Domestic secrets!

Despite the fact that alarms play a major role in discouraging burglary attempts, homeowners still, typically, purchase only after they’ve been burgled.

But the flipside of this low take-up of professionally installed alarms (fewer than ten per cent of households) means that this sector represents the greatest opportunity for growth.

Over the past few months the British Security Industry Association, supported by the Home Office and the DTI, has been carrying out the most comprehensive survey into this market so far.

The BSIA has given Security Installer the exclusive first inspection of the results of this survey … revealing not only the buying attitudes of consumers but also what installers themselves think about prospects in this sector.

We can, of course, only publish a detailed summary over the next five pages but a careful study of these findings, (covered more comprehensively in the full report) could give you a much better understanding of your potential customer and help you turn that sales “no” to a “yes”.

Consumer attitudes

As anecdotal evidence has always tended to suggest, this survey clearly shows that experience of a burglary is the most common impetus for purchasing an alarm, with 22% of owners citing this as their reason for purchase, followed by the desire for improved property security (20%).

The most common sources of information when selecting an alarm related to recommendation (25% of respondents), contacting a known specialist retailer/installer (22%) and directory entries (10%), with advertising (9%) and direct mail (1%) being cited much less often.

91% of respondents with alarms were using them; 37% said that they used their alarms whenever they were out, however briefly, but 15% said they only used them when they were out for 24 hours or longer. Only one in 12 respondents experienced any difficulties in setting their alarm, and 61% said they used all the features. 92% of respondents were completely or mostly satisfied with their alarms.

‘No idea’ about up-grading

A total of 55% of respondents said that they had no idea at all when they would need to consider replacing or upgrading their system, or else had never thought about it.

33% of respondents with bells-only alarms showed little interest in upgrading to a monitored system and a further 25% said that £100 was the maximum they would consider paying for the upgrade. 73% of these respondents were willing to pay no more than £10 for monthly monitoring costs. Alarm owners with an interest in upgrading to monitored also showed interest in a variety of other features, the most popular being alarms linked to CCTV (mentioned by 29% of respondents), wire-free systems (26%), alarms monitored for fire as well as intrusion (17%), alarms linked to other internal systems (7%).

Only 28% of respondents without alarms said that they had ever considered having one fitted. Amongst homeowners who had considered having an alarm installed, the most common reasons for not having done so as yet were that it was too expensive (36% of respondents), they had not got round to it yet (22%), they had a dog (8%). 67% of respondents without an alarm said that they were aware of the differences between bells-only and monitored alarms.

Those without an alarm

In the region of half of all respondents without an alarm said that they would be unwilling to pay anything for an alarm. The average amount remaining respondents would be willing to pay for a bells-only alarm was £203 and £362 for a monitored alarm. (Compare this to the figure given by installers of what they are currently charging: £480 bells-only and £721 monitored!) The average price respondents were willing to pay for monitoring was £9 per month.

Further questions to establish the views of non-owners, revealed that 30% felt that if they had an alarm they would not bother to have maintenance visits and placed no value on such a service. 29% ascribed a value of under £20 to the maintenance visit, while a further 24% felt it was worth £20-40.

75% of consumer respondents had bells-only alarms, with 11% having monitored and the remainder not knowing what type they had! When assessing the importance of various factors in the purchase decision, respondents placed overall quality and reliability of the system highest, ascribing this an average score of 4.5 in a ranking which ranged from 5 (extremely important) to 1 (not at all important).

Length of warranty (4.0) and Independent quality approval (3.9) are also at least as significant as price (3.9) in the purchase decision.

’Association’ influences

The following percentages of respondents said that they would be influenced by the association of an installer with the following bodies/quality schemes: BSIA (27%), NACOSS (8%), ISO 9000 (6%), SSAIB (4%), AISC (1%). A total of 22% said that all quality schemes were a good thing but did not refer to a particular body or scheme. However, 30% of respondents showed no interest in inspection/quality schemes.

55% of respondents without an alarm said they would prefer a monitored to a bells-only system. The main reasons for preferring a monitored system were that there was a tendency for people to not pay attention to a bell ringing (34% of respondents), and there would be an automatic police response with a monitored system (30%).

Those whose preference was a bells-only system were overwhelmingly influenced by the lower price (39% of respondents) followed by the fact that they could rely on their neighbours responding to a bell going off (11%).

When asked about levels of neighbourhood crime compared to the national average, 56% of respondents felt that their area was better (a lot or slightly) than the national average. Only 12% felt that it was worse (a lot or slightly).

