Four Keys to Building an RMR Machine

Changing your business model is not the same as changing your shirt

Everywhere, we are seeing articles, blogs, advertising and conferences about growing recurring monthly revenue, or RMR. It seems that the security industry is obsessed with this concept. It’s a good obsession, provided that we keep in mind that building RMR is more about philosophy and execution than technology, and that we focus on a few key facts:

  1. Simply selecting an “RMR product” to sell is not enough to generate success.
  2. End users buy value-added services, not “RMR.”
  3. Building service revenue streams requires organizational commitment.
  4. Commitment is measured in years, not months.

At this point, most integrators have gotten the message that product and installation revenues alone are not sufficient to support a healthy organization in the long term. It’s also clear that the enterprise value of integrators can increase exponentially if they derive significant revenue from recurring sources. As a result, many integrators are searching for avenues that will open up increased RMR.

Naturally, many vendors have lined up to offer them a variety of solutions that promise to “build your RMR.” The verb “build” is essential here because that’s what it takes; RMR must be built. However, it’s important to recognize that any technological solution on its own won’t build much RMR unless your organization has taken some basic steps to ensure success.

Building RMR takes organizational commitment and execution of a long-term plan. There are no “get rich quick” programs in recurring revenue growth. Why? Because a service business requires significant initial investments that gradually show results over a period of years. Consider the recent disaster of LinkedIn’s IPO. Organizations that jump on the RMR bandwagon without proper planning and an intense commitment will jump off as soon as the investments get too high or when another transactional opportunity appears.

When speaking with organizations in the process of building significant recurring revenue streams, you hear a number of consistent statements such as, “We don’t sell any product without an accompanying service,” or “We have a dedicated sales force for our service products,” or “We focus on service X because it’s the one that has the most value for our clients.” Many organizations also describe changes they made in financial systems, incentive plans and the allocation of resources to support their RMR growth strategy.

I have observed that many successful RMR companies start with a separate sales team built from the ground up. Many times, the existing salespeople are driving large revenue projects that generate big commissions. Over time they have also garnered large salaries to match their experience and results. It’s going to be tough and probably costprohibitive to ask these salespeople to shift their focus to the smaller projects that typically generate RMR.

One successful tactic is to hire some less-experienced salespeople who will require training to sell your services portfolio. If you pick the right partners, the service portfolio will be less complicated to sell than your traditional products, so your rookies should have a shorter timeframe to perfect their performance. The really successful companies don’t just tack an RMR option onto their existing offerings. They’ve figured out that selling services requires a different approach.

To really drive RMR, a business must undergo a paradigm shift and focus on this goal from the executive suite on down. There is a reason for this: The pot of gold is at the end of the rainbow, and it takes skill and perseverance to get to the end.

The four points below map out the basic elements an integrator should consider when working to build recurring revenue. You must articulate organizational philosophies and goals that will support the growth of RMR. Then you must lead your team to do it by assembling the right mix of internal capabilities and partnerships to create your complete value proposition. Ensure that your delivery platform is supported by employee incentives that are properly aligned for the achievement of long-term RMR growth. Finally, ensure you have the competencies to properly educate your target end users and achieve the level of engagement that is required for success.

If you’re an integrator trying to determine how to move your business from a transactional model to a recurring model, consider the following key success factors:

