Within the security sales market, intrusion detection systems – along with their accompanying monitoring services – have long been a source of recurring revenue. Alarm companies have baked RMR (recurring monthly revenue) into their business model; their pricing structure which features monthly fees is what customers expect. However, RMR should not be reserved for Alarm companies. The evolution of physical security technologies within the past decade, transitioning from hardware to software-centric, has resulted in opportunities for security integrators to also capitalize on RMR sales in a surprising number of other ways.
A 2019 survey by Security Sales & Integration (SS&I) Magazine reports that security dealers and integrators reported a 23% increases in RMR sales in 2018 and project a 15% increase for 2019. If you’re not seeing those types of increases, you’re missing out on steady monthly revenue that can be critical to growing your business. Here are four areas where your sales team can focus to help make this happen.
1. Maintenance and Service Agreements
According to SS&I, for the past two years, about 2/3 of surveyed security sales and service providers have generated RMR from maintenance and service agreements – second only to sales of burglar system monitoring. These contracts have always been lucrative for the companies that sell them, but the proliferation of security systems that rely on network and cloud software has made them even more so. Many systems today can be serviced remotely, without ever requiring an onsite visit. At the same time, the peace of mind such contracts offer to customers has never been greater. With so many intertwined systems running on network servers, the impact of having a system down or malfunctioning can be crippling. System integrators can position service agreements as offering the benefit of same-day service whenever remote support is possible, while simultaneously incurring lower labor costs than when on-site visits were the norm. This means better service for the customer and more money for you. Furthermore, the move toward cloud solutions is resulting in fewer opportunities for hardware to malfunction. This is another win for companies offering service agreements. Less hardware that can potentially fail makes RMR contracts even more lucrative.
2. IP Systems and Cloud Sales
The past fifteen years have seen a complete transition within the physical security space from analog systems to network-based, IP solutions. The new, network paradigm provides many ways to add RMR to security system sales, and yet too many integrators remain resistant to adding these line items as standard fees within their quotes.
Sales of cloud-based security solutions, in which manufacturers have replaced the upfront cost of hardware with monthly or annual service fees to keep system software current and operational, are an easy way to generate RMR. Customers are increasingly trusting of, and receptive to, solutions in the cloud and are already accustomed to SaaS pricing; other business software solutions have been migrating to the SaaS model for years. Using a similar pricing model for security systems is an easy sell. The availability of cloud systems is growing across security and related technologies. Access control, video surveillance, video and data analytics and home/facility automation are just a few areas where you may want to rethink your product lines and consider selling systems that can add a steady stream of RMR.
And for systems that are network based but still rely on local servers, there are also ample opportunities for integrators to build RMR into their quotes. Surveillance systems often require annual per-camera and/or per-device licensing fees. Integrations between disparate software – such as license plate recognition with access control, or access control with video surveillance, can command an “integration” service fee that keeps integrations functional as software updates are released. Manufacturers may also impose integration “licensing fees”. For example, there may be an annual cost to run video analytics filters against certain cameras’ video feed. Don’t shy away from presenting these options to customers for fear of being less price competitive. The market has shifted, and customers now understand that recurring fees, licenses or subscriptions are required when investing in cutting edge integrated solutions that rely heavily on software and hardware.
3. Added Value Services
With the proliferation of network solutions comes the growth of value-added services, most of which can be priced as part of RMR packages. The recent SS&I survey reports that 14% of systems integrators are offering managed network/IT services and about one third are generating RMR through remote system diagnostics. Even more – 38% – are offering video verification of alarms as an added-value service with an RMR pricing structure. Other services mentioned in the survey include personal emergency and medical monitoring, energy management, cybersecurity services and data analytics. Not all of these services make sense for all integrators. You can only offer added value where you have the expertise to deliver. However, with potential revenue growth in so many areas, it may make sense to evaluate your current workforce and service offering and consider adding new members to your team who can support some of these profitable RMR growth opportunities.
4. Software to Simplify the Sales of RMR
RMR can be a game-changer for your bottom line, and opportunities abound to add these services to your company’s offerings. However, without the tools to easily quote such services, getting buy-in from your sales team is likely to be slow-going. Quoting RMR often includes many variables, making it more complicated than dragging a single part number into a quote. If it’s too difficult for salespeople to perform the necessary calculations, or if including such services will delay getting a quote out the door, there’s a good chance that your RMR offerings will represent little more than missed opportunities.
Sales software designed for security sales can make a big difference. There are plenty of sales software solutions designed for the general marketplace, but they often require significant customization and programming in order to support the complex nature of security installations. Including RMR makes that customization even trickier. WeEstimate, from WeSuite, offers a special RMR module that makes it easy to incorporate RMR pricing within quotes. For example, if RMR is based upon the number of devices or licenses in a system, RMR can be easily added at the part level. If an RMR service applies to the entire project, that’s fine too. Sales people simply select RMR items from the catalog of services, indicate the length of contract and frequency of billing, and the software takes it from there. Quotes and proposals automatically display the RMR line items with the correct, calculated price. Be sure to look for this type of feature when evaluating sales software for your organization.
As we’ve just shown you, there are many ways for systems integrators to increase RMR, but leveraging the right sales software is a springboard that will amplify your success. Be sure to include it in your action plan!