In House Analysis

By Alvin Mason

Date

Mr. Vice President

ABC Corporation

Dear Mr. Vice President,

After working for 1 month as an employee of ABC Corporation (ABC) doing business as ABC Security, I have finished my analysis and evaluation of the Alexandria, VA Division of ABC. The report will be presented to you using the Leavitt’s Diamond Model Format. (The diamond model established by Professor Harold J. Leavitt in 1965)

Diamond Model

Structure

The ABC corporate structure is presented here, as it pertains to the Alexandria Division of ABC. The other regions have Divisions that perform sales, installation, and monitoring. The Alexandria Division only performs sales at this time.

Board of Directors

Chairman and CEO

Vice President for Sales

Eastern Regional Director

Alexandria Division Manager

Alexandria Division Sales Associates

There is an Eastern Region, Mideastern Region, Midwestern Region, and Western Region. The Eastern Region includes all the states that border on the Atlantic Ocean and all of New England.

The Alexandria Division includes Washington, DC and the states of Maryland and Virginia.

The CEO and Directors (Corporate) set goals with the input of the Vice President of Sales (VP) and the Eastern Regional Director (RD). All guidelines are sent from Corporate. The VP and RD also send mandates. The Alexandria Division Manager (DM) sends weekly and monthly reports to the RD which is forwarded to Corporate.

All referrals are sent from Corporate down to the Alexandria Division. When one of the Sales Associates (SA) develops a lead it must be sent up to the Sales Division at Corporate and then that lead is sent back down to Division as a referral. In most cases in the Alexandria Office, the person who develops the lead does not receive the referral. Thus the person who developed the lead does not get credit for the sale or the commission from the sale.

In the East Region only sales are performed by ABC. Equipment Installation and Security Monitoring are contracted out, as are the Security Patrols. In 2 of the other 3 regions installation and monitoring are in- house. In the West Region installation and monitoring are being brought in-house, which is about 50% complete. The conversion to in-house is achieved by purchasing companies that install security equipment and/or monitoring services as well as hiring and training staff for those positions. Security Patrolling is contracted out to security companies that have uniform security officers and patrol cars.

All Sales and/or Installation and Monitoring offices are located in major metropolitan areas. Many customers are serviced outside the areas of the Sales Offices

Task

The primary task of the employees at the Alexandria Division of ABC, is to sell security services. The sales people in the Alexandria Office only sale the service which includes the sale or rental of equipment and the monthly service charge. Once the sale is made a contractor installs the system that is purchased or leased. Another contractor monitors the security system when the outside monitoring option is selected and calls local police or contracted patrol officers when a system goes off.

The services range from burglar alarms on doors and windows to motion sensors that turn the lights on and/or starts a recording or a monitor which is observed by a monitoring contractor. When a security system is set off a recording of all cameras is started on packages with the video option. The top of the line security service offered, is 24/7 camera surveillance. Some communities are offered drive by surveillance when the monitor shows suspicious activity or when an alarms or sensor is activated.

Competition

ABC Security (ABC) competes against the established Security companies such as ADT, Ackerman, Guardian, and many others. The established firms do most of their work in house with minimal contracting.

The referral list is generated from 3 sources.

One source is leads which are generated at the time of a sales presentation. The SA will ask the potential customer if any friends, relatives, or neighbors are in need of a security service.

Another source is new home sales from both newly constructed homes and existing homes that were sold. The newspapers and internet have those transactions and researchers at corporate gather those reports.

The other source is police reports of break-ins and burglaries also compiled at Corporate by researchers who use the internet to scan local newspapers. Most newspapers have a weekly Crime Report. The crime report list the addresses of the crimes and many times the names and phone numbers are found from the White Pages data base. Sometimes a letter is sent to the home where a crime occurred with a post card for the homeowner to check a box if they are interested in a home security system and put in their phone number. The list is sent from corporate to the division call centers.

The sales associates at the Division call centers will make a cold call and start a scripted sales pitch. The sales presentation will start in one of five ways.

1. Hello MR. or Ms._____, my name is _____ and I am calling from ABC Security, our records indicate that there was a crime at your house.
2. Hello Mr. or Ms._____, my name is _____ and I am calling from ABC Security, you sent a post card back from a letter we sent you.
3. Hello MR. or Ms._____, my name is _____ and I am calling from ABC Security, our research of crime statistics in your community indicate that there is a pattern of break-ins and other crimes.
4. Hello MR. or Ms._____, my name is _____ and I am calling from ABC Security, Congratulations on your new home.
5. Hello MR. or Ms._____, my name is _____ and I am calling from ABC Security, your name was referred to us by_______.

The sales associate then introduces the different security options available. Should a potential customer already have a system or have made contact with another security company then the script is shifted to the cost. ABC Offers a very competitive cost for a basic service but everything is extra. So the emphasis is put on the basic cost.

