Close Window  

SJ&Co. Security Industry Consultants

Sandra Jones & Company. Security Industry Consulting Firm

Heightened market sophistication and the emergence of large corporate players have made business more difficult for smaller, independent dealers. Dealer programs can help them remain competitive with sales and marketing, administrative, financial, technical and other assistance.

By Sandra Jones and Craig F. Leiser

The independent 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.

The full print version of this article can be obtained by contacting us at (440) 285-4444.

Copyright 2001, Sandra Jones & Company.