Understanding the Value of Prevention

Julie Lawson:

All right. It is 12:01 Central, 101 Eastern. Super excited to kick this off. My name is Julie Lawson. I'm the director of partnerships and business development over here at the Loss Prevention Foundation, and it is my pleasure to be your host today. Today's webinar is Understanding the Value of Prevention. Today's webinar is sponsored by LiveView Technologies. LiveView Technologies delivers safety, security, and active intelligence for the physical world by collecting and interpreting and acting on real-time information. Headquartered in American Fork, Utah, LVT's enterprise SAS and HAS solutions are used by retailers, critical infrastructure and utilities, construction projects, warehouse and distribution centers, police, municipalities, and more. LVT products are proudly made in the USA with domestic and foreign parts. For more information, visit www.lvt.com. Now with that, I'm going to go ahead and go over a couple of webinar logistics. First, the session is being recorded, so if you need to walk away for any reason, have no fear, you could always visit this by going to our on-demand section.

And I know that LiveView is also going to post this on demand later as well if you want to share this with someone else or come back and revisit the content. Also, everyone was muted upon entry. So if you do have any questions, we will have time for Q&A at the end. So please find that Q&A box and we will try to get to as many of those questions as we can. And with that, I'm going to go ahead and turn it over to Robin Ditch so that that way he can actually walk us through today's webinar.

Robin Dich:

Thanks, Julie. Really appreciate this opportunity. Joining me today is Matt Kelley, my colleague, senior vice president of business and market development at LVT. And also joining us is Mike Combs, former director of asset protection, investigations, and ORC. He also runs the retail crime consulting firm right now. Thank you guys both for joining me today. Really excited to dive into this topic.

Matt Kelley:

Thanks for having us.

Mike Combs:

Yeah, thanks for having me.

Robin Dich:

Yeah, and thank you to LPF as well. I want to say stick with us here because toward the second half of this discussion, we'll actually take a tool that we've created that can share the potential savings of prevention. It's something that we've been really working on. And Mike and Matt will help walk through with some real data points that they've seen in their past and show you the ROI of prevention. So stick around for that. It's a really great interactive tool and we'll show you how you can try it out for free. First off, I want to start with just a basic discussion about deterrence. We understand that deterrence in our audience understands it's an important piece of the strategy for security and business, but let's start with you, Mike. What is deterrence? What does that mean to you?

Mike Combs:

Thanks, Robin. Yeah, I think it's really evolved over my career. I mean, it used to be applications that prevented bad customers from doing bad things, but we usually applied some type of mechanism or technology that prevented something from happening that caused losses. And we did it in a way that we did it to all the customers. I think in a perfect scenario, you would introduce some type of friction on the bad customer and not the good customer. And I think that's where you see the evolution in retail is getting really, really surgical in how you apply a technology to have the most deterrent effect on the right person. And I think gone are the days where we're applying something that just affects every single customer that walks in the door. The other thing when I think of deterrence, I think of changes in how aggressive some of the thefts have happened.

Pre - COVID and post - COVID, there's obviously a large criminal element out there that can make a living on you if you don't have the right deterrent measures and prevention measures in there. And I think you've seen retailers use more of a scholastic approach in layering deterrent values as far out as the parking lot all the way to the self-checkout situation. All throughout the store and all throughout the process, they're layering it in so that the bad customer is kind of bombarded with these things that are overtly deterring them from doing what they want to do.

Robin Dich:

Yeah. Matt, as someone who knows the importance of deterrence, what's your take?

Matt Kelley:

Yeah, I think to Mike's point, it's evolved over time across a spectrum of sophistication. Started out with cameras, the signage in a very simplistic form, even labor. Are you allocating your resources across the sales floor? Making sure you have people in the aisle to help.

The customer out, but then also letting the bad actor know that there's eyes and ears out there to help stop them from doing that activity. And it could be all the way from sophistication with some of the technologies like locking up product, putting actual tools on the product that you're trying to buy to make sure if it's an electronic or something like that, that it actually doesn't work when you purchase it until you get to the point of sale and get some sort of activation code. So there's a broad spectrum of application that is very simplistic in nature to processes, to labor, to actual technology.

Robin Dich:

Yeah, absolutely. It's grown. The needs, the changes with technology, Matt, to your point. And Mike, when vendors would pitch to you that, "Hey, we'll just deter for you. We've got this, we'll deter." It doesn't mean that much because deterring it means just so much more than we'll just deter for you. What is your reaction whenever you hear that pitch? And then what does it take for a real deterrence pitch to get to you and for you to actually buy in?

Mike Combs:

Well, I mean, obviously you want to measure it in a type of pilot so that you can see the real human behavior. Does it change behavior? How long does it change behavior? Sometimes, and I'm sure everybody on the call can remember this in their current life, which is you can deter something, but once the bad person notices people aren't watching or the system isn't always working, then they'll change their behavior. So what I'd like to do is see how long that behavior has changed, and you may have to layer in, again, another deterrent value. And then if that's the case, the return on investment isn't as good as you thought it was that the vendor pitched.