There is an extra monthly charge for monitoring and should the police of the homeowner be called after the second visit there is a $150 cost, charged by the jurisdiction.

If the potential customer is interested the sales associate will set up an appointment for a home visit to access the security needed. The sales associate will discuss the different options and decide what equipment is needed. For instance in a security package that will include one or more cameras to monitor a property, the location(s) for camera installation are discussed and selected. For instance a camera can be installed to monitor the front and one side of a house and another camera can monitor the rear and the opposite side of the house or property. Some security options will have lights that are triggered by motion sensors. The more deluxe option will include the motion sensor light response and camera recording. The top of the line also adds human monitoring at a remote location to include calling police and/or security for a visit. Some areas in wooded areas will not want an automatic police response to a motion sensor trigger, because animals can set off the motion detector which might make the customer incur an unnecessary cost.

There is a smoke detector service as part of the security package. The customer has an option with the monitoring service option to have the personnel at the monitoring office call the home first before the fire department is called. Other options alert the local fire department when the smoke detector goes off. Most people prefer a call first, as a smoke detector can go off without the fire department being needed. Some jurisdictions will charge a fee if the Fire Department makes a house call and there is no emergency.

Depending on the security package selected, the equipment cost or rental (option) is detailed with the installation cost and the monthly fee. If a contract is not signed then, the SA must return once the customer makes an affirmative decision that they want service with ABC.

One of the major sales pitches is that the customer has a 30 window to cancel the security agreement for any reason. However, when a problem arises in the first 30 days the customer can call a customer service # or the SA at their direct line. In either case the complaint or problem is referred to corporate and filtered back down. In the case of an equipment problem the complaint or problem goes from corporate to the contractor. In many cases it takes over a week for the problem to be solved. When a cancellation happens, the SA loses credit for the sale and the commission and if the commission has been paid it is taken back from the next period’s commission.

Doing installation, signs and stickers that say ABC Security are installed as a deterrent to would be criminals.

The SA will ask the potential customer if any friends, relatives, or neighbors are in need of a security service. Once again, referrals generated at a sale go to Corporate and are sent back down.

Technology

The technology discussion will start with the point of sales (POS). The POS starts at the telephones. All sales associates (SA) have telephones and computers with the internet and an intranet to corporate sales. The SA use the computer to get their next referral. The computer will give the homeowners name, address, and phone number and how referred. The phones have headsets with a mic or the SA can use the traditional handheld phone.

All sales and appointments are recorded by the SA and sent to Corporate by a dedicated phone line to the corporate computer system which tracks sales by region, division, and the individual SA.

The SA can use the internet maps to zero in on the location. The scripted sales pitch is also on the computer and printed paper.

Once an appointment is made the SA uses their private vehicle to visit the customer’s home.

At the house the SA will do a walk thru inside the house and a walk around outside the house. The SA will display the signs and window stickers that are meant to be a deterrent for would be burglars. The SA then will discuss various options as he or she shows the following equipment.

1. Control Panel - The SA displays the alarm base and how it works with a code.
2. Door and Window Sensors - The SA will show the Alarm system for the doors and windows and how opening triggers the alarm.
3. Motion Sensors – The SA will show and demonstrate motion sensors both indoor and outdoor.
4. Lights – The SA will demonstrate how the lights come on with motion sensors
5. Cameras Recording Devices – The SA will demonstrate the surveillance camera and the recording capabilities and memory storage. Cameras are wired and wireless.
6. Video of the Remote Monitoring – The SA will show a video of the monitoring station that corresponds to remote monitoring. Aka Professional Monitoring Service
7. Alarm – The SA will demonstrate the alarms (inside and outside alarms) which are very loud.

People

Sales associates (SA) are hired by Corporate Human Resources. The job is announced on different job services and applicants email resumes. The resumes are scanned and telephone interviews are conducted. When a job offer is accepted the DM is alerted to the start date and name of the new hire. The first day of work is the first contact the DM has with the new SA.

The sales associates work on a system called commission versus draw. That means they are guaranteed $300 per week. Commission is 15% of all sales and 5% of the monthly service charge the first month and 3% the second month and 2% for the duration of the contract or service.

They SA are reimbursed at 49 cents per mile for trips to customers houses.

The Division Manager has a salary and receives a 5% commission on all revenue generated at the Division Office.

Person 1 SA#1 has been working for ABC for 6 months. He is very knowledgeable with regard to the security service packages offered. SA#1 is also an experienced sales person. Whenever he goes outside the script it is using previously successful sales technics that enhances his presentation. He likes working for ABC with the exception that the leads he generates are not referred back to him. He estimates that in 6 months he has generated 10 leads and has not had one referred back to him. He also has had 12 cancellations due to the slow correction of problems. He would like to see equipment installation and monitoring bought in house.

