entrepreneurial dealer has been the origin and lifeblood of the
security industry for more than 50 years. At any given time during
this period, there have been 12,000 to 15,000 reported dealers in
the security and alarm business.
Due to the ease of entry into the security industry and the
relatively low capital requirements, the small and entry-level
dealer population has seen an annual recycling of companies
approaching 25 percent. Even so, some of these dealers have grown
into very large and successful local and regional businesses.
As the potential of the security industry has become apparent,
larger national companies have entered the market to sell and
install products. Dramatic pressures have been created by the entry
of very large and well-capitalized utilities (telephone or power)
into the industry, including bundling of service offerings to the
end user and the relentless acquisition of the regional and
nationally recognized companies.
However, local and independent dealer-based businesses continue
to dominate the electronic security market. Many of these dealers
have had difficulty effectively making the transition from an
entrepreneurial company to one that can compete against those large
and national providers.
The independence of the small dealers leaves them in an exposed
and tenuous position. Whom do they seek assistance from? Where can
they develop financing to compete with the new selling plans from
the larger companies? How do they secure consistent and lower-priced
product to competitively serve their customers? Can they afford to
advertise to the same extent that a large, consumer-based utility or
multinational company can?
The solution may be to enroll in a dealer program. Such programs,
which are becoming more and more prevalent, can keep independent
dealers competitive via sales and marketing, administrative,
financial and other support services.
Many Companies Offer Valuable Assistance
Dealer programs for the security industry, as well as the home
automation/entertainment industry market, are offered from a wide
array of industry-related businesses, such as monitoring,
manufacturing, distributing, financing and other companies.
Dealer Programs Are Available in 3 Forms
In general, there are three different types of affiliation
programs: franchise; authorized dealer; and associated dealership.
Various providers may identify these under other categories, but the
differentiation remains the same.
Keep Up With Products Via Technical Support
Technical support usually is based on specific or proprietary
product lines that the participating dealer has or will have access
to. The support may include training at the provider facilities,
regional training sessions, or on-site at the dealer premises,
depending on the complexity of the product or service.
Marketing Support May Include Ad Materials
Sales and marketing support is probably the most critical area
for the success of the affiliation relationship.
Administrative Support May Include Billing
Administrative services and support may also be offered in a
dealer program. Where there are long-term financial relations to be
administered between the end user and the provider, or where there
must be clear definitions of the services being offered, it is
always prudent to utilize a contract that spells it all out.
Additional Support May Involve Networking
One of the greatest, but most intangible mechanisms, to develop a
dealer organization is through networking. Dealers should be
supportive of each other in representing the product or service,
even if they may be competitive in geographic presence.
Financial Support Comprised of 4 Kinds
Financial services fall into four general categories: leases,
loans, conditional loans and purchases.
Make Sure Affiliation Contract Is Reasonable
No program can effectively be managed unless there are means to
measure and quantify the result of the efforts. Sales results are a
necessity regardless of the product or service offered. Market
demographics are also a management tool to determine the results of
advertising expense or promotional programs.
Programs Breed Success, Growth
There is greater strength in the combined efforts of the dealer
and the provider than either can reach on their own.