Robin Dich:

Yeah, absolutely. Let's show a ecosystem that I think a lot of people are used to on this call. This is a basic workflow of just crime prevention, crime response. We have detect, validate, deter, defend, report, investigate, prosecute. Matt, is this something that people are still following as a framework for the most part?

Matt Kelley:

Yeah, absolutely. Because if you think about the methodology that LPRC applies, you run this flow from see it, fear it, get it. And I think we'll probably touch on some of those things as we work our way through the presentation, but it always goes from how are you recognizing the activity you don't want to have happen? How are you stopping it? And then if you can't stop it, what does it look like from a right of bang to be able to gather the evidence and prosecute them to hold the bad actors accountable?

Robin Dich:

Yeah, absolutely. When you talk about bang, that's where the incident is happening, where the crime happens. So you have the left of bang, which is prevention, and then you have the right of bang, which is response and recovery. Mike, you've spent a lot of your career likely focused on the right side of bang. Talk to us about how much time versus each side in your time and when you're consulting as well.

Mike Combs:

Absolutely. Well, let's go back 10 or 12 years and just level set with the increase we had in shrink in crime rate in retail. Because of the opioid crisis, there's a few things that happened that made our losses grow in retail. And at that time, we had to put a lot of resources and effort in the right side to try to identify who was causing all the losses. And when you do benchmarking with some big box retailers, you quickly find out that of all the offenders they catch and identify, 90% of the losses are caused by 10% of the bad guys.

So think about that. 10% of the criminals are causing almost all the losses. So it was very important for me and our leadership teams to try to identify that 10%. So when you leverage your increased technology, your increased headcount, whether it's a case management system or cameras or AI, you name it, or if it's even prevention technology like locking carts, if you could leverage those data points to help identify that 10% of bad guys, you could really start investigating and prosecuting and working with law enforcement on the people that are going to really make a difference in your loss if you put them away. And so that's kind of where I spent a lot of my time the last 10 years while I was at Home Depot and then now in the consulting space trying to identify those people.

Robin Dich:

Yeah. And you touched on, you talked about it. How different will it look moving forward? How will that change the job? Because it seems like there's better technology, there's better vendors out there now on the left side of bang. How do you see that changing the job of an asset protection or ORC investigation?

Mike Combs:

I think you have the ability to measure it perfectly. We're going to go through the calculator here in a little bit, but I think one of the misses I had in my career is it was really easy for me to measure how much I got back in recovery, how many cases I made, how many prosecution cases I made, how long they took, what the productivity was for the investigator. But I didn't always look back left and use the same technologies to try to identify how much were they preventing at the same time. And I think in the future, we'll have a better way of measuring the whole spectrum and then determining where my resources go based on the productivity and the return on investment. And I think you'll see people ebb and flow with where they put their resources and their technology. Is it left-sided bang or is it right side? And it'll depend on the return.

Robin Dich:

Yeah. And as you mentioned, it is just as important to have consequences and strong prosecution as it is with prevention. The reason we're talking about prevention is because a slight shift, a bounce is what we think could really bring a lot of value to your company. Matt, how is LVT playing on both sides of the left and right right now? What is LVT's role?

Matt Kelley:

Yeah, so when I think about LVT and the role they play in this ecosystem or workflow, it's the deterrence value of having the AI capabilities that we have to identify when activity is happening and in an automated way at the location level, at the site level, being able to automatically and automate the deterrence of whether it's talking down, recognizing people and the activity that's happening, to all the way through to if the event does happen, then be able to have that evidentiary capability to have video, to quickly search it, and then to package it up and then attach it to a case, to an event to be able to give to law enforcement. So it runs a spectrum across this whole workflow of being able to add friction, have the see it, fear it or see it, get it, fear it of the prevention aspect of it to being able to capture the evidence and then quickly attach it to a case, send it over to law enforcement so they have what they need to go do their activities.

Robin Dich:

And so it seems like we have identified that there is a very strong place for prevention and deterrence in an ecosystem, in a security ecosystem. But Matt, why has it been so hard to get that side of the funnel funded as a team? What has historically been one of the toughest parts of that?

‍Matt Kelley:

Well, because traditionally prevention is the absence of something happening or stopping things from happening. So you don't necessarily have those data points that you need to be armed with walking into a strategic planning session or walking into a budget meeting because you stopped something from happening. So they're more of a soft benefit historically. But with video and being able to capture the actual prevention, as Mike alluded to, you're going to be able to start to attach data to that. And that's really why we've created the calculator to be able to say, well, we haven't been able to attach dollar values to these events in the past, but now that we're starting to get large sample sizes based on all the video, we're able to assign a value to that and be able to say we've got loss avoidance to speak in industry terms and be able to attach dollar values.

Because once the damage is done, let's use break-ins as an example, you've already got broken windows, broken doors, broken door contacts. If you're thinking about burglar alarms, time spent away from your leaders out on the floor teach coaching and training. The frontline associates are providing customer service because they have to go manage the vendors that would go fix all of the broken things that I'd mentioned before. So being able to take what traditionally has not had

Data points or value assigned to it and apply it in the traditional measuring mechanisms that a CBA or cost-benefit analysis would need to have to be able to say for every dollar you put in, this is the expected benefit, is really going to change how the industry thinks about prevention.