  1. A realistic self-assessment: Look in the mirror, and determine what your company is really about. What types of customers do you service? What types of services do your customers want from you? What would it take for you to offer those services? What investments must you make in infrastructure, organization and financial assets? Do you have the right people in your organization, people who can sell services and solutions instead of technology? Are you willing to make the initial investments? Are you willing to stick with the strategy?
  2. A five-year RMR business plan: Once you have thoroughly evaluated your current situation, you are ready to create a business plan. I suggest looking at this program on a five-year horizon. In year one you will be making investments and climbing the learning curve for selling and delivering services. In years two and three you will be perfecting your training, market focus and service levels. In years four and five you are driving real revenue and preparing to evaluate the growth strategies to pursue in your next five-year horizon. Having a fiveyear plan will help you to maintain focus on your goal.
  3. Strong partners: Once you know which services you want to sell and have a general plan for implementation, it’s time to look for partners. Fortunately, plenty of firms are creating products and services that will help you implement your RMR strategy. As with any vendor evaluation, you want to look for those with successful track records. Also, look for companies that derive most of their revenue from RMR. You cannot afford to partner with a company that is just experimenting with a new RMR model. Successfully driving RMR means building long-term relationships with your customers. You can’t base long-term customer relationships on short-term supplier relationships. The key suppliers for your RMR solution need to be just as invested in your RMR as are you.
  4. Discipline of focus: Wanting to be in the RMR business will not lead to overnight success. It will take continual effort, focus and discipline. There will be times when transactional opportunities distract you and your team. You have to keep your eye on the five-year plan. There is a reason that RMR companies are valued at high multiples: Selling services and attaining on-going respect from your customers is hard work.

There are no shortcuts to building value-based relationships with your customers. Building RMR is an outcome of the process of building this sustainable value proposition.

This article originally appeared in the October 2011 issue of Security Today.


  • 12 Commercial Crime Sites to Do Your Research

    12 Commercial Crime Sites to Do Your Research

    Understanding crime statistics in your industry and area is crucial for making important decisions about your security budget. With so much information out there, how can you know which statistics to trust? Read Now

  • Boosting Safety and Efficiency

    Boosting Safety and Efficiency

    In alignment with the state of Mississippi’s mission of “Empowering Mississippi citizens to stay connected and engaged with their government,” Salient's CompleteView VMS is being installed throughout more than 150 state boards, commissions and agencies in order to ensure safety for thousands of constituents who access state services daily. Read Now

  • Live From GSX: Post-Show Review

    Live From GSX: Post-Show Review

    This year’s Live From GSX program was a rousing success! Again, we’d like to thank our partners, and IPVideo, for working with us and letting us broadcast their solutions to the industry. You can follow our Live From GSX 2023 page to keep up with post-show developments and announcements. And if you’re interested in working with us in 2024, please don’t hesitate to ask about our Live From programs for ISC West in March or next year’s GSX. Read Now

    • Industry Events
    • GSX
  • People Say the Funniest Things

    People Say the Funniest Things

    By all accounts, GSX version 2023 was completely successful. Apparently, there were plenty of mix-ups with the airlines and getting aircraft from the East Coast into Big D. I am all ears when I am in a gathering of people. You never know when a nugget of information might flip out. Read Now

    • Industry Events
    • GSX

Featured Cybersecurity


New Products

  • XS4 Original+

    XS4 Original+

    The SALTO XS4 Original+ design is based on the same proven housing and mechanical mechanisms of the XS4 Original. The XS4 Original+, however, is embedded with SALTO’s BLUEnet real-time functionality and SVN-Flex capability that enables SALTO stand-alone smart XS4 Original+ locks to update user credentials directly at the door. Compatible with the array of SALTO platform solutions including SALTO Space data-on-card, SALTO KS Keys as a Service cloud-based access solution, and SALTO’s JustIn Mobile technology for digital keys. The XS4 Original+ also includes RFID Mifare DESFire, Bluetooth LE and NFC technology functionality. 3

  • Camden CV-7600 High Security Card Readers

    Camden CV-7600 High Security Card Readers

    Camden Door Controls has relaunched its CV-7600 card readers in response to growing market demand for a more secure alternative to standard proximity credentials that can be easily cloned. CV-7600 readers support MIFARE DESFire EV1 & EV2 encryption technology credentials, making them virtually clone-proof and highly secure. 3

  • HD2055 Modular Barricade

    Delta Scientific’s electric HD2055 modular shallow foundation barricade is tested to ASTM M50/P1 with negative penetration from the vehicle upon impact. With a shallow foundation of only 24 inches, the HD2055 can be installed without worrying about buried power lines and other below grade obstructions. The modular make-up of the barrier also allows you to cover wider roadways by adding additional modules to the system. The HD2055 boasts an Emergency Fast Operation of 1.5 seconds giving the guard ample time to deploy under a high threat situation. 3