Video, Managed Services and Increasing RMR Rates Lead Industry Growth in 2013 and 2014
The results are in: 2013 was an unexpectedly good year in the alarm industry. The integrators and dealers that participated SDM magazine’s 2014 Subscriber Market Forecast Study experienced an average increase in total annual revenue of 9.9 percent from 2012 to 2103, far outpacing the meager 1 percent they estimated they would have at this time last year. What’s more, they expect 2014 to offer even better growth – an estimated 12 percent. While the survey participants varied widely, from small dealers to large companies in the top tiers of the SDM 100, most reported being less focused on sales and installation, more focused on increasing RMR, and proactively more selective when pursuing and committing to new business.
While installation revenue varies widely across participants in the survey, depending on the security company, the territory, and the markets covered, among other factors, the overall experience seemed to be that revenue growth from sales and installation was “lackluster.” While the participation of smaller companies in the survey may have skewed the growth in sales revenue higher (an average of 38 percent), many companies reported “flat or only slightly improved” growth in this revenue area. At least one survey participant, commenting on the results and its experience in installation and sales, suggested that lingering fears over the economy was contributing to “pent up demand,” especially in the commercial marketplace that might ease a little in 2014.
While sales and installation appeared more stagnant last year (and many expect the trend to continue for a little while longer, either because of economic or market factors, or company business and sales strategy), RMR appeared to be the universally recognized revenue leader in the survey, with more than 64 percent of the survey participants enjoying higher RMR. Some of the companies surveyed attributed their growth to a renewed business focus on achieving RMR, to new marketing choices and strategic business decisions, including being more selective in selling new business, for example, choosing to focus on small businesses and residential customers instead of only on large commercial customers, and responding to the demand for more interactive or managed services, and video monitoring.
Many of the companies surveyed also believe these services will drive revenue performance going forward. The overall outlook in the industry has improved, with 59 percent of the respondents expecting to achieve some growth in 2014, despite the perception that the economy remains somewhat stagnant. Three main services are likely to contribute to both sales and revenue growth in 2014: managed services, interactive services/lifestyle enhancements, and, remote video monitoring. In one survey, seven out of 10 respondents plan to invest in video equipment and other monitoring devices, especially given the huge jump in the average monthly cost of monitoring from $26 in 2012 to $37 in 2013 attributable to those services. Indeed, real-time or virtual surveillance is where dealers and integrators seem to believe the money is, in both the commercial and residential markets.
Click here to read more about SDM magazine’s 2013 Market Survey.