Robin Dich:

Yeah. Mike, you wanted to jump in there?

Mike Combs:

I agree with everything Matt's saying. I mean, it's amazing. And I think with AI, we've been so good at measuring how long it took to make a case, the recovery rates, how many cases I made. I really do think leveraging some of the new technologies to also at the same time be measuring when I had success at prevention is kind of a game changer. And we haven't really been doing that because again, we've been focused on trying to stop this big problem. But as retailers really, really hone in on prosecuting that 10%, that bad group, and trying to stop all the other stuff, I think it's a big cultural shift and they could have big benefits. And again, your calculator you're going to go through will help you measure that over time.

Robin Dich:

Yeah. Matt started going down this road of, one, it's hard to track crimes that don't happen, but there's so much upstream and downstream effects that Matt knows about, but I didn't even touch, talk about retention, worker retention. If there's crimes continue to happen over and over again, broken windows, broken doors, customers, workers don't want to go there. There's a huge downstream effect. And I'm sure, Matt, you've seen a lot of that happen to stores, right?

Matt Kelley:

Yeah, for sure. And you touch on thinking about upstream and downstream impacts and the customer experience, what that looks like from a voice of the customer standpoint. If you're stopping things from happening, how that drives top line revenue and ultimately profitability for your business. Those are all things that should be considered going forward as you're looking at your strategy from a loss prevention standpoint.

Robin Dich:

Yeah. And Mike, you talked about ORCs, being able to shift those resources to maybe better focus on ORCs while it takes care of this lower percentage of things that are happening. How much, as you mentioned, I'm just using your percentage, what if you used that 10% and put in ORCs? How big of a difference would that have made during your time?

Mike Combs:

I mean, I think it would've made a difference, but I do want to be honest with everybody that we weren't that great at identifying those people. And I think we're getting better in retail. We're sharing information. We're able to, again, capture that habitual offender, the repeat offender, which is that 10% ORC cases or that 10%. So now that we've added technology across the spectrum that allows us to do that, we just got to hold ourselves accountable to go ahead and using our headcount and our hard labor to go after the right person.

Robin Dich:

Yeah, absolutely. And we talked about it, we mentioned it. No good deterrence is effective without really strong consequences and the right of bang process. But sometimes the deterrence can be just as strong by itself or stronger than the prosecution. Mike, you have a really great example and I'll kind of take away the punchline, but you yourself admitted that you were a little skeptical too of it, but walk everyone through this deterrence factor that you've experienced recently. Yeah,

Mike Combs:

I'm on the advisory board for a secure access control system called Good2Go. And they put their application, it's a QR application. You scan a QR code, you get a quick approval. It unlocks the bathroom door for you. It's being used a lot on bathroom security and safety. Think about fast food, airports, places like that, gas stations, convenience. And it's also going to be used on fitting room doors and on locked up merchandise. But as it relates to the bathroom problems that we all know we have, you go to a bathroom and the sign says, "Hey, go see the manager for a key." So that's friction we don't need. So this QR code you scan, you use your phone, and it has a great deterrent value because people think, oh my gosh, I'm being tracked on my phone. They knew who I am now and they don't want to do it.

So the people that are going in there and doing unsafe things and bad things or stealing aren't doing it. So the ROI is through the roof. Well, I've been advising the CEO that, hey, we need a secondary and third deterrent application on top of this because eventually the bad people will just go around it and start doing it. They'll realize no one's arrested them or whatever. And we do have that deterrent, the secondary deterrent. That phone gets locked out of ever being able to open the bathroom ever again if they get caught doing anything. Well, I'm a year into advising this company. We haven't had to turn that on yet.

Julie Lawson:

Deterrent

Mike Combs:

Value has been great for a year. And the thing that blows me away is a 30-plus year practitioner, I would've bet my paycheck that that wasn't the case, that they would've had to turn that on quicker. So I think we got to be very open-minded about, hey, some of these new deterrent techniques may have better value than we think they did.

Robin Dich:

Yeah, absolutely. Matt, you've seen as deterrence has gotten stronger, has developed, evolved from what it was decades ago. Just seeing that what Mike was talking about, you just see the number creep up of how many more people are being deterred because of strong deterrence, right?

Matt Kelley:

Yeah, I think that starts to show up in some reports that we see, whether it's a NRF study or whether it's an LPRC or a real study or whomever is doing the study, you've seen property crimes go down, whether that's a factor of being under-reported or it's the actual strategies being put in place, or are they moving upstream into different areas of the business that they're going to get more value out of their activities? But that's because in the brick and mortar retail space, in the four boxes of the building and those ecosystems that they operate in the communities, they've invested a lot of time and effort in the deterrence value and on the investigation side.

Robin Dich:

Yeah, absolutely. And if anyone in the audience wants to comment about some deterrence that they've used that surprised them as well, like Mike, feel free to put in the chat. It'd be good to see what everyone's using or seeing as effective out there in the real world. Now I want to move on to the calculator that we've been teasing, discussing, working on as well. This is something that, as Matt has mentioned, LVT has been really trying to find the value of prevention and the potential value it can bring to people in our industry. At the end of the day, we want a safer environment for your workers, for your customers, and just a business. So we've been really looking at data points, doing a lot of research, working with partners to help us get a peek into the window of the potential savings that you could have by just slightly balancing your left and right of bang process that we talked about.

