December 11, 2013
NorthStar surpasses $1m RMR milestone
The summer sales company plans to quintuple RMR in five years, offer sales staff equity in accounts By: Tess Nacelewicz OREM, Utah—Summer sales company NorthStar Alarm Services says 2013 was the best season in the company’s 13-year history, helping to propel the company’s RMR to more than $1 million. And NorthStar, based here, also recently announced a bold vision for its future: a plan to reach $5 million in RMR over the next five years. That’s an “ambitious goal,” NorthStar President Jason Christensen told Security Systems News. He’s confident in NorthStar’s ability to achieve it, but said the plan will “require expansion of our sales organization, along with continued improvements in our operations and customer retention.” One way the company plans to strengthen its sales force is through a new “universal equity” plan NorthStar is introducing in 2014. The new plan will provide all sales reps with equity in their accounts. Christensen predicts that benefit will make sales reps more invested in the company and its customers, and make NorthStar stand out from other summer sales companies. NorthStar, an authorized dealer of Honeywell security products that serves customers in more than 20 states across the nation, made news this spring when it received a $40 million cash infusion from Goldman Sachs and The Beekman Group. NorthStar says its sales average (102 accounts per rep) is “industry leading” and helped drive its RMR past $1 million. Christensen, in phone and email interviews with SSN, also noted that NorthStar has “over 27,000 customer accounts. We had a deliberate plan to maintain a controlled growth that allowed our organization to evolve effectively as our customer base grew. This also allowed for us to be financially self-sufficient and not forced to constantly sell off customer accounts. We have seen an increased growth in recent years and consistently [have] had over 30 percent increase in our customer base each year since 2005.” The new sales rep equity program is an addition to NorthStar’s existing residual commission program for sales reps, which Christensen said started in 2005. Christensen told SSN that through the residual program, sales reps get a monthly commission that is tied to a customer account that “keeps paying for the life of that customer [account].” Even some sales reps that have left the company still continue to receive residuals, subject to certain limitations, such as not working for a competitor, Christensen said. “It’s a unique form of compensation they wouldn’t get anywhere else,” he said. But now, the company said, “For new talent joining the company in 2014, equity will be a whole new ball game.” The equity program “extends and continues the residuals but the main difference is … as NorthStar continues to improve and increases in value, all of our sales representative will benefit, the same way a shareholder would gain value when the stock price of a public company increases. … Basically, they’re able to participate along with company, and at the time of an equity transaction, can receive full value for their residuals based on the company valuation at that time.” Christensen added, “I have heard of equity plans for sales management but never to individual sales representatives.” He said the idea behind the residual program was to “align the interests of the individual members of our sales organization with those of the company. We expect sales representatives to share the core values of the company.” That new equity plan takes that concept one step further, Christensen said, providing “an even greater level of accountability and participation as the company succeeds.” Christensen believes traditional dealers and most summer sales companies are typically only concerned about customers until they no longer have a financial incentive to care. “The same can be said about the sales representatives that sold those accounts. This short-term mentality has also led to some of the recklessness and bad reputations associated with sales practices within our industry.” NorthStar also is launching a new Legacy Club awards program that recognizes high-performing sales reps. Among those honored in 2013 were Jay Dresser, for selling in excess of 2,500 accounts during the more than 12 years he has worked for NorthStar; and Mike Visher, who has sold more than 1,500 accounts.