applications servicing the needs of the small-business owner. No one wants to maintain training personnel across five or six DVR products. Ever heard of the proverbial "Jack of all trades, master of none"?

Dealers who have become dominant forces in digital video surveillance have learned it isn't enough to just run cable, hang cameras, plug in a VCR and hit record. Customers want to know how to use the advanced features of the systems they are paying top dollar to have installed. They want these systems networked. They want to know how to control these systems from remote locations. They want to know how to set up alarm commands, use input and output devices, and adjust frame rates for optimum storage. All of these things take more than a passing knowledge of the way each DVR product is built.

Finding qualified sales and technical people who are competent in this new digital technology is proving to be easier said than done. For decades, our industry's technicians have been low-voltage people who pulled wire, fished walls and mounted cameras. Very little product programming, training and setup were required. Certainly no IT networking or extensive computer skills were needed.

Customers willing to spend top dollar for quality products and solutions expect competent technical training. Because these systems interface with the customer's computer and/or computer network, some degree of IT and computer networking skills are necessary when providing installation and training services. These are skills that many traditional low-voltage security installation techs seem to have trouble with. This is where significant frustration often enters the equation.

The sales department has no trouble selling the benefits of this new magical technology. The customer is excited. He can't wait to see firsthand all these wonderful new features his salesperson has promised him. But, to his consternation, he finds the installer doesn't know much about how the system actually works once he gets it installed. When questioned, the installer tells him he needs to call his Internet provider to figure out how to get it online so he can view it from remote locations. He assures the customer he knows it can do all the things his salesperson told him it could, then hands him a user's manual and tells him good luck.

Customer service calls begin to increase as customer satisfaction plummets. Making things simple for technicians is critical. Getting them trained to a proficient level so that they can properly install and service digital video surveillance systems can be difficult. Few companies offer any significant IT and networking training. It does no good to teach people how to operate their sophisticated software if no one knows how to get it on the network.

Opportunity exists, but obstacles abound.

Finding the Right Product for the Right Price
Second is the obstacle of finding a quality product priced so that it can be sold in volumes and at margins necessary to support a truly professional company. Most quality DVR systems are priced considerably higher than VHS systems. Yet, many dealers have not successfully passed those cost increases along proportionately to their customers.

Learning how to sell these systems at acceptable margins has proven a difficult task for many security sales reps, who for years have been nothing more than equipment sellers. These salespeople, for the most part, know only how to compete on price.

Selling value and margin is an art. It requires a consultative selling process that most equipment sellers have never been taught. Consequently, many dealers struggle getting the margins they truly need on higher-priced digital systems. They have no trouble getting the customer interested in the fact that they don't have to change video tapes every day or two.

But many times, they simply can't build enough value in the mind of the customer to justify paying the true margins that are needed to be profitable long term in the world of digital surveillance. Selling at true acceptable margins means adopting a consultative selling approach that is much different than that of the equipment seller approach.

Opportunity exists, but obstacles abound.

Finding a Way to Market the Product
Third is the obstacle of trying to figure out how to market this new generation of security products. With so many new applications and benefits offered by digital video surveillance, virtually every business -- regardless of type or size -- can now afford and benefit from it.

So how does one get in front of literally thousands of new potential clients and decision-makers? Of course, bid work and the usual business networking and referral processes will always be staples of lead generation. But these methods leave out hundreds and thousands of high-margin, low-profile local businesses.

For example, how does one get in front of the local liquor store owner who has 15 locations and can be led to easily justify spending a quarter of a million dollars to employ these integrated management tools?

Opportunity exists, but obstacles abound.

Combating the Problem
All of these obstacles are very real. Many in the industry are doing their part to find solutions. American Sentry Guard, for instance, has created a business plan that allows the company to come alongside dealers nationwide with a new business model.

The company developed a business premise that dealers and systems integrators would benefit from a comprehensive program of quality products and service and support mechanisms designed to increase collective marketing, purchasing and fulfillment power.

American Sentry Guard created a national equipment-financing program so that dealers can leverage new customer sales potential with lower rates and a broader range of qualifying credit criteria. This program allows for the financing of all security-related equipment, not just video equipment purchased through American Sentry Guard.

The company created a targeted direct mail co-op program and national outbound call center. It also created an in-house sales and technical training program designed to give real-world practical sales training.

The digital revolution has arrived. This industry is ready for a network of dealers who are empowered, efficient and laser-like focused. It's ready for dealers who have overcome the obstacles.