It's really simple. I'll show you what it'll look like. We'll share a link at the end for you to try it for free afterward as well. But all we're going to do is just put in really basic data points that most of you already have at your disposal or can get pretty easily, and we'll show you some of the results that you can get by just putting in these basic data points. We'll use Mike as a guinea pig. He has a lot of experience in this field, as many of you know. And we really want to, with his consulting background and the Home Depot and other enterprises, we really want to put an example, Mike, of a large enterprise business with a lot of locations across the country. So we'll use that as our example.

‍Mike Combs:

You got it.

Robin Dich:

Fantastic. Let's start with incidents per year. What would you say the average incidents per year are across an enterprise business? Yeah,

Mike Combs:

I think a big box enterprise across the country retailer would be around 100,000 incidents per year. Some years are higher, some years are lower, but I would say I would plug that number in as your starting point.

Robin Dich:

Sounds good. Let me put in 100,000. Awesome. And then of those incidents, 100,000 is a lot obviously, but if you had to put a number on the average cost per those incidents, what would you estimate them to be?

Mike Combs:

Well, if I look at the entry level shoplight event, maybe it's a $50 per incident. And then I also look at the ORC cases and I blend that number and get an average, I would say $3,500 or so between three and four grand.

Robin Dich:

Yeah. Matt, that number probably is something that you've seen as well, but that number, Matt, probably doesn't involve the legal part of it all, right? The prosecution. This is just the cost of the thing that's stolen or damaged, right?

Matt Kelley:

Yeah, this is just cost of goods. This is not including all the other ancillary things that might happen or might cost the company. This is just whether you're looking at it as a cost of goods or what it looks like with margin included, it definitely does cost the business. And sometimes you're just replacing product at the rate of theft on those high dollar value items. And so it's going to get skewed to those more expensive items, and that number probably goes up over time depending on who the retailer is.

Robin Dich:

Yeah, Mike, and how much could those legal processes be if we were to even add that? It'd be thousands and thousands of dollars on top, right?

Mike Combs:

Oh, at a minimum. And for a big case, like an ORC case where you're doing tons of surveillance, you're meeting with law enforcement multiple times just to get them to take the case, and then to think about all the work you do in the prosecution side. Yeah, there's tens of thousands of dollars on every case on an ORC case. Yeah.

Robin Dich:

Time is money, as they say, right? That's a really important resource for sure. And this is a data point that we kind of tweaked because of some of your feedback too, Mike, the monthly repeat crime rate. The percentage of those incidents we would say are repeat offenders. We originally had it at repeat offenders per month, but you made a good point. These repeat offenders, they don't hit a calendar. They don't go, "Okay, this is this month. Let's hit the store again on this date." It can be a wide ranging times and days and locations too of the same store.

Mike Combs:

And I think this number probably was higher 10 years ago. I think we've done a better job of a habitual criminal in store A is hitting three other stores 10 miles away. We've done a better job of connecting those dots and holding them accountable. So I think this number would've been worse 10 years ago. So I would say 7% or so, seven to 10%. If you don't have any AP resources, it would be a higher number. But we're talking about, again, big box, just to keep it a level for the data.

Robin Dich:

Yeah, enough resources that you have, but still a target because of how long that is. Yep. Awesome. All right, 7%. Let's add that in. And then we touched on this average recovery rate. We talked about Mike, Matt, you guys know that yes, recovery rate means getting your stuff back, your assets back, but many of the times, Matt, you can't even do anything with it. It's pretty much done.

Matt Kelley:

Yeah. I mean, especially for these large ORC cases, we're getting better as an industry, but it's hard to identify where the product came from unless it's a brand specific item. They can only be purchased at a specific location. Or you've all seen the show 48 Hours. If you don't catch them within a certain timeframe, oftentimes it's already sold, whether it's at a swap meet or out of the back of a truck or a pawn shop. Those items are already been sold, so you can't really recover them. Then that's when you have to put the efforts into actually catching the people who are stealing them.

Robin Dich:

Yeah, you mentioned 48 hours. Mike, sometimes you have the actual assets back, but you can't even touch them because it's part of an active investigation. What is that process like?

Mike Combs:

Yeah, one of the shocking things in my career when I worked organized retail crime with Home Depot, we had massive amounts of recoveries, and we would have to hold all that merchandise throughout the entire litigation process. And for the life of me, and some jurisdictions are different, but why we couldn't just take digital pictures and use that as our evidence. But by the time you would get the merchandise back to you, it was unsellable. I mean, we didn't carry the same part numbers, queue number, so we would not get the value of the product. We'd have to resell it or to go through some other process like that. And we would go at maybe after their finances or after their equity, the criminal house, seize their house, seize their car, get bank account money. Sometimes you get money back then, but that's two or three years down the road. So this number should be a lot higher, and it's not, unfortunately. That's what's sad. I mean, I use the number around 25%, but I think now the real number's 10% because of what I told you, how long the process takes.

