With nearly six years of door-to-door sales under my belt, I have come to know a great deal about the door-to-door industry. I find it interesting to see how sales companies run their businesses: what products they try to sell, how they attract and train salespeople, how salespeople are compensated, what kind of door approach they take, and what new sales “schemes” they think up to actually get sales. One particular industry that I follow is the door-to-door alarm companies. Living in the door-to-door alarm company Mecca, I’ve seen the rise and/or fall of the best of them – APX (now Vivint), Pinnacle, Northstar, Elite, Amp, Firstline, Security One, Peak, ADT, Brinks, Broadview, Signature Alert . . . and the list goes on and on. As I follow these companies, especially as a student of business, it is becoming easier to recognize when these companies make wise business decisions, and when they make poor ones. Unfortunately, since most of the owners of these companies are simply just champion door-knockers, they are subject to make poor (and frequent) bad business decisions. Often their day-to-day operations, recruiting efforts, perceived goals, and leadership styles run contrary to what they all really want – to become a first class, profitable alarm company with a solid base of happy customers and a great reputation. One such company that I personally worked for that has fallen subject to a misalignment of goals and actions is Platinum Protection.
The owners of Platinum Protection had the best of intentions. A group of four top-selling regional managers from APX decided that they were sick of all the injustices in their company. They didn’t like the reputation the company had, they weren’t impressed with the quality of sales reps it attracted, and they were quite displeased with the controversial nuances associated with compensation. So, they did what everyone else before them did – broke away from APX to start their own company. This time, though, it was a “by salesman, for salesman” type company. No longer would the upper management be so out of touch with the day-to-day grind that they couldn’t make informed decisions on behalf of their workers. No longer would there be pay injustice with sales reps. They would start a company that attracted the most honest of reps, one that prided itself for its fantastic customer service, and one that was run like a publicly traded company . . . or at least so they thought initially.
However, what we see in Platinum is a classic misalignment of their actions and strategies. Their first problem was that they set up shop right next door. By remaining in Utah Valley, right off the bat they were perceived as “just another Provo alarm company.” Next, most of the owners never rose above the salesman image. They drove their hundred thousand dollar trucks, wore their $300 jeans, and acted in every other way just like all of the other reps in the company. After all, that’s what they were. They never seemed to gain the respect from the reps that executives of other companies earn.
One of their largest misalignments lays in their compensation structure. In an industry known for up to six figure signing bonuses, Platinum knew the problems associated with giving reps something for nothing – it attracts arrogant workers who think they deserve more than they're worth. They shop around, sacrificing friendships and relationships and company loyalty in order to look out for number one. In order to avoid these problems, Platinum knew how they could avoid these problems. In fact, it’s so simple to see, why didn’t all of the other companies do this? No more signing bonuses. After all, does ADT give huge signing bonuses? No. Did Brinks when they were around? No. By cutting out signing bonuses, they would attract only hardest working, most honest, company loyal sales reps. Wrong.
What Platinum didn’t consider strongly enough was that door-to-door sales is not an intrinsically rewarding or motivating profession. Nobody knocks their guts out day in and day out, in 100+ degree weather, for 10 hours a day, six days a week, for all 118 days of summer with no vacation or days off just because it’s fun or because they like it. They do it for one reason and one reason only – money, and LOTS of money. With that being said, no signing bonuses and no negotiating of pay scales killed their rep base. In their first year in business, they came out of the gate bigger and faster than any first year alarm company . . . ever. They did more accounts in their first year of operation than APX, Pinnacle, or even ADT. They attracted reps by promising them quick management opportunities, tons of room for growth, and large future manager pay scales. In fact, Platinum did so well their first year in business that they scared the daylights out of all the other companies in their market. In year two, their volume doubled.
Year three is when their true colors started coming out. Managers weren’t promoted as fast as they were promised. Those that were promoted didn’t earn near as much as they thought. Reps felt the owners were so tight with their compensation that they were unjust. The company’s Better Business Bureau rating dropped to a D-, after which they removed themselves from the Bureau all together. If you were to type “Platinum Protection” into Google, the first hit that came back is “Platinum Protection scam.” They have 37,000 complaints online about dishonest, scamming reps. So what happened? All of the reps left to go work for someone else. Regional managers took $250,000 signing bonuses to bring multiple offices of reps with them to other companies. The average starting rep realized they could get five or ten grand to go sell the same equipment the same way, just wear a different name badge, so why would they ever go to Platinum?
Where did it all go wrong? What was the root of their misalignment? Clearly, we see a profound misalignment between the company's strategy, their structure systems, shared goals, and staff. For what they “wanted” to be, they opened up in the wrong market, with the wrong image, with a weak leading coalition, and ultimately with a poor company. The founders goals were not shared by the reps. They ended up recruiting people they didn't really want or need. They looked like, acted like, and recruited like a typical Provo summer sales company, but they didn’t pay like one, and their company structure and system are struggling because of it. Is it too late to re-align? Not necessarily. But what they need is to relocate their company headquarters out of the state of Utah. This way, they have no reputation for being just like all the others before them. They could attract the career-motivated reps that they desire. The rivalry wouldn’t be as intense, so reps wouldn’t have as many other options for which to shop around. Next, they need to lose their $100,000 lifted trucks and hummers and designer jeans and start acting like company executives. Stop calling your reps “bro,” and start wearing suits. Last, they need to pay their reps like a publicly traded company would. In fact, they could keep paying them the way they have been. When it all comes down to it, if you live in an ocean with sharks, look like a shark, swim like a shark, but fight like a minnow, you’re going to starve to death. Either learn to fight like a shark, or move to a smaller pond.
