DIY Security Systems Generate Recurring Revenue
Front Point Security sells pre-configured GE Security panels and Alarm.com service, no fleet required.
Peter Rogers was a typical security dealer for about 15 years, working for some fairly large companies that sold, installed and monitored traditional systems, including GE Security (previously ITI).
But when it was time to venture out on his own, Rogers took an unconventional path: DIY.
Instead of hiring professional installers, buying trucks and investing in an infrastructure to manage a large number of installations and service calls, Rogers developed a business model in which consumers install security themselves.
He and two partners founded Front Point Security, based in McLean, Va., in 2007. The company sells some of the same security panels that pros sell and install, namely, the Simon XT from GE Security, but instead of rolling Front Point trucks to the customer’s home, Front Point ships product via FedEx.
The security system arrives at the premises completely pre-configured. The customer follows the included instructions to install the alarm panel and accessories, and then calls Front Point for activation. At that time, “we remotely check every sensor to make sure they’re all communicating,” says Rogers.
Then the Front Point meter starts running to the tune of $35 to $50 per month. Front Point has its own in-house central monitoring station and call center. In fact, says Rogers, “everything happens in Virginia” with a staff of roughly 60 Front Point employees.
Kevin Bish, an Internet expert, runs marketing for the company, generating leads from paid search and other Internet opportunities. By now, Front Point has enough customers to generate referrals organically.
Don’t Call it DIY
Although consumers install the Front Point themselves, “We don’t call it DIY,” stresses Rogers. “We call it ‘Easy Install.’”
That’s because Front Point provides a level of support not typical of security wholesalers. The company pre-programs all panels and accessories, and even installs the batteries. When GE would not make a tabletop stand for the Simon panel, Front Point made one itself.
“We get dealers asking for it,” Rogers says. “They see the pictures and ask what the GE part number is.”
Front Point offers three levels of service to customers:
Protection ($34.99): Traditional alarm monitoring with GSM communications, plus some modest security interactivity - no land line or Internet required.
Interactive ($42.99): Adds Z-Wave lighting support, and automation and alerts via Alarm.com.
Ultimate ($49.99): Adds wireless surveillance cameras and support for Z-Wave thermostats and locks.
If customers opt for the simple Protection package, Front Point adds one free month of Alarm.com interactive services for two very good reasons: First, for consumers to name their sensors and program simple features themselves, they need to communicate with Alarm.com; and second, once they use it for a month, they usually won’t give it up, says Rogers.
Roughly 90 percent of all Front Point customers opt for the Interactive service, according to Rogers.
Front Point provides three packages, starting with a standard kit that includes one control panel (with cellular radio included), two door/window sensors, one motion sensor and one keychain remote.
That system retails for $100 with a three-year monitoring contract or $375 with a one-year contract.
Cameras are sold separately for $180 to $400, depending on pan/tilt/zoom and indoor/outdoor capabilities. Front Point sells Z-Wave lighting modules (not switches) for $50 each; GE touchscreen keypads for $140; and GE hard-button keypads for $80.
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Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at email@example.com
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