The following is an excerpt from the Monitoring Matters column featured in Security Sales & Integration magazine. Our Vice President of Technology and Innovation, Morgan Hertel, is a regular contributor and authored the article below.
It isn’t surprising that many mass marketing organizations in our industry have shifted down and changed the way they do business. Nor is the reason obscure: giving away hundreds of dollars of alarm equipment as an incentive for new customers no longer makes sense in the face of the rapidly growing costs of subscriber acquisition.
The math is pretty easy. If your cost of acquisition is in the high 20s, it’s well nigh impossible to make that work in a 36-month contract. Increasingly, acquisition programs charge more money upfront to offset their costs or higher monthly rates are stated. In some cases, a financing option is offered in addition to monthly monitoring.
There are myriad reasons why the cost of acquisition is more expensive, and it would be easy to say, “Isn’t everything?”. Unfortunately, there are very compelling reasons that are endemic to our industry, and they make it certain that a major change needs to be in the works.
Both wholesale monitoring and full-service centers have had to do their part in dealing with the compressed margins their dealers are facing, but in many markets, it has been a race to the bottom. Those with larger economies of scale, along with additional technology, have been successful in lowering prices and maintaining margins while continuing to provide good service.
Still, even those are teetering on the edge.
To read the full article, click here.