Robin Dich:

Yeah, 10% seems like 10% to about 25 is kind of what we've seen. But just as we've done research and talked to third party, more people closer to 10% are at 10% than 25, definitely with a large enterprise business. All right, so that is this part - Can

‍Mike Combs:

I stop you there?

Robin Dich:

Yeah, go for

Mike Combs:

It. Another cool thing about this calculator is I used to always get asked to show my return on investment on my headcount that I had on the team, and they would always look at recovery. How much recoveries do you have? And I think this calculator helps you show the value at all levels of your program, so they're not just looking at that one number.

Robin Dich:

Yeah. And as you mentioned, it could be so volatile and there's so many variables that go into recovery that, again, at the end of the day, you might not even be able to most likely put it back in the store or even get that money back or it's just stuck somewhere, as Matt was talking about as well. So let's look into the prosecution funnel. Again, it's really important to have an important prosecution funnel. We have some of your basic data points here, so let's move on to the prosecution funnel. This is just the positive ID rate, which means the percentage of instance where the property or the secure team is able to identify and get a good clear look at the offenders and who is stealing or taking assets. This obviously probably was worse 10, 20 years ago, but with cameras now, with just all this technology we have, it's probably a little higher, right, Mike?

Mike Combs:

Absolutely. I think it's a lot higher in the last 10 years. We're using all the pieces of our technology, whether they're cameras, license plate readers, case management systems, we're identifying these people and using even AI is helping us do that. And then again, if the thefts have happened at multiple stores, we're connecting those dots so that we don't have these misidentified people in one store that's the same person. So I would say around 25% is what that number would be now, and I think it's growing probably rapidly.

Robin Dich:

Yeah. Matt, what are you seeing when you're talking to stores about being able to ID people? You're seeing that same improvement as well?

Matt Kelley:

Yeah, and especially as technology advances, I think you touched on a little bit as we moved from analog cameras to IP cameras that give us a much clearer picture as who the perpetrator is, but then also camera coverage. As cameras become a bit more inexpensive and/or you show value in the strategy you're putting, you're able to expand that camera coverage with better quality cameras and better technology to help you better identify those bad actors.

Robin Dich:

Yeah, and technology is really important. It's talking to each other now from inside the store to outside the store to other stores. As Mike and Matt have mentioned, you're now talking to other stores to make sure that these groups can't hit your store or try to at least prevent it. So the fact that you can talk to each other person to person now when that might've been a little taboo back in the day and now the technology's talking to each other, that's great news that that number's going up. Now we move on to case acceptance rate. This is now you're taking the positive ID and then getting a report to the police department and getting them to accept and open a case.

Mike Combs:

Yeah, and I think I got to stop and just admit that this is so across jurisdictions. And everybody knows that on the call, but I don't want to make it seem like this is a heart and stone number. It definitely moves around depending on the state, the jurisdiction, the county, the city. It also depends on the kind of crimes that are happening in that jurisdiction.

Mike Combs:

It could be that you have a really, really good theft case, but they've had some other violence happen in the city that has taken precedent. So I think those numbers ebb and flow over time. But I think on my notes here, I had this around 15% on average when I benchmarked with other retailers.

Robin Dich:

Yeah, to your point in our research as well is 15% is about where the average was. It fluctuates, but 15%, it's still really hard. You have to spend a lot of time, get a lot of evidence in order for a case to really be accepted. I know we talked about the number it has to reach in order for it to really start ringing bells on some of these ORC ones. And then we talked about even cross-state investigations. It really takes a long time and a lot of effort to ring those bells and get those cases.

Mike Combs:

And what brings this down, again, we talked about the jurisdictions sometimes having issues, to put it bluntly, but also the adoption of technology at the retail level. If they adopt a lot of these technologies that we're talking about that help you build a physical evidence chain for the case, then the law enforcement teams, the prosecutors, they get comfortable with your physical evidence that you're presenting on a daily basis and it's not questioned anymore. And I think that really has helped over time. But again, everybody's in a different spot on their evolution on that in retail, but the big box retailers have already adopted these pieces of information that help them gather physical evidence to move this forward.

Matt Kelley:

And add to what Mike was saying is also the quality of the evidence. Because think about success metrics and how these prosecutors are gauged on success. It's all about their win rates. If you don't instill confidence in the jurisdiction, the local prosecutor, the DA, that office, they don't feel good about the quality of the data they're getting, they're not even going to accept it because they don't feel like they can win. And it's a waste of resources for them to go try to prosecute the case.

Mike Combs:

And I remember a time way back when your narrative, your case report that you were writing as a prevention agent was the most important part of whether or not it got accepted or prosecuted. And I'm not saying that's not important. It is important. But you've got so many other things you can use as physical evidence that kind of paint the picture for the law enforcement person, the prosecutor, the jury. If you do it right, it's all right there. They probably won't even look at your narrative if you've got it all laid out the right way.

Robin Dich:

Yeah, absolutely. And yeah, unfortunately, this is a low percentage because of the lowest probably that we'll input here because of all those factors that you guys mentioned. But when it comes to now we have the case accepted, the police department or the investigation team is taking it on. What is the case to catch rate for that? That means leading to an arrest, having enough evidence for a warrant. Where would you say that sits, Mike?

