Q&A- account take overs

Question:
      What is the best way to handle account take overs?  We are
getting more and more request from people who no longer want to be with the
alarm company that they are with.  Also, my salespeople are finding more people
who want to change.

Thanks,
Robert Hanley
Certified Security Systems
Spokane, WA
==============================

Answer:
       Account takeover can have different meanings and arise from many diverse
circumstances.  This is a question I have to respond to fairly often.  First I
should point out that because a significant part of my law practice is
representing alarm companies who sue their subscribers for breach of contract I
typically respond to this question by saying that I will not assist one alarm
company to "acquire" the subscriber of another.  More often than not I
represent the alarm company about to lose the account and I know I will soon be
suing that subscriber.
     Having said that, and since the inquiry comes all the way from Washington,
I will address the issue.
  There are two ways to be in contact with a new subscriber.  Either you
solicited the subscriber or you were contacted.  Let's look at both scenarios.
     If you are soliciting subscribers you need to reasonably careful not to
solicit the subscribers of other alarm companies who are under contract.
Inducing a breach of contract can subject you to a lawsuit and liability.  This
does not mean that you can't cold call.  It means you can't target another
alarm companies accounts, you can't misappropriate another alarm company's
customer list,
you can't use the equipment owned by the other alarm company, you can't make
disparaging remarks about the other alarm company in an effort to persuade the
customer to terminate its contract with the other alarm company and generally,
you can't use dirty tricks to persuade the subscriber to switch.  You can make
an innocent call, ask if the subscriber is under a current contract (that is
enforceable) and if not ask if they are happy, etc., and if you can do anything
for them, etc.  When do you cross the fine line of inducing breach of
contract?  Like porno, it's hard to define but you'll know it when you do it.
     If a subscriber calls you it is a different matter.  I know some of you
will tell me how you will call the other alarm company and give them a chance
to save their customer (yeah some guys really do that), and that some make a
careful inquiry about outstanding contracts, but I don't really know how
necessary that is.  If you get contacted I think you can fairly safely start up
a relationship with the subscriber.  If the subscriber is breaching a contract
it's not your problem.  Make sure you don't use the other alarm company's
equipment.  You should know better and it could be conversion, making you
liable for the value of the equipment, and maybe more (like the savings you had
in avoiding a new installation).
        Well, let's see how everyone else handles this.
                        ---------------------------------
 Additional Comments:

     We do not encourage clients from other companies to break their contracts,
and as you correctly point out, there may be equipment ownership issues. This
must be checked. We will often, providing that a client really wants to switch,
not charge them until the renewal date if they can provide us with
documentation showing the renewal date and that it has been paid. BEWARE of
clients (or potential clients) that will switch companies on a regular basis
and not pay. We will also in certain instances contact their alarm company and
mention that they may want to look after their client a bit better. This
courtesy is extended to legit companies in our specific area, and usually we
can count on them reciprocating. You know, it is pretty futile to switch
accounts with other companies back and forth. There is enough business out
there that I feel there is no place for predatory marketing. Unfortunately not
all companies feel this way.   Ivan Spector, Sentinel Alarm, Montreal
---------------------------------------------

Ken:
Thanks for the reply. I never had the heart to hold a customer to a monitoring
contract that hasn't had a single payment. I always just got paid a goodly sum
for the work. I never had this on a full install. For some reason those
customers knew what they were doing, and I always got paid. Go figure. Is it
really worthwhile to fight and create hard feelings for $20 per month? I spend
more than that at my news stand each month.
-Mitch
-----------------------------------------------
Our policy and practice is:

1 - Every sales person reminds the customer, no matter who made the initial
contact, the customer may have obligations to his existing alarm company under
an existing contract.  (Usually this merely elicits a note of disgust from the
customer, who is already fed up with his present service.)

2 - Should the customer sign our contract, we send a letter to the customer
thanking them for having selected us and reminding his that our Sales Rep did
tell him he might have obligations to the other company which were his to
settle.

3 - After the customer has signed, we write the other company putting him on
notice and asking if any equipment belongs to him.  Rarely do we ever get a
response (except to say they don't get such letters from others).

