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Recurring Monthly Revenue Programs are About More Than Revenue

Integrators often hear the mantra from media and others –  you should offer some kind of recurring monthly revenue (RMR) program, they say. By this they mean creating an ongoing service contract or maintenance agreement program for your clients, who make regular monthly payments to cover the ongoing costs of providing maintenance and support on your system installations.

But how many integrators are actually implementing some form of RMR program? According to CEDIA, about 29% of their members offer some form of maintenance agreements. CEDIA believes that this rate is too low and they highly recommend that integrators offer some form of an RMR program.

What are factors driving the need to offer maintenance agreements?

From our conversations with multiple integrators, we’ve uncovered several factors driving the industry towards more integrators offering an RMR program. They are:

  • The Shift from Analog to Digital – Analog systems were simple and always worked, if not very flexible. Digital components are very flexible, but stuffed full of ICs, hardware, software, firmware, device drivers, flash memory, etc. At the very least, these require regular firmware and software updates to keep everything operating smoothly.
  • Accelerated Obsolescence – in the digital realm, technology progresses rapidly requiring regular replacment with newer devices. Obsolescence, once measured in years, is now measured in months.
  • Complicated Wired & Wireless Networks are the Norm – All installations now require networks, and networks introduce hubs, routers, switchers, matrixes , modems into the mix. In other words, more things that need tweeking to keep running smoothly.
  • Stuff Breaks – Face it, stuff breaks…even from normal use. Daily use of complex systems creates a greater opportunity for stuff to break.
  • Declining Margins – Something many integrators tell us that they deal with all the time. Lower margins mean you have less ability to offer your clients free upgrades or other free services.

The fact is that technology is progressing much faster than your clients ability to keep up with it. They need help. They need their systems to work…every time and always. They need a technology advocate who will ensure that they are always up to date with their systems and those systems operate reliably on an ongoing basis.

Aren’t recurring monthly revenue programs just about the revenue?

According to several integrators we spoke with, there are more reasons than just revenues to consider implementing an RMR program. For example, one we spoke with told us his goal was to reduce the number of truck rolls. Integrators generally lose money everytime they roll a truck for servicing a system- so cutting truck rolls can greatly improve your profitability. With his effective RMR program, he has cut truck rolls by 82%!

Another integrator told us that their goal was to educate their market on the need for ongoing maintenance on today’s sophisticated – and sensitive –  systems. Up until now, the integrator offered service on their systems at no charge for the first year. After that, the relationship moved to the traditional break-fix model: something breaks, the client calls for service, you send a truck to fix the problem…charging the customer something for the repair.

With an effective RMR program, you can: reduce the number of truck rolls required to keep the system operating…improve the uptime of the system through ongoing remote monitoring and maintenance…and improve your clients satisfaction with an ever-working, optimized system. Done right, an RMR program is a true win-win situation – keeping your client satisified with your installation…and keeping them coming back for more.

Are RMR programs easy to set up?

It is easy to say you should have an RMR program, but it can be very challenging to create and implement one. For example, just consider the fee you would charge – if you charge too much for the monthly fee, you won’t get any adoption from your clients. On the other hand, if you charge too little, you will get lots of adoption from your clients…but you will lose money on the service – which is not the point of an RMR program.

Our panel of integrators told us, finding the sweet spot is a product of trial and error – one pricing structure does not work for every market. One thing to keep in mind, it is not necessary to include a rich basket of inclusionary services. Other factors, like prioritization over non-program clients (front-of-the-line service), expanded service days (Monday-Friday for non-program clients, Monday-Sunday priority service for program clients), etc.

But beside the cost, there are so many other factors to consider: What kinds of services will you provide? Do you offer after-hours support? Do you have a dedicated service team? Or will you just have your installation techs take turns as service issues arise? Each of these considerations requires some real thought on how to accommodate them within your structure. Not to mention that there could be various local labor laws and other issues to consider.

If You Only Do One Thing, Do This

That integrator who reduced his truck rolls by 82% – his secret was effective utilization of remote monitoring and remote power cycling in his installations. By regularly monitoring and remotely managing systems, he found he could solve the vast majority of problems right from his office.

New tools have emerged that help facilitate remote monitoring and maintenance of your installations which can be a key part of devising some form of maintenance agreement or system care program. Take advantage of technology from Ihiji, Domotz, and others…as well as those offered by major manufacturers like Control4 (BakPak). When you couple these with remote power cycling capability from products like BlueBolt, you can offer your clients preventative services…remotely. Several integrators talked about how, through remote monitoring, they could see devices on the client’s network that needed a reboot…before the client was even aware of it. When the client goes to use that newly rebooted device, no problem…almost like it was magic!

If All Else Fails

Finally, if the struggle to launch your own program becomes too great, you can work with outside services, such as One Vision or Ihiji, who offer a turnkey solution. These services take care of the remote monitoring, after-hours calls, and all basic level servicing…all on a “white label” basis, so that your client thinks he or she is dealing with your company. In some cases, these services will even take care of the marketing of your care program to your clients for increased adoption.

There are pros and cons to outsourcing an RMR program, so it is a step you should carefully consider. But for some, outsourcing their RMR program can be an effective solution.