Mike Combs:

When we're talking about, again, the same group of retailers that I'm talking about, it's right at 50%. Again, they've layered in technology, they've done all these other things the right way, and they've got credibility with their jurisdiction. So that number's really rapidly increased at 50%.

Robin Dich:

Yeah. And then as we talked about strong prosecution, trying to make sure that bad actor doesn't do it again, there is consequences on here. Obviously, I think everyone would love 100% on conviction rate, but that's just not the reality that happens with all of those factors that we've listed from ID rate, case acceptance, case to catch. Where would you say the percentage arrests that result in conviction? And that could be impacted by prosecutors declining charges. Evidence, as you said, is not sufficient, or even just the case aging out and not being a priority after a while. It can really drop that number that we're hoping to be really high, really low.

Mike Combs:

Yeah, I would say it's just under 25% probably when I look at my notes from other people. And again, it's what you said. Sometimes they can't find the person, they've left the country, or maybe there's some turmoil in the prosecutor's office and it's fallen off the radar. There's a lot of reasons why this happens.

Robin Dich:

Yeah, a lot of variables, unfortunately, that play a factor in it. But as we're about to see some of our calculated benefits, again, only eight data points that you'd need in order to put these in to get a picture of just what 1% of improvement on deterrence is, and of course one percentage of prosecution. And in most cases, you'll be surprised with some of the numbers that it spits out. So we've taken your data points, Mike. Really appreciate us walking us through and using some real experience and data from your consulting as well. And when we take a look at the 1% improvement deterrence, so again, we're not saying you need to spend now your entire budget on deterrence prevention. We're just saying if you shift 1% of improvement to the deterrence side of the house where we've identified that there are wins that are being left on the table because of how undervalued deterrence is, that means out of the 100,000 crimes that Mike has pinpointed at the very beginning of 100,000, that's a $3.5 million a year benefit from that as well.

And then when we take a look at the calculated benefits for prosecution, there's still great value here. That's 1% of prosecution is an additional four criminals convicted, about an additional 6,500 recovery value, an additional 372 crimes prevented because we're putting them away or we've started a case and they're going to leave. And that's still $1.3 million saved. So we just want to show you how beneficial both are here in these numbers. This is deterrence and prosecution. So Matt, let's start with you. When you see these numbers, what is your reaction? How do you interpret those numbers?

Matt Kelley:

I think it's interesting that just making incremental improvements over time, the compounding effects of those improvements across the span of a strategy. So say you've got a strategy that you're rolling out over a three to five-year period. These incremental benefits and improvements you're making to a strategy will add up over time. So it's going to impact profitability of individual stores. You think about in the retail space, a lot of the folks that are working in the four walls of those buildings get to share in the benefit and the profitability of that store. So you're changing their abilities to go make a little bit more money, which could have impacts on the quality of their life. And just think about it more broadly across the experience of your customers and of their experience, but then also the people that are working in the four walls of those buildings.

It makes a bigger impact to them that you would realize when you're increasing profitability of a business. But then also over time, it starts to stack and compound upon itself.

Robin Dich:

Yeah, Mike, your thoughts as well.

Mike Combs:

Well, first of all, I applaud the efforts to try to put some calculator to some of the things we haven't measured before. And I think a really good leader and a good asset protection department will try to measure these things across their entire department so that they can make the right decisions moving forward. And it sticks with my old thing, which you have to be good at both sides. You have to be good at the prosecution side, measuring yourself on investigations and prosecution, but also you want to make sure that you know what's having a good return when it looks at deterrence and stopping the behavior before it happens. So I just applaud the effort. I think it's great. I haven't ever seen something like this.

‍Robin Dich:

Yeah, I think with this tool that we have, just looking at deterrence, really trying to give it a value, how could this have changed someone in your seat previously at a Home Depot? How could that have helped you in your position?

Mike Combs:

I think it would've helped make sure that I have, again, the investment and resources in the right spot. It may have brought more people to the table on the deterrent side in other parts of the company than just. You can think about the internal people in my own AP department.

It may have brought more people to the discussion and make them more engaged if what they're doing matters, but also grabbing other people in the operations group and other parts of the company because they all have skin in the game. They all do things that impact that left side.

Robin Dich:

Yeah, absolutely. Matt, that's something I think a lot of security leaders could really start dipping their toe in, because security, what Mike is saying is security isn't just a security problem for this department. It is actually an overall business operation that security plays a role in.

Matt Kelley:

Yeah, for sure. You think about, Mike mentioned a little bit of bringing other people to the table, helping them understand how this benefits them. We always call it the with them, what's in it for them?

Helping them understand how this is going to impact their operations, how it's going to make them more efficient in what they're doing. And even within the AP department, whether you're on the investigation sides, you're on the loss prevention side, if you can show that red thread across the organization, it's going to bring the people together like Mike was talking about, because you might have competing priorities. You've got the operation side and AP are responsible for one thing, and then the ORC group's responsible for something else. If you can put them both together and show how it overall benefits, because there might be competing priorities, especially when it comes to budget and strategic planning, everybody's fighting for dollars. So if you can show how they both dovetail together and overall and benefit the business, it's going to make those conversations easier to have because you have a holistic strategy and approach rather than a siloed approach is I'm just going to look at the metrics that impact me.

