Why Do Alarm System Users Cancel Service?

I recently wrote about taking your alarm system with you when you move, and mentioned that “Moving” tops the list of reasons that alarm system users cancel service. When you move, the traditional alarm system is stuck – and if you’re in a multi-year contract (which is standard), then you’re stuck, too! That’s when having portable peace of mind is a tremendous advantage. We can also take a broader look at the trends in why people in general cancel their alarm service. There’s a great source for the information: an annual report on the electronic security sector that is compiled by a consulting firm with the most comprehensive database in the business. Industry-wide alarm cancellations (measured as “customer attrition”) are on the rise, but the reasons for canceling are shifting:

	2007	2008	2009
Reason - Moving	51%	45%	40%
Reason - Financial	20%	29%	34%
Reason - Other	19%	17%	16%
Reason - Service	10%	9%	10%
Total Annual Attrition	11.8%	12.1%	12.5%

As the numbers indicate, “Moving” is still in first place, but has dropped to 40% from 51%. And that’s not because it’s any easier to move an “old school” alarm system – it’s because the second reason, “Financial,” has increased so rapidly.  At this rate, “Financial” may replace “Moving” as reason number one.

What’s behind the Financial reason for canceling alarm service?

Several reasons are bundled into this one category, but the bottom line is that the customer has stopped the service. Remember, many of the alarm systems being sold today are phone-line based, do not offer interactive features, and are often sold to people who were not even looking for an alarm system to begin with.  Here is a list of cancellation factors under the Financial heading:

• Customer was pressured to purchase the system in the first place, and subsequently canceled.
• Customer did not really understand what they were buying, and subsequently canceled.
• Customer does not trust or use the system, and cannot justify the ongoing expense.
• Customer experienced economic hardship, and subsequently canceled.

In other words, much of the basis for the increase in Financial cancelations may be attributed directly to the alarm companies themselves- and I have written about these questionable practices (see link here on pushy alarm sales people).

FrontPoint is proud to have the best customer retention in the alarm industry, and many factors go into this accomplishment: we offer systems that are safer, smarter, simpler, and more affordable (and move with you!), and we take a decidedly consultative approach to explaining our products and services – that's a big part of what drives our numerous positive online reviews. Even so, we are always looking for ways to improve - and invite you to let us know.