Consumer GuidesElectrical, Telephone & Data

Alarm Companies

For more than 100 years, alarm companies make their livelihood by installing systems to protect lives and property, both residentially and commercially. The most common scenario was for a system to be installed after a potential customer had received several estimates from two, three or more companies. The system was usually purchased, although leases were not uncommon.

Over the years, more and more emphasis was placed on having the account monitored by a central station for police or fire dispatch. This might be at the customer’s insistence, the insurance underwriters’ demands or at the urging of the alarm company.

Around 1980, the alarm industry began to recognize the value of the “recurring monthly revenue” (known as R.M.R). The push was on for monitored accounts versus the more traditional style known as “local” alarms, where bells and sirens sounded on the premises only. These new “R.M.R” accounts represented steady cash flow to the alarm company.

About 1990, a new industry approach emerged on the scene. These were the mass marketers. They would put in systems at no immediate profit, sometimes deferring it 12 to 24 months. The equipment might be owned by the customer or it might be rented. The only common denominator was the “R.M.R.”

Today, there are several thousand alarm installing companies in the country. Some are large with thousands of accounts, some are small with just a few. Some companies operate out of private homes, some are national with hundreds of employees and multiple locations.

However, larger doesn’t necessarily mean better. Many companies are now selling off their “R.M.R” accounts to larger “finance type” companies for what is knows as “multiples.”

For example, if you pay $25 a month for monitoring, you are paying $300 a year. A alarm company might sell your account for 20, 30, even 40 times your monthly payment. So, your account would sell for at least $400 to $600. And this is all quite legal.

You may think you don’t care—until you need service or have a billing problem and have to deal with an office located 2,000 miles away. That company might sell your account off again, as multiples rise and fall.

So the bottom line for the customer is this: Go into a relationship like a marriage, look for commitment, longevity, stability and mutual respect. Be partners in a relationship, not a commodity to be bought and sold among finance-type companies. Don’t you deserve a sense of security from a security company? Don’t settle for anything else.

If you are currently seeking a security company, feel free to ask them if they sell off their accounts or keep them in-house for long term growth and a lasting relationship. You’ll be glad you did.

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