Robin Dich:

Yeah, absolutely. Great way to close this section of it. If you want to try the calculator yourself, please feel free to use this QR code. We'll have it up during the Q&A section as well. Try it out for yourself. We'd love your feedback on it. If you have anything you want to mention or say, "Hey, this actually is a little off," or, "We really like this." Any feedback on it? We know that this is an ongoing conversation, as we've mentioned, of the value of prevention, and we want to make sure this tool is beneficial to anyone who uses this. So I really appreciate your guys' time and any feedback that you guys will have. Julie, we'll send it back over to you. Looks like we have some questions as well from the audience.

Julie Lawson:

Yeah, absolutely. We have a couple questions that have already come in. Feel free to pop questions into that Q&A space and we'll try and get to as many of those as possible. And if they are, as long as they're not anonymous, we can always pass them along to the team to help. But I'm going to start with something that you guys have both just said. Matt, you mentioned that adding in different types of technology does build benefits to deterrence over time. And Mike, you mentioned that numbers overall as regards to theft used to be higher, but with all of the different pieces that we've put in and investments that have been made, that the numbers have started to lower. So with that in mind, a great question had come in. My leadership only wants to fund things tied to a case number or a conviction.

So how do I make the budget case for something that shows up as fewer incidents rather than more closed cases? So Matt, I'm going to kick it off to you first. And just how have you seen retailers make that budget case?

Matt Kelley:

Yeah, and that's where you take that holistic approach of if something's not happening, what does that actually mean to the business? Look in other areas that are upstream from those events to figure out what the data tells you, because this could all be solved through data. If you're saying we have less capable, inherently that's a good thing, but what other areas of the business is that impacting so you can go make the case to double down on that strategy?

Julie Lawson:

Mike, do you have anything that you'd like to add there?

Mike Combs:

Yeah, just think starting to measure both sides. The prosecution side, it sounds like this person asked a question is really good at measuring prosecution, case recoveries, all that, but also starting to use their technology to try to measure things that they've prevented and keep an eye on that. I think that would be really good. One thing to keep in mind, Julie, is there's things in the courts and the prosecutions with law enforcement that are out of your control. Sometimes those numbers that we talked about are going great and they're going up, and sometimes they start going down. Nothing to do with your impact to your teams. That other side of the equation, the courts are just getting inundated with cases and it affects your stuff. So you want to be good at both sides of this, the prevention and the prosecution side, just because things are out of your control on the other side.

Julie Lawson:

Yeah, absolutely. And that's a great comment that had come in from Robert. I love prevention. This is who we are and the overall benefits may not be fully measurable. One area I think we're lacking from the DA down in that order is prosecution of misdemeanor cases. Nip it in the bud and stop developing future felons in ORC cases by ignoring misdemeanors. So absolutely can totally agree in that space. And to your point, Mike, courts are overwhelmed and they're absolutely inundated. So talking about some other pieces that y'all had touched on, I noticed even from my own retail experience how offenders adapt, but a great statement and question to come in. Deterrence effectiveness reportedly fades if the tactic is static and offenders adapt. So how often do you see organizations actually rotate or refresh their deterrence measures? So Mike, you obviously have your experience most recently at Home Depot, but also in your consulting role.

I'm sure you've seen that as well. So I'll pass that to you first.

Mike Combs:

Absolutely. I think as soon as a retailer rolls out a deterrent technology or some type of application, they have a secondary thing in mind in case that thing starts running its course. But I think they have to keep refreshing it. And I think at least it's a yearly look. It's a yearly review process where you're measuring whether or not it's giving you the same impact. But I think that person that asked that question is exactly right. History tells us through studies and research that if you don't have some type of accountability or some type of something on there that makes the person know that you're serious about this deterrent and something happens if you violate it, then it may not work for very long. So you have to have a secondary deterrent. But again, go back to let's use all my technology to identify the worst of the worst, the habitual offenders.

Those are the people you need to worry about. It's not all your customers. It's roughly 10% of the bad people, which is probably less than 1% of your customers. So try to keep it in perspective before you freak out.

Julie Lawson:

Matt question, I'm going to turn that over to you. Have you seen some of the retailers that you work with even reevaluate maybe where they're putting something or where they're spending their time on specific solutions?

‍Matt Kelley:

So that's the guidance I give all of our customers. There should be no strategy that you put in place to set it and forget it. And I think historically we've done some of those things like EAS, for example. You put it in and you put tags on product. Technology has now started to evolve with RFID and some of the other advancements in the technology, but there are strategies that retailers and this industry in general have just said, "We're going to put it out there." And then you see that diminishing returns. That's why you should iterate on processes, maybe have backups like Mike mentioned, but look at the data. What's working? What's not working? How can you improve the process, improve the technology? Where are the gaps that you have? And on an annual basis, if not more so look at what the data's telling you, iterate on it, get the feedback from the field, figure out what's going on, why it's not working or what's working.

Where areas that it's not working, take best practices and apply those to the bottom and you raise the average. So in a nutshell, it's more about what's the iterative process? Continuing to prove on it, making changes, making tweaks so that you're not a static solution.