The supply chain

According to installers interviewed, the average split of domestic sales versus commercial was 55% domestic, 45% commercial, and the split of domestic sales of bells-only to monitored was 76% / 24%.

For installers the average product sales split across the board was: security alarms 65%; CCTV 18%; fire alarms 9%; access control 8%.

Manufacturers showed little change in product sales split over the last five years (96% alarms). For distributors the average decrease in the proportion of alarm sales over the last five years has been 28% (55% of sales are currently security alarms).

How distributors could boost sales: ‘ ... the most popular (installer) response was lower prices followed by recognition that payment methods might need to change’

The installers were fairly evenly split on whether or not they could detect growth in the sector (52% saying yes). 37% of manufacturers thought it was growing, and 20% of distributors.

Installers’ profits down

Companies who felt there was growth cited the fact that a few major players were stimulating the market, public awareness of crime was increasing, more house building and young people owning homes, concern about lack of police. Those who felt there was no growth highlighted DIY sales, installers selling too cheaply, the public seeing alarms as a grudge purchase, the preoccupation with CCTV.

The average profit margin decline for installers over the last two years was 3%, and 8% over the last five years. The average profit margin decline for both manufacturers and distributors over the last two years was 3%, with distributors also experiencing in the region of a 7% decline over the last five years.

The main reasons given by installers for their customers purchasing alarms were burglary /attempted burglary at their homes (44 responses), insurance requirements (19), burglary in the neighbourhood (15) (out of a total 108 responses). The average proportion of customers asking questions about quality was 31% - most mentions went to NACOSS (25), followed by cables/wiring (6), fire alarms (5).

In terms of future product development, manufacturers see themselves producing more wire-free, monitored and simpler systems. Distributors also see themselves selling more wire-free and monitored alarms over the next ten years, as well as providing more personal attention, quicker delivery and a better helpdesk service.

How installers can be helped

When installers were asked how manufacturers could help them to sell more alarms, out of a total 205 mentions most interest was shown in the reduction of false alarms (34 mentions) and maximising reliability of equipment (31) followed by offering more marketing assistance (24) and making equipment easier for the homeowner to use (23). In terms of how distributors could boost sales, out of a total 82 mentions the most popular response was lower prices (26 mentions), followed by recognition that payment methods might need to change (18) and then improved quality of advice (13).

88% of installers continue to purchase from specialist security distributors, more than a third purchase from electrical wholesalers and just under a third purchase from manufacturers.

When choosing suppliers, out of a total of 120 responses, installers were particularly influenced by trade show activity (30 responses), followed by advice from distributors/wholesalers (23), own trials/assessments (18), advertisements and mailshots from manufacturers (17).

No waiting for kit

The average installation charge for a bells-only alarm was £480 and £721 for a monitored alarm.

Installers were overwhelmingly satisfied with the product range on offer.

A total of 68% of installer respondents purchased equipment every couple of days, and could get what they wanted straight away in 90-95% of cases. The average amount of time spent on a domestic installation by most installers was 6-8 hours (61%) followed by 32% who tended to spend more than a day on these jobs.

Installation companies with turnovers up to £3 million still seemed to prefer full payment on completion.

Marketing help needed

Manufacturers felt distributors could help to improve the state of the market by not forcing prices down, working more closely in partnership with them and helping installers to market their products.

They felt that installers needed to pursue more effective sales and marketing strategies.

Manufacturers interviewed said they could see themselves providing more marketing assistance to distributors and installers. Over half of distributors said they would be willing to provide more marketing assistance to installers.

When choosing an additional distributor, the major factor for manufacturers was countrywide coverage .

Distributors felt that manufacturers could help to boost sales by making alarms easier to use for end-users, linking them to other systems, eg fire and developing wire-free systems. No interest was shown by the distributors interviewed in providing deferred payment schemes for installers.

Insurers’ views

When insurers were asked what proportion of homes to which they provided contents insurance had an alarm, answers ranged from 4-20%, the average being 11%. The average proportion of these with a professionally installed alarm was 38%, and the average proportion of these being bells-only was 78%.

Stipulations that an alarm must be installed related uniformly to assessment of risk – contents, area and history. All but one of the respondents provided discounts for having an alarm, with a variety of differing conditions. Quite frequently other security measures are also specified.

One company said that incentives were dependent on installation by a NACOSS approved company, two others said that it had to be installed by an ACPO approved company. Three respondents out of eight said that, if an alarm was stipulated, it had to be installed by a NACOSS company.

