ASIS 2008 Conference

ASIS 2008 Conference

 

The attendance at this conference was off this year. We are still waiting on the official number from ASIS, but I am pretty sure they will report fewer than the 24,000 attendees for 2007 and even fewer than the22,000 reported for 2006. [The final count announced by ASIS on 10/3 was “just over 21,000”]

This year we spent only one and a half days on the exhibit floor whereas last year it took two full days. Maybe we were more efficient or maybe it was because there were fewer CEOs in attendance. There were only 24companies to visit vs. 31 last year. The breakdown was like this:

 

200820072006
Background Screeners182118
Database244
Drug Testing311
Fingerprint technology11
Assessments11
Other13
Total243125

 

Notables absent included First Advantage, ABSO, A-Check, Crossmatch, IntegraScreen, Intelius, Kroll-Background Checks (one small division of Kroll was there), TracersInfo, TransUnion and Verified Person.

What is going on? Is it possible that the economy has caused some of these folks to not exhibit? Or is it just that there are fewer and fewer companies where the decision on who to use for backgrounds falls into the security function vs. HR? Or is it just that people don’t know how to work a trade show? One person commented that last year’s ASIS yielded two $1,000,000 accounts; that kind of volume can pay for a lot of trade shows. Wealso noticed that in several booths people were not being aggressive in the aisles to pull people into their booth. Many were sitting back waiting for the prospect to come to them, one fellow was sitting with his iPod in his ears,in other booths people were busy talking to each other and not dragging in the few people that were roaming the floors. Tsk-Tsk on those folks who are missing the boat.

While these conferences are indeed expensive, they are like any marketing expense, in that you have to valuate the return on investment. Even at a cost of $8000 for a minimum presence at ASIS, if you can close only one client that brings you only $8000 in gross revenue, then over 3 years that one client pays for the show and after that it is profit to you. Meanwhile you are building a client base for future referrals and just helping to build the strength, size and substance of your company. And without growth, you are subject to losing accounts and your business shrinking. This is a very competitive market and the other 1000 background screening companies are all going after the same client base. Will your absence at the trade shows be noticed?

There continues to be significant sales rep movement in the industry. All kinds of changes:

  • Rumor has it that FADV commanded a RIF in all their divisions to cut back on costs. The people we heard about included:
    • Todd Hensley (former USIS), Sr. Salesrepat NBD.
    • Teresa Brooks Alicea, Manager of Client Services
    • Tim Lima, Operations Managemer
    • Dave Wirta (former ChoicePoint), Sr. VP of Sales for FADV chose to leave FADV after seven years.
  • Carco hired three or four salespeople in the past year and only a few months later let them go.
  • Mike Cherkasky. In case you missed this one, Mike, the former President and CEO of Marsh, McLennan (owner of Kroll-Background America) went to USIS as their President and CEO and USIS paid Marsh$10,000,000 to settle the non-compete. USIS is doing $850M in sales and bought HireRight recently.
  • ChoicePoint. Not much talk about changes here, but since the sale of the company to Reed Elsevier completed on Sep 19, we will see.

While Allied-Barton acquired Vanella and HR Plus, their presence as a background company was not separate, but was incorporated with their regular exhibit booth. And did you hear that The Blackstone Group announced in July that they are going to buy Allied-Barton in a reported $1B deal?

There was some talk about a challenge for USIS in their HireRight acquisition relating to the use of HireRight offshore use of IT and verifications vs. the US governments requirements regarding this.

GIS has hired a new Sr. Sales VP to market their “pangea” concept. He can probably find some space somewhere to find an office in their 72,000 square feet, much of it newly built.

Locate Plus seemed to have a new energy since the turnover of CEOs there. I am sure they were happy that TracersInfo was absent. These folks sell primarily to PIs, but also sell to CRAs for background checks.

New Products? Not much new this year.

  • The rechecking of existing employees seemed to be on the grow. Different companies give this different names. Audit or Continuity Screening or Vigilance.
  • More people offering systems/controls for making sure subcontractors of end users are doing proper checks when the end user requires such checks of the sub. While this is nothing new it is a great marketing approach. My company did this with Home Depot Contractors back inthe mid ‘90s and provided another client with a check of his new hires in his 1000 retail locations to besure the new hire had been background checked. One exhibitor at ASIS called this “VendorScreening” and it was the headline in their booth.
  • One CRA told me that they have seen a significant up tick in both their Drug Screening business and in their I-9 activity.

I was told that a certain person is an expert on ‘70s music as attested to by the other passengers in the car as they drove the six hours to Atlanta. I heard that they were scrambling to find some other means of transportation home to avoid a repeat.

So what is the word on company sales volume? The feedback we got was that “same-store” sales were off by from 5%-25%, but that new business was more than off setting that decrease. True? Who knows? Since 2002everything in our industry has been “up” but there is no question that the economy is impacting turn over and hiring for growth and if 90+% of all significant employers are already doing background checks, where is the growth coming from. When I asked this question, I hear it is coming from “the big boys” including Acxiom,ChoicePoint, FADV, Kroll and USIS. I am told that these companies have the competitive disadvantage of not offering the kind of customer service that is needed in today’s market. This is not Bruce Berg saying this; those companies that are gaining clients from these providers report this.

How is your sales volume? Are you reacting quickly enough to offset lower sales by lowering your costs? Are you missing some highly competitive bids because your costs are too high? Have you looked into our Better Vendor Program? (I know this is a commercial message, but if you can cut your data acquisition costs in half while improving your quality, then is there a better time to do this?)

Overall, I think most of the exhibitors were pleased with the opportunities at this show, in spite of the fact that the attendance was less.

We sure enjoyed seeing everyone and appreciate your sharing.

Bruce and Evan

Remember, when you think Mergers and Acquisitions think Berg Consulting Group.