Everyone Wants RMR

Here are suggestions on how to build revenue on a long-term basis

As the physical security industry continues to mature, integrators must confront a new landscape as they try to make themselves more relevant to the end user. DIY and the commoditization of products are becoming serious challenges to the profit margins most have enjoyed during the early phases of IP technology deployment.

As IP technology becomes more plug-and-play, and cameras, access control, and video surveillance systems become commodities soon after exiting beta testing, how does the integrator sell value to an ever-more skeptical, cost-conscious customer base?

Keeping Existing Customers

The old rule of thumb in business is that it costs many times more to get a new customer than to keep an existing one. This played out during the 2008 recession when we saw many security integrators virtually shut down their installation businesses in favor of service and support revenue streams.

When you study the margins in this area of the business, it quickly becomes evident that this is not such a bad idea. Service, remote monitoring, and proactive support offer real sources of revenue after the sale that are oftentimes overlooked. In addition, inattention to the customer after the sale is the most certain way to invite your competitors in to steal any repeat business from the customer you worked so hard to acquire in the first place.

Service and Support Long after the Sale

Let’s look first at service and support after the sale. The nightmare that all security integrators face is a loss or other liability from an incident the security system either failed to prevent or capture due to equipment malfunction. Nothing says failure like a customer trying to retrieve video of an incident only to find that the recorder’s hard drive failed two weeks ago and no one was the wiser. Solution: integrators should invest in and sell only technology that has the capability to self-report issues with hardware and configurations.

This is not much of a reach today as most hardware and software provides some type of health check capability that can be exploited to insure your customer’s system is truly providing all the protection they purchased. Basic data on the state of the system should be reviewed on a regular basis and the system must be capable of producing alarms when a hardware failure is pending or when it actually occurs. These systems should also be able to report on the status of the configuration and the information that is being collected.

If you expect to get 30 days of video storage from a VMS system, the system should be intelligent enough to tell you when that is not happening.

P is for Proactive and Building Trust

While proactive hardware and software support can be very powerful differentiating factors during the initial sale, they also provide a source of recurring revenue and additional customer touches that can serve to maintain and build a healthy customer relationship. Imagine being able to call your customer, proactively, and report to them that a camera is offline or a door contact is reporting failure. Then, telling them that a truck is on the way to bring that system back online, and they never called you because they weren’t aware they had a problem. That has to be a much more enjoyable conversation than one about missing video or an undetected break-in.

Next, think about an automated process that can report the health of a security system to the end user on a regular basis via email or text. Consistent, proactive communication with your customer will build a sense of loyalty and trust that can help overcome the onslaught of competition when it comes time for system expansion or upgrade. If your customer is happy with your relationship, they will have no reason to look elsewhere and will be much more likely to pay a premium to retain the level of service you have been providing.

Remote Alarm Monitoring and Verification

Building on these same technologies, consider the benefits of remotely monitoring and verifying alarms as they occur. Certainly, not all integrators can provide central station capability, but everyone can re-sell and service alarm monitoring through third-party service providers if you deploy the right technology. In the not too distant future, every municipality in the US will regulate alarm response and levy penalties when false alarms occur. These penalties can be costly over time, but the most worrisome penalty is when police departments impose slower response times for repeat false alarm offenders. Deploying technology fully capable of alarm verification is an added value that not only helps differentiate you from your competitors, but also provides the recurring revenues that can become the lifeblood of your business.

RMR Smoothens Cash Flow and Builds Profits

Every integrator wants to win the elephant deal of the day and reap the benefits from these large installations. To do so, keeping the install team working quickly becomes the sole focus of the business. These large projects, however, create a hill and valley revenue stream that can be extremely dangerous when the economy turns sour as it inevitably will. By building a steady recurring monthly revenue stream, your business can prosper during good and bad economic times, and revenue from those large projects can then become a source of growth.

Building a recurring monthly revenue stream from service; support; remote system monitoring. Customer retention rates grow because you’re communicating when things are going great as well as when issues occur.

You will quickly become the trusted advisor that insures repeat business, and you’ll build a recurring revenue stream that will sustain your business during good times and bad and create a strong platform for future growth.

This article originally appeared in the April 2015 issue of Security Today.


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