Stay Focused

Price system says to consider most profitable services

• By Kevin Lehan
• Apr 01, 2017

In free-enterprise systems, common economic theory dictates that business resources—meaning time, money and labor— should be allocated in the manner that obtains maximum profits.

For decades, the most profitable activity for alarm contactors was to sell a system (at a loss), recoup costs via recurring monthly revenue from monitoring and then profit from good service that retains the customer for many years. The next step was to repeat this process at a rate much greater than your attrition to grow your customer base and overall recurring monthly revenue (RMR).

Today, however, you should consider focusing efforts on existing commercial customers by offering two-way, mass-notification service from your central station, which represents an added layer of RMR for those accounts.

Another opportunity is to sell mass-notification service as a stand-alone system to operators of facilities in which you do not currently have the system under contract. With your foot in the door, you may be able to gain the entire system from your competitor, thus increasing your market share.

EARN REVENUE FOR EACH BUILDING OCCUPANT

Offering a mass-notification system to existing customers that draw a repeat daily population, such as schools, offices, hospitals, factories or government agencies, enables you to earn additional revenue based on the number of “contacts” who must be notified in emergency and non-emergency manners.

Your compensation includes the revenue you already receive for equipment, installation, maintenance and monitoring, but you gain an additional revenue stream for making individual notifications by text, email or digital voice to each “contact” subscribed to the massnotification service. Those messages could be received—and replied to—via a smart phone, tablet or computer.

Further, you can provide ancillary services that schools pay for now to facilitate non-emergency communications, such as promoting a school-wide function, a teacher informing parents of an upcoming field trip or cancellation of classes due to severe weather.

In other words, mass-notification could be the most profitable service you can offer existing customers who have a system in place already.

OPEN DOORS TO A NEW MARKET

Alarm contractors can also sell mass-notification service to communities, which is a huge new segment of potential customers. Those communities in turn would then promote a website or text address that enables citizens to OPT-IN to receive local alerts. Whoever chooses to opt in will receive the notices that the community decides to generate from the mass-notification portal.

Depending on the wants of the community, the service could either be free to constituents or require a subscriber charge, which could cover the cost of the service or priced so that the community creates a new revenue stream, as opposed to a cost.

A mass-notification system could be used to alert citizens of an impending tornado, crime sprees, a boil order, a train derailment that’s blocked the main drag—anything really—and the means to receive community feedback, including requests for help.

For example, an attempted child abduction takes place at a community park and officers receive a description of the perpetrator and his light blue four-door sedan. The sergeant tells a dispatcher to notify opted-in community members of the pertinent information by text, email or digital voice. This will make people aware of the incident and they will be on the lookout for the perpetrator.

After the notification is generated from an online portal, a recipient may see a car fitting the description at a different park? That person can then send a response text message, possibly accompanied with an image: “That guy might be in city park—here is a photo of his car.”

Maybe the license plate is showing or the sender says that the blue car is heading west on a certain street. That’s valuable information that could lead to apprehension—and a safer community.

It is also a means to generate a new stream of revenue for your company without installing a single piece of equipment. Instead, you are selling access to secure online portal from which two-way communication is facilitated.

MAXIMIZE PROFIT POTENTIAL

Economic best practices require that a business focuses on its most profitable functions. Tightly related to this thinking is that the cost of every good or service is relative to perceived value. Because prices are expressed in terms of currency, which is a commodity, price allows people to develop their own comparative values for the products/services you offer.

When this is applied to mass-notification service for existing customers, the best way to present this is that the cost per contact is pennies a month.

With such a nominal cost—compared to the horrific potential of not having such a system in place—alarm contractors can be assured of gaining a significant share of this new market and revenue stream.

This article originally appeared in the April 2017 issue of Security Today.