Too often I talk with security companies whose owners and/or managers believe that any company that provides security guards are their competition. This is especially true of small to medium-sized security companies. If you are one of those owners/managers let’s see if I can change your frame of reference a bit. As a foundation for this conversation, let’s define the three types of competitors: Direct, Indirect, and Substitute.
Direct Competitors are the companies that your buyers always have on their shortlists. These are the companies, that if you weren’t around, would be the security companies that your customers would replace you with.
Indirect Competitors are companies that offer products or services that are alternatives to yours. You don’t usually have to worry about these companies, but you usually keep an eye on them. In some cases, these types of competitors can become direct competitors.
A Substitute is a product that delivers the same set of benefits to your customers as your services but isn’t a competing product.
Categorizing Security Companies
So why is any of this important? Well, because you need to know who you’re trying to beat so you can position yourself properly. I can’t count the number of times that I’ve spoken with small security guard companies that complain that the national and multinational firms are destroying the security industry because of low billing rates; Or those that feel bottom feeders are stealing their customers.
Although I am sure that there is some truth to both situations, I believe that if these are your primary issues then you are competing in the wrong market. When I was managing my security company I very rarely experienced those frustrations, because I had a very concise view of my market and my “Direct Competition”.
In my opinion, the market for security guard buyers is divided into at least 3 segments:
- Buyers that require large amounts of resources and personnel;
- Buyers who are looking for great service;
- Buyers who just want the lowest bid.
Only one of those segments is suitable for consistently growing a small to medium-sized security guard company.
The first segment is the arena in which the national and multinational security companies make a living. Generally speaking, they have the capital and personnel to staff any account. Many times they can provide these services at an unbelievably low billing rate. 9 times out of 10 this is not what your company excels at, so they are not your direct competitors and not the game that you want to play in.
Hint: If you see Securitas, G4S, and Allied Universal at every bid conference you attend you are probably trying to punch above your weight class…unless you’re SOS, Whelan, Walden, or similar.
The third segment is for companies that are just getting started, paying their employees off payroll, haven’t purchased workers comp or general liability insurance, or are just struggling to survive. Unlike those companies you are, or should be, in the security guard business for the long term and to make a profit. The companies that win these bids have different motivations, so I would not consider these companies your direct competitors either.
Through the process of elimination, we are left with only one viable option—segment 2. Even within the second segment, there are numerous sub-segments; Residential, commercial, industrial, construction, etc. The key to dominating any market is to specialize in providing exceptional service in two or three sub-segments of the market. Each sub-segment requires a different type of officer and/or resources. Once you have identified the sub-segments in which you are going to compete, it becomes much easier for you to see your true competition and easily differentiate your company to potential buyers.
Our security company was pretty successful in implementing this strategy, but I’d love to hear from other security companies who segment their markets differently. Or if you think I’m just wrong, please feel free to leave your comments below.
By Courtney Sparkman
OfficerReports.com is a software company that provides security guard companies with an easy way to monitor their officers, better manage their operations, and win new business. Take a tour of our software to see how we combine Electronic Reporting, Real-Time GPS based Tour Tracking, and GPS based Clock In and Out into one easy to use platform.