Question:

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Ken

    What makes anyone think they "own" the customer any more than an alarm company purchasing a vehicle?  You purchase a product (car or truck) with some type of time limited warranty.  The dealer doesn't "own" you.  You can choose to purchase service from another dealer should you be dissatisfied with the original dealer.

    If it's a good product and serviced in the manner you want, you return again.  If dissatisfied you will go elsewhere.

    When the industry enters into open combat on the customers front lawn, there are no winners.

    Some people need to grow up.

Respectfully,

John W. Yusza, Jr., President

Monitor Controls, Inc.

Wallingford, CT

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Question:

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Ken...

    RE: Take-overs, another perspective.

    The Newsletter has expressed lots of opinions about account take-overs, a/k/a conversion marketing, a/k/a stealing accounts.  Most of the defensive comments seems to bet on the language of the contract to keep the customer rather than quality performance.  That could be a very weak defensive strategy.  

    Please correct us if we are wrong by assuming that the contract language does not protect you from takeover, just the loss of the contracted revenue .  For example, the customer could have 12 months remaining on a contract X $30 monthly = $360.  I would gladly pay off (you) a portion or all of the remaining value of the contract if I then capture that customer that has buy/sell market value of $1000 or more.     

Lee Jones

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Response and answer:

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    Providing good service does not always keep the account.  Some subscribers will be swayed by lower prices or persuasive salesman, promises -realistic or otherwise, or other gimmicks.  Unless the alarm work you do is your hobby I have to assume that you are trying to build a business, a successful business.  You are not going to do that by simply relying on good work and good customer relations.  Of course that is essential, but it's also a given. 

    Your business is accumulating contracts with recurring revenue streams.  All Standard Alarm Forms provide for recurring revenue except for the Sales Contract.  Your subscribers need to know they are covered - locked in, if you will - to a contract, cementing the relationship.  Any potential buyer of the accounts or business will want to see proper contracts with the subscribers.

    What happens when you lose an account and you get a call offering to buy out the rest of the contract.  If you are being asked to sell your account to another then why limit yourself to what's left on the contract?  Why let the in-coming alarm company laugh all the way to the bank because they are thinking that the account is worth 35-40 times the RMR and they paid only what was left on the contract?

    Don't agree to sell the account for that number.  Use the 35- 40 RMR formula.  Unfortunately, the subscriber or the in -coming alarm company can simply pay off the contract and tell you it's terminated; not to be renewed.  If you see that the in-coming alarm company is causing more than a few of your accounts to leave you then sue for tortious interference of contract, and use 40 times the RMR.  Don't forget to demand punitive damages.

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