Session Highlight: Why Growing RMR Remains So Important
ESX delivered on its promise of providing security professionals a forum for networking, education, and coming up-close-and-personal with the latest security tech. And while the Electronic Security Expo 2022, held in Fort Worth, Texas this June is now in the rearview mirror – and plans are already revving up for ESX 2023 – there are many key takeaways that should stay top-of-mind for security professionals. Among them are lessons learned from the educational sessions presented at the Expo. Those who may have missed some of the sessions on the roster need not miss out on the insights and instruction imparted. Here, we take a look at the topics covered in the “Powerful Hacks to Grow Your Recurring Revenue” presentation, led by Melissa Brinkman, CEO of Custom Alarm and ESA Board of Directors.
Brinkman is well equipped to speak on the RMR topic, as Custom Alarm has been successfully serving the security needs of customers in Minnesota for some 50 years now. Their services span fire alarm, intrusion, video surveillance, access control, home automation and more in both the commercial and residential spaces.
Like all of the peer-to-peer educational offerings on the ESX lineup, the “Powerful Hacks to Grow Your Recurring Revenue” presentation was designed to help electronic security pros move their business forward towards efficiency and productivity. Attendees were primarily security dealers and system integrators, eager to learn more about the RMR-related topics covered in the session.
Recurring revenue is the heartbeat of every security business. Although it’s certainly not new to the security industry, innovative and profitable ways to grow recurring revenue can help a security company increase its average RMR per customer, which leads to greater profitability, sustainable growth, and higher enterprise value.
Why Reviewing Your RMR Pricing Model Is Good Business
This portion of the presentation explored the various reasons why it’s so important to regularly review your pricing models. Service agreements, labor costs, inspections, etc. should all be considered. As Brinkman pointed out, some security companies don’t look at implementing rate increases. She advises that they should take a closer look at their recurring revenues across the board, either annually or at the least, every other year, and ask themselves if those rates are at a minimum. If so, those RMR rates should be increased by a certain percentage that makes sense and keeps the company profitable. The best way to determine a reasonable rate increase is by looking at your pricing model and determining your overall operating costs and how they have changed since the last increase. Costs for everything and for everybody are going up in today’s economy. It’s likely you’re servicing a lot of customers at a cost below what your rate should be, so it’s worth considering that it’s time to communicate to them the value of your services that justify a reasonable rate increase. She cautions that companies that don’t regularly adjust their RMR margins are likely leaving money on the table.
Newer Technologies and Services Based On A Subscription-based Model
Simply stated, the times are changing. Are you? Brinkman, together with her co-presenter, Randall Renfroe, President, All State Security Industries, addressed some of the newer technologies that today’s security dealers and integrators should consider adding to their arsenals.
Cloud-based solutions ranked high on the list. The model is being much more widely adopted and becoming an attractive alternative to traditional, on-site physical access control and video surveillance systems. The number of organizations making the migration is on the rise, as many end users are looking to lower their upfront investment costs, as well as their system maintenance costs.
In terms of access, credentialing is actually markedly easier with a cloud-based system than it is with a physical access system which requires ongoing issuing and returning of access cards or key fobs. With a cloud solution, administrators can instantly grant or revoke access from any Internet-connected device.
“If you’re not offering cloud options you should be looking at it,” Brinkman advises. “If we’ve learned anything in the last two years, it’s that many more businesses are operating remotely.”
“Pre-COVID, most offices opened at 8 and closed at 5, but now management teams are tasked with keeping their businesses safe at all different hours and with varying numbers of staff onsite. Cloud and mobile access technologies enable users to manage their system anywhere, anytime.”
The good news for security dealers and integrators is that a cloud-based access or video surveillance system means customers pay one simple monthly subscription fee. This opportunity for dealers and integrators to create new RMR is a huge benefit, and one that also allows for more realistic budget planning for future growth.
It’s All About That Base, That Base, That Base
A very smart place to start segueing into selling cloud-based solutions and other additional RMR-generating services is with existing customers who already know and trust you. While it’s always prudent to continually prospect new customers, Brinkman contends that there are usually many opportunities to sell more RMR within your existing customer base. This formula has worked well within her own company, Custom Alarm, as she reports that between 60-70% of their additional sales come from existing customers.
As discussed in the “Powerful Hacks to Grow Your Recurring Revenue” presentation, there are many ways to successfully upsell more services to your existing roster of clients. As highlighted in the
session, it’s very likely that your security company is now offering newer solutions that your customers aren’t even aware of. You are already their trusted security integration partner, so never take that relationship for granted. Keeping in touch on an ongoing basis is vitally important. Customers look to you to keep them apprised of new technology capabilities that can help improve their operations and ensure their security systems are working optimally. Communication should be an integral part of your ongoing service to customers. This can be as simple as regular check-in calls, to sending out marketing pieces that keep customers informed of new offerings they may want to implement. Regardless of how security dealers and systems integrators maintain communication with their existing customer base, the important thing is to recognize how important that customer base is to their business and how vital it is to keep those relationships healthy, happy, and ongoing.
Security dealers and system integrators rely on monthly recurring revenues to sustain their business and remain profitable. In turn, end users need to rely on their trusted security partners to keep their operations safe, secure and profitable.
Savvy security professionals know that staying on top of the latest technologies ensures that their customers are reaping the benefits of the most reliable and robust security solutions available.