Person 2 SA#2 has been working at ABC for 8 months. This is her first job after graduating from college. She has no previous sales experience. She rarely leaves the script. At times when a question is asked that does not have a scripted answer she has to ask another SA. Her personality makes up for her lack of sales knowledge. In the one month I have been working with her she has become tremendously more proficient in the knowledge of products. I am sure she will finish at least one year before looking to move to another position. She believes she has generated at least 10 leads and had only one referred back to her. She has experienced 10 cancellations due to the slow correction of problems.

Person 3 SA#3 has been working for ABC for 3 months. This is his second stint with ABC. He worked 13 months before resigning a little more than a year ago. He left the first time because of frustrations with referrals and cancelations. He is very knowledgeable and professional. He also has a knack of developing leads. I can see why he was rehired.

Person 4 SA#4 has been working for ABC for 7 months. He has previous sales experience and previous security systems sales experience. He is very knowledgeable of security systems and the methods of the leading competitors in the field. He is an untapped resource because he knows things corporate doesn’t. He has had at least 10 leads that did not come back to him and at least 10 cancellations. He is actively looking for another sales position including security sales positions with other companies.

Person 5 SA#5 has been with ABC for 5 months. She has previous sales experience in retail. She is currently studying to get her real estate license. She is very good with customers and follow-ups as a matter of habit. Her follow-ups have led to sales and leads. She has even followed up after a cancellation and that is how she discovered that the contractors who install security equipment recommend other companies. She has not had one lead come back to her as a referral. She also has lost sales due to the time of correction which caused her to go into the hole (negative) one month.

Person 6 SA#6 has been with ABC for 2 and ½ years. He is the only SA in the Alexandria Division with more than 10 months. He has aspirations of being a DM. The one office for DC, Maryland, and Virginia could eventually be three Divisions, as the long term plans show.

He is very knowledgeable in all aspects of the job. When the DM is busy or not available, he is the go to person for the other SA with questions. He also has as much influence on the team as the DM. To his credit he respects the DM as his supervisor and has never attempted to undercut his authority.

He is the number one SA not only in the Alexandria Division but in the entire Eastern Region. He is # 2 nationally. Part of the reason is he receives the majority of referrals, not only referrals from the leads he developed.

The question I have for corporate is why most of the referrals go to SA#6? Is it intentional based on his ability to close a sale? It happens too often to be coincidental. With the number of referrals that he receives, one must wonder does he know someone or have a friend in the corporate sales department that is looking out for him.

Division Manager: The DM has been working for ABC for over 5 years. He started in the Midwest in Houston as a SA. He moved to open the Alexandria Office. He has superior security product and service knowledge. He also has sales knowledge and experience.

He is an excellent trainer and he has to be since the turnover is so high. There are currently 6 SA in the office that should have a staff of 10. The one month I worked in the Alexandria Office 2 people left. One quit and the other gave notice. The reasons for their departures were largely due to the differences of the job description in the telephone interview to the actual job.

Whenever someone leaves he wishes them well and the team has a moment giving the person a best wishes card that they all signed. I inquired and the overwhelming response is that no one has left because of the DM.

A DM with his sales ability, technical knowledge and training ability to include patience is an asset to ABC Corporation.

Recommendations

The first recommendation is to bring equipment installation and monitoring in house. Some customers who cancelled got a system from a company recommended by the person employed by the subcontractor when they were removing the equipment after a cancellation.

The second recommendation is for the SA be able to contact the subcontractor to fix a problem instead of sending the complaint to corporate and having corporate contact the subcontractor. When the installation is brought in house the installation office should be adjacent to the sales office.

The 3rd recommendation is to stop doing business with XYZ as an installation contractor. There is evidence that they might not be conducting business in good faith. I have spoken to 2 customers who cancelled and they told me the installer from XYZ recommended another security firm.

The 4th recommendation is to allow the SA who develops a lead to receive that referral that they developed.

The 5th recommendation is to allow the DM to interview the prospective employee before they are hired. A second interview in person when possible.

The 6th recommendation would be to have the monitoring under a subsidiary of ABC and allow the SA to work part-time monitoring to increase their take home money. Monitoring for a subsidiary would allow the workers to earn extra money without ABC incurring overtime. There could be a day shift and night shift for both sales and monitoring.

A 7th recommendation is to allow the SA to receive residuals when a customer renews. Many sales positions most notably Insurance Sales allow residuals to the sales person when the customer renews on the anniversary date. Residuals should be a small percentage such as 2% of the monthly cost. The residual should be applied monthly after the 1 year anniversary date.

My final recommendation is to increase name recognition by advertising.

Conclusion

Once the installation and monitoring are bought in house to reduce the time to address and fix problems and the SA who develop leads receive the efforts of their work in referrals to them I predict the turnover rate will be reduced significantly. The income potential is great. However, if you include the residual suggestion to the SA income package the SA position within ABC will be a highly desired employment opportunity. The security service business is still growing. As long as new DM positions are filled by ABC SA then current SA can see the future growth and income potential and consider a career with ABC.

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