Keith M. Ladd
The Protection Bureau
Exton, PA 19341
610 903-4900

--------------------------------
Hi Ken:

    I want to comment on the latter portion of your response. When you stated
that "If the subscriber is breaching a contract it's not your problem." I
disagree. Perhaps you meant from a legal point of view, looking at contractual
interference, maybe? From a business point of view it becomes your very own
problem and headache.
    When the customer writes or otherwise notifies the old alarm company they
have left, very often the customer finds out that they indeed have a valid
enforceable contract. What do you do then? You have already installed your
equipment and packed the old alarm, communicator or panel nicely for the
customer to give back. Now the customer has to pay for two alarms, which he
certainly won't do. You can tell him that he has to settle with the old firm.
But when push comes to shove, unless the old system is completely gone and it
isn't just a communicator or panel change, it is your problem. Expect a call
from the old firm threatening interference, because NOW you know about the
contract. They will rattle some sabers or even have an attorney write a letter
to you. While you may be able to handle this, the customer is getting it much
stronger than you. You can bet that every call or letter received is followed
by a call to you from that customer. Sure, you can tell him they are not going
to sue him for $200 or $300 on a year of monitoring. He won't believe you. He
will tell you that he made a mistake and he can't change firms yet.  How much
monitoring are you willing to eat? Six months? Two years? Most of the time I
have found that the customer will offer to pay you for your time and expense in
putting your new equipment in and offer to call you back in when his contract
really ends. Of course he will be too embarrassed and you will never, ever hear
from him again. He is more afraid of his old firm than of you. After all, he is
leaving them. Most of the time the customer doesn't have a real good opinion of
his old alarm firm.
    If you install a full system, that is another story. It isn't a service
call and dialer. Now it is real money you laid out. Not so likely to eat the
loss, and you have a customer between a rock and a hard place. When he finds
out you just played the same game as his old firm, he isn't a happy guy. You
now have an unhappy customer who thinks that if he doesn't pay you at all, it's
better than paying you and having to pay two firms at the same time. There is a
good chance you will be suing him for installation and the full contract. Not
your problem? Think again.

Mitch Cohen
Project Engineer, Security Consultant
Edwards and Zuck PC, Consulting Engineers
(formerly of Paramount Security)
mcohen@edzuck.com
mitchc@optonline.com


---------------------------

First here's the story which will tell you why I handle it the way I do:

Many years ago, a store in my town, that had been empty for a long time was
rented by someone who called me to do his alarm. There was already equipment
there and the name of the alarm company was on the door, but I assumed the
equipment was purchased and just left behind by the previous tenant. I
reprogramed the chip, reactivated the system, charged the new client a fair
amount for my time and set him up for monitoring. A few days later I get a call
from the previous alarm company, all bent out of shape because I'd taken over
his "leased" equipment. I asked him why there wasn't any indication on the
equipment and he said he "didn't do that" All he had was the lease agreement
from the previous tenant. So ... I had to go back and pull out the chip, and
leave a new one for the other alarm company, refunded the clients money and
gave the other company the account. Waste of time, waste of money and to this
day, (about 18 years ago), that other alarm company *still* thinks I tried to
"steal" his account.

Second story:      How many times have you had a client fall in arrears and
then cancel, owing you months of monitoring, only to find out later that he's
being monitored by someone else? If he did it to one alarm company, chances
are, eventually, he'd do it to the next.

For those two reasons, I always call the previous alarm company under the
premise that I'm being courteous, to let them know about the account, but in
the process I ask all the questions necessary to insure the validity of the
account.

The end result is ..... every body who deserves to be happy ..... is.
It's just a good business practice.

Reliable Alarm.
----------------------------------------------

Dear Ken:

I read the attached e-mail, and had to respond. It was written addressing alarm
takeovers.
I have taken over quite a lot of systems of the years, and most have one common
thread, poor service by the installing company. I have found, almost all
customers getting good service, won't switch even if pricing is a little lower.
Consequently though, I have only once, had the other company release the "lock
out code" regardless of contract status.

As for my question: My intent, is to advertise (flyers, etc.) targeting
customers with an existing system, with poor service. If they are in contract,
I will not take them unless they pay it out, or complete it before switching
(always my policy). I figure, if they will breach there contract, why should I
trust them either. Is there some unwritten rule, making me liable for
advertising lower rates or better service?? Or, dropping a flyer in the mailbox
of a prospect, that has another alarm company sign, etc., outside their door?

I am really curious as, I have seen an awful poor alarm work out their.
=====================

Mr. Kirschenbaum ...

      Reference your "Account Takeover Answer", and your last comment in your
response to Mr. Hanleys Question...

"Well, let's see how everyone else handles this"..............

You laid it on the line... guidelines, laws and truths are to be followed no
matter how much a person needs to put bread on the table!... these laws are
there not only to protect the alarm company from such practices, but the client
as well... causing the client to get in the middle of a legal battle that they
dont understand anyway!... its no different than our mortgage, car or other
contracts that we 'read', agree to, and sign our names too for a period of
time.
They dont need to handle it ... this is the law... period... its there to
protect and so forth... you get way too much flak in my opinion for the honest
and true help that you give... You gave a beautiful explanation of a touchy
matter...
Savannah