ADT 2014 Annual Report Download - page 71

FORM 10-K
the phone if appropriate, while balancing the opportunity for up-sales and customer education that occurs when a
sales representative works with the customer in their home or business to fully understand their individual needs.
When the sale is best handled in the customer’s home or business, the sales center associate can schedule a field
sales consultant appointment in real-time.
Our field sales force of approximately 3,800 sales consultants generates sales from residential and business
customers through company generated leads and leads generated by our field sales force as well as customer
referrals and other lead “self-generation” methods. Our field sales consultants undergo an in-depth screening
process prior to hire. Each sales consultant completes comprehensive centralized training prior to conducting
customer sales presentations and participates in ongoing training in support of new offerings and the use of our
structured model sales call. We utilize a highly structured sales approach, which includes, in addition to the
structured model sales call, daily monitoring of sales activity and effectiveness metrics and regular coaching by
our sales management teams.
Our extensive dealer network, which consists of approximately 415 authorized dealers, including one
authorized premier provider, operating across the United States and Canada, extends our reach by aligning us
with select independent security sales and installation companies. These authorized dealers generally agree to
exclusivity with us for security related services. We train and monitor each dealer to help ensure the dealer’s
financial stability, use of sound and ethical business practices and delivery of reliable and consistent high-quality
sales and installation methods. Authorized dealers are required to adhere to the same high quality standards for
sales and installation as company-owned field offices. We provide dealers with a full range of services designed
to assist them in all aspects of their business.
Typically, our authorized dealers are contractually obligated to offer exclusively to us all qualified security
services accounts they generate, but we are not obligated to accept these accounts. We pay our authorized dealers
for the services they provide in generating qualified monitored accounts. In those instances when we reject an
account, we generally still provide monitoring services for that account by means of a monitoring services
agreement with the authorized dealer. Like our direct sales contracts, dealer generated customer contracts
typically have an initial term of three years (two years in California) with automatic renewals for successive 30-
day periods unless canceled by either party. If an accepted security services account is canceled during the
charge-back period, generally thirteen months, the dealer is required to provide an account with equivalent
economic characteristics or to refund our payment for their services for generating the account.
Additions to our customer base typically require an upfront investment, consisting primarily of direct
materials and labor to install the security and home/business automation systems, direct and indirect sales costs,
marketing costs and administrative costs related to installation activities. The economics of our installation
business varies slightly depending on the customer acquisition channel. We operate our business with the goal of
retaining customers for long periods of time in order to recoup our initial investment in new customers, generally
achieving cash flow break-even in approximately three years.
Field Operations
We serve our customer base from approximately 200 sales and service offices located throughout the United
States and Canada. From these locations our staff of approximately 4,400 installation and service technicians
provides monitored security and home/business automation system installations and field service and repair. We
staff our field offices to efficiently and effectively make sales calls, install systems and provide service support
based on customer needs and our evaluation of growth opportunities in each market and utilize third party
subcontract labor when appropriate. We maintain the relevant and necessary licenses related to the provision of
installation and security and related services in the jurisdictions in which we operate.
Monitoring Facilities and Support Services
We operate ten redundant monitoring facilities located across the United States and Canada. We employ
approximately 4,100 monitoring center customer care professionals, who are required to complete extensive
5