Julie Lawson:

I love that you said listen to the field because they're the boots on the ground at those specific locations and they may see something that you just have no idea about. So that was absolutely a great point as well. Mike, you had mentioned just a second ago and earlier in the presentation that 90% of loss comes from 10% of opportunistic non-habitual offenders. Does that ratio also hold for organized retail crime?

Mike Combs:

Yeah, I didn't mean to say non-habitual, so let me correct that. 90% of your losses come from 10% of the people that you catch. So I think it is habitual. Okay.

Julie Lawson:

And

Mike Combs:

Yes, ORC is embedded in that number.

Julie Lawson:

Perfect.

Mike Combs:

Yep.

Julie Lawson:

And then this question's going to go back, unless Matt or Robin, if you have anything to add to that? No. All right. So this question could be going to Robin, could be going to Matt. I'm not sure. But for a multi-site retailer, does it make sense for them to run this calculator on a per location, per region, division, or an entire portfolio level to make it more useful for that budget conversation?

Matt Kelley:

Yeah, and I think that's different environments behave differently. So you can't peanut butter spread strategies across the entire geo. You can take some ideas and concepts and apply them broadly, but there's nuances within every geographic area that you operate in, whether it's demographics, whether it's urban environments, or it's more rural environments, or it's like Mike had mentioned several times, it's what is the community and how do they police? And what is the jurisdictional guardrails that they put around prosecution and/or even responses from local law enforcement?

Robin Dich:

Yeah. And to that question, Julie, I would say try them all. If it's maybe your local store or your regional, to Matt's point, everything's a little different and maybe it can give you a more specific picture at a store or region. But the example we walked through with Mike is that's where you can really start, and then you can pinpoint what those strategies could be in those savings as well.

Julie Lawson:

Yeah, that's definitely a quote that I'm going to take away.You can't peanut butter spread a strategy. That's a really great one. So keeping on the calculator, somebody had asked, "We only open cases on repeat offenders because prosecution eats so much of staff time." Does that case acceptance rate account for the incidents where they're not even bothering pursuing that or just the ones that they do?

Robin Dich:

Yeah, for the calculator, it's the ones that they end up doing. So the ID is you were able to identify this person, you're able to gather, or persons in a lot of cases, that's the positive ID. And then the positive case acceptances, they will start the investigation. The police will accept the case from that evidence as well. So that's where our percentage come from.

Mike Combs:

And that case acceptance rate should be very high. And that person that asked that question, it should be going up because they're choosing to go after the right people.

Julie Lawson:

Fair point. Fair point. Last question here. If both prosecution and deterrents come back with positive ROI in the calculator, how do we decide where the next dollar actually goes?

Matt Kelley:

That's dependent upon whether you think you're going to continue to get that rate of return. So there's got to be a line in the sand you draw to say, "Well, I've squeezed all of the juice out of this orange and I need to go figure out what the other areas of the business I need to focus on." That's why I'm a very strong believer in there is no silver bullet. It's the culmination of the efforts across different teams, across different technologies, across different processes. They come together to make a successful AP organization and strategy. That's why you have to have a menu of options to pull from to help, whether it's on the deterrence or the investigative side. There's not just one specific tool that's going to solve all your problems. You need to figure out what fits where from a puzzle standpoint and apply those to where it's going to make the biggest impact.

Julie Lawson:

Well, y'all, I have appreciated this conversation so much, and I look forward to continuing the conversation, not just with y'all, but also with the retailers that have joined us. But with that, we are almost out of time, so I'm going to go ahead and close out today's webinar. So Robin, if we can flip to that next slide. First, the LPF, we'd like to thank our founding 1LP partners. 1LP is LPF's retailer-focused initiative built to simplify and elevate how the industry trains, certifies, and develops LP and AP talent. Retailers are joining the movement because the LP/AP function has never been more critical or more complex, and 1LP gives them a consistent, scalable way to invest in their people. So thank you so much to all of those retailers that are listed there on the screen. And with that, we're going to talk next on the next slide about the promo code that's available.

So we do have that promo code available to you to leverage on either an LPQ or an LPC course, as well as our ORC investigation courses. Now, if you are LP certified and you're having to re-certify every year, this also qualifies for lifetime membership and lifetime membership waives recertification fees, so definitely check that out. And with that, we're going to flip to the next slide and talk about we are giving away five LP course certification scholarships. Those will be announced via email to those five recipients. You do have to have been present to win, so check your email. You do have to claim those within five business days, otherwise they are transferred to the next person that's available. And last but certainly not least, thank you so much to everyone who has joined us today. If you enjoyed today's webinar, we have webinars of all different topics.

Normally we have 30 plus of them a year. So feel free to scan that left QR code to get a free guest account to register for those media blasts so you can get updated on all of our different notifications and webinars that we're going to host, as well as you could also follow us on LinkedIn. And then also if you are in the US, scan that middle QR code. You can get a free, I love that word, free, copy of the LP magazine that is sent out four times a year so that way you can keep up to date with all of the different trends and things going on with loss prevention and asset protection. But thank you so much to LiveView for sponsoring today's webinar, Robin, Mike, Matt, y'all have been amazing. Thank you so much, and we look forward to seeing you on the next webinar.

Matt Kelley:

Thanks so much.