The decision to expand your product and service offerings is not one to be taken lightly — without careful consideration you could do more harm to your business than good. However, a logical expansion can be the boon your company needs for extended growth and success.
There is a good chance that, by now, you have considered adding security to your roster. It makes sense, as it is now tied into the whole smart home system that includes AV, but with so many already providing the service, will it pay for you to jump in?
It did pay off for Todd Sandler, owner of Kansas City’s Naturally Wired, who expanded into security early on in his shop’s history, and has since used it as a tool to win more business from existing clients and bring in some recurring monthly revenue. So how did he navigate adding it to his AV roster, and how has it evolved along with the rest of his business?
In the Beginning
“It was fairly painless and reasonably simple for me,” says Sandler. “I was strictly an AV guy for two years, and one of the first employees who I hired had a security background — he was a security subcontractor. He provided the basic information for me to better understand what I needed to know in order for us to start doing our own security systems.”
That included knowledge such as the brands he liked using and why, plus the contacts he had to purchase those brands. Even better — that employee was a subcontractor to local security companies, so, once he joined Naturally Wired, Sandler took on that work as well.
“I rolled his knowledge into the company and expanded on it,” Sandler elaborates. “We used it to start installing systems before I or my other employees got trained in it. We started as a subcontractor and then moved into selling and installing our own systems.”
Sandler started with a brand that, at the time (the late ’90s), was industry standard — Ademco (which is now rebranded as Honeywell). The reasons behind the choice were fairly simple, according to Sandler. “It was the 800-pound gorilla in the room,” he says. “We went with them because it was so well known and popular and, as I brought in new employees, I didn’t have to do additional training because they were already familiar with the system.”
Naturally Wired’s ability to handle AV as well as security helped them compete against the solely security dealers in his market.
There were a few things Sandler had to get used to as a security dealer that differed from his existing AV business. The cost of entry was not insurmountable — purchasing some specialty tools and programming equipment were about it. And Ademco did have a proprietary software system that he had to buy.
The customer expectations took a little more getting used to. “The immediacy of service was the biggest thing,” he explains. “There is a higher level of customer expectations. If there was a problem with the security, it would have to be fixed very quickly — as close to immediately as possible. If you can’t watch a TV, you can get there the next day. We quickly ramped up our turnaround need for service calls.”
Beyond the cost and customer handling, the next challenge was quickly ramping up his knowledge and that of his staff. “It is a vastly different knowledge base than AV,” says Sandler. “Those of us not familiar had to quickly learn industry terms and lingo and the devices used — for example, we had to understand the different motion detector and glass break options. Similar to the AV side, where we know speaker or TV differences, we had to acquire new knowledge for new products.”
Making Money with Contracts
The model for security systems hasn’t really changed much in the decades since Sandler made his start in it. You know the deal — you get a “free” system with a monthly monitoring contract. In the beginning, Sandler sold all of his contracts to a monitoring station, who would pay anywhere from $750 to $1000 for a contact. “It was quick cash,” he explains. “That can be done today, but we don’t do it anymore because, when you do that, your recurring monthly revenue opportunity goes away.
“Now we wholesale the monitoring through a third-party company. We disclose all the info to the customer, but the third-party does not have anything to do with the client. They will only contact the client for an alert. A malfunction or question about equipment goes directly to us. So we keep the RMR.”
AV & Security & Smart Home — One Big Happy
Today, Sandler doesn’t treat security as separate from the rest of his business. “I look at security and smart home as synonymous, because it has grown into about 25 percent of my business,” he says.
It has also become a significant upsell for his AV business. “Most of our security jobs come in through AV,” says Sandler. “For the most part, security is more of an add-on service than the other way around. If they want security, we get their business 90 to 95 percent of the time if we are already doing their AV. Going the other way — security to AV — it is closer to 50-50.”
As far as smart homes go, Sandler sees security as the starting point. “We basically paint the picture to the client that, if they want a smart home, they start with security,” he says. “The reasons for that is because the security system puts all the devices and contacts in place for the house to be aware of who is home or not home. The security system becomes the basis for the house to know your status. Now we can do all the other smart home things, and they do things based on your status. For example, if you leave, the house knows and sets the thermostat back and all the AV equipment turns off.
“Out of all the jobs we do, we integrate some sort of smart home feature into 75 percent of those houses.”
Want more stories like this delivered to your inbox every day? Then sign up for the free Residential Systems eNewsletter here.
New Gear for New Times
With smart home sophistication mingling with security systems, Sandler had to re-evaluate his equipment choices. “We have switched over to 2GIG,” he says, “because 2GIG is more modern and current.”
Another reason for the move to 2GIG is because it is part of the Nortek family, which allows Naturally Wired to use one product for different levels of installations. “We pair with ELAN for the high-end systems, and use the same 2GIG product with Alarm.com for lower end smart homes,” says Sandler.
When pressed for some final recommendations for residential integrators looking to make the move into security, Sandler offers: “Start small. Pick one security system and stick with it — learn it inside and out. We stuck with the same one for 25 years and, when it came time to switch, we had a full day of training and a factory rep came and put in a few test systems with us to make sure we understood it. Get comfortable and familiar with whichever system you choose.”
While results will vary, Naturally Wired offers a clear example of successful security integration.