Market trends

This section compares and contrasts data arising from different parts of the survey to establish strong trends, also comparing this with information arising from other data sources. Some of the findings:

‘Over half the installers said they felt the market was growing ... manufacturers and distributors were more pessimistic’

There is a strong ‘reactive’ nature in the consumer’s buying decision, expressed by both home owners and installers.

A resistance to purchase is also shown by the low price value placed by consumers on alarms.

There is a contradiction between consumers’ interest in quality and their relative vagueness about this issue, and a divergence between this and their focus on low cost.

There is a relative lack of concern about crime.

Installers, manufacturers and distributors have very similar views on desirable product developments – a striving for reductions in false alarms, easier systems for consumers to use, more integration with other systems and wire-free.

Installers optimistic

Suppliers have mixed views on market growth. Installers currently appear more optimistic than other groups. Security distributors are having to compete with other types of providers of security equipment to achieve sales.

The survey considers other factors that may have an impact on future growth, ie, perceived crime levels, house building and purchase, demographics, regulation of the security industry, publicity campaigns of larger operators and new product developments. It suggests Regulation, larger operators’ publicity campaigns and new product developments might be the more influential of these – backed up by more co-operative marketing and development work between all the elements in the supply chain to overcome the current challenging commercial climate.

Burglars and alarms

A variety of existing reports indicate that the majority of offenders are deterred from attempting to burgle a house that is protected by an alarm, for example Burglars on Burglary by Bennett and Wright (1984) and Burglary in a Dwelling by Maguire and Bennett (1982).

Experiments included asking offenders to look at photographs of houses displaying different conditions, security measures etc and asking them which houses they felt it would be suitable to burgle.

In conclusion ...

The research reveals a lack of understanding of, and interest in, alarms by the majority of consumers. The most common reason for purchasing is, indeed, only when a burglary has actually taken place. The vast majority of individuals who do not currently have an alarm show little interest in doing so.

Both those with and without alarms have a low opinion of what they would be wiling to pay for an alarm or an upgrade, which is well short of what it would actually cost to provide the product/service. There is very limited understanding of the difference between bells-only and monitored alarms.

Consumers also showed themselves to be quite complacent about crime levels, generally thinking that they had better than average crime figures.

On the plus side, those with alarms seem largely satisfied with their systems and would always have one in future, although sometimes display rather irrational behaviour in their use of the product. There appeared to be no particular strong feeling that products were difficult to use.

It is clear that considerably more work needs to be done by the industry and relevant authorities to educate consumers about the benefits of alarms, differences in alarm type and their specific advantages. There would appear to be some indications that more growth is in the offing – over half the installers said they felt the market was growing, though manufacturers and distributors were more pessimistic.

The quite robust reasons for believing growth was taking place included: major players stimulating the market through their promotional initiatives; concern about crime levels and the lack of police; new building and more young people purchasing houses. There would also appear to be more of a trend for house builders to incorporate alarms, which is something that can be further developed.

However, certain other issues clearly have to be overcome if these are not to cancel out potential positive developments, eg growth in purchase of DIY systems, suppliers constantly undercutting each other so artificially lowering prices, an abundance of non-approved and relatively under-qualified installers offering cheap alarms and helping to lower the image of the industry.

Both manufacturers and distributors showed interest in providing marketing support to other elements within the group although there is a danger of a ‘chicken and egg’ situation developing with these companies saying they will only help if their profits improve.

Also, whereas some courses of action might seem to have the potential to stimulate the market, eg deferred payment from the homeowner through to the distributor, this may be much more difficult to achieve in practice and appears to be gaining minimal support from distributors at the current time.

Interviews with installers, manufacturers and distributors suggest that some changes to products might play a significant role in creating a more positive attitude amongst consumers towards alarms, eg fewer false alarms, easier to operate, more wire free systems.

It is clear that manufacturers , distributors and installers need to work much closer together on joint initiatives to move some of these complex issues forward and a number of them highlighted the importance of partnerships in the survey.

Home Office support

The project was funded by the Department of Trade and Industry. Support and advice was given by the ABI, Crime Concern, NACOSS, The Home Office and SITO.

The following organisations provided support, involvement on the alarms research working group and financial assistance for general educational activity relating to alarms: A&A Security Technologies Group, Ademco Microtech , Aritech SLC Technologies, BT RedCARE, Cooper Security, CQR Security Components, Gardiner Security Limited, Gardiner Technology, Protection One (UK), Pyronix, Visonic UK. The AGA Group also provided assistance.