Re: Monitronics monitoring assigned to Apex

[Nomen Nescio <nobody@xxxxxxxxx>]

Jim said:

>You don't seem to be able to see that there are numerous things that
>companies or their owners do to survive and to assure that they will be
>around or have some equity in their business for retirement. Just
>because you don't have the intelligence, need, will or insight, to see
>any future for you in this industry, there are thousands of people who
>do see them selves and their lifes long work continuing. Hey you dumb
>shit, why do companies get liability insurance? Why do companies make
>investments? Why do companies upgrade equipment, have pension funds,
>health plans?  401k's? Roths?  None of these things enhance the service
>that the end user gets, but the end user is damn well paying for it.
>You sound so damn stupid in the face of every authority in the alarm
>industry, who says that it's down right stupid for any company to NOT
>have contracts and the longer the better. You've just got this ADT bug
>up your ass, so Goddamned far that it's reached,what used to substitute
>for your brain. You're a fart in a wind storm and you damn well know
>it. Yet, you've just GOT to pontificate your stupid and asinine
>nonsense and expect, just as RFI Paul does, that if you say it often
>and long enough, that someone may believe you. If you're such an
>authority on running a business, why don't you explain the logic to the
>people, that you explain in as great a detail as your "no contracts"
>gobbledygook,that you also don't see the logic to charging for service
>calls ..... ever. Now ..... for them, they're all happy as can be, and
>it never sinks in that ........ eventually it's going to eat your
>company right up and likely right out of business. Why don't you tell
>them that you really don't care if your business survives or not. Why
>don't you tell them that YOU've already got an income for retirement
>and that this is just sort of a hobby for you. I'm sure then they'd
>REALLY understand why you don't have any common sense or concern about
>keeping your company viable with equity value or making enough profit
>to make it grow as well as it could or keeping it around for years to
>come. You're just going to hand it off to your son, who's Ahem!...in
>training now ........ But hey, what the hell, both he and the company
>will sink or swiw ...... Right? Then they just might understand also,
>how you're not building any value for who ever takes the business over
>in the future ..... someone who just doesn't happen to have a
>retirement income as you do. Sure, you're customers are as happy as can
>be to help you eat up your profits and keep your business in stasis
>.... so that they can save a few bucks now. And I'm sure that they all
>pat you on the back and give you all the "attaboys" for not doing what
>all your smarter competitors do. I'm sure they'll be happy when the
>company can't make it anymore and they've got to jump ship and find
>someone who knows how to keep a company in business.

Jim's absolutely right.  I wouldn't have been so blunt, but he's right.  It
is both foolish and nonproductive to use month-to-month monitoring
contracts.

The idea of building equity through the use of contracts is well
understood.  RHC will pay a heavy price when he tries to sell his accounts,
and discovers buyers want some kind of assurance that the subscribers will
continue to pay their bills.  He will say that he has no intention of
selling, but eventually, everyone sells.  People get old, they get sick,
they need money suddenly for a host of reasons, their children decide they
don't like running an alarm company, and so on and on.

Not using contracts is like throwing money away.  It's foolish.  I'm not
urging everyone to use five year monitoring contracts for existing
customer-owned systems, but a contract term of one year is entirely
reasonable, and prudent.

The question then becomes, what is the advantage to using month-to-month
contracts?  Obviously, it is only a good idea if the alarm dealer can sell
more accounts that way, and only if those additional sales stick around at
least as long as accounts sold under contract.

Personally, I have never had anyone argue with me over a one year
monitoring contract (and yes, I always tell people orally that the
monitoring contract is for one year!).  People either sign with me, or they
don't, but the length of the contract is never a factor in their decision.
If you want to be a really nice guy, you can always choose to let people
out of their contract instead of enforcing it religiously.  This option
lets the dealer maintain the written contract for possible future sale,
while letting deserving customers leave without penalty.

So, if RHC believes he is making additional sales by using month-to-month
contracts, I believe he's fooling himself.  But let's assume he is making
those extra sales.  What kind of customers is he attracting?  People who
want the flexibility to throw him out at a moment's notice, for no
particular reason.  That's hardly a desirable client base.  The good
customers won't mind signing a one year contract, and the bad customers are
probably going to be the collection problems and the ones who will have no
loyalty, who will dump him without a second thought.

Summing up:

1.  Good customers won't mind signing a one year contract.
2.  People who do mind, you don't want as customers anyway.
3.  No contracts = no equity.

- badenov