RMR recurring theme at ESX

Thursday, June 26, 2008

NASHVILLE, Tenn.--Here on the opening day of the first annual Electronic Security Expo, attendees repeatedly heard the message that they need to add recurring monthly revenue to their business model. In seminar sessions that were often so crowded people were standing along the walls, presenters such as Harvey Eisenstadt and Bob Harris of Attrition Busters, Pete Celano of Alarm.com, Pat Petrow of Vector Security, and John Tedesco of Contigo emphasized the high gross margin a recurring revenue model can create and the value that RMR adds to a business.
Further, many services that lead to recurring revenue, said Eisenstadt, "lead to customer loyalty, and you can couple that with customer retention. You're making the customer happy. They're not going to look elsewhere. They're going to pay their bills and you'll get referrals."
Specifically, said Eisenstadt, if you're not selling service contracts, "you're missing the boat." He estimated you can charge anywhere from $.50 to $10 per device, per month, and said service contracts should represent anywhere from 10 to 20 percent of your gross revenue.
A number of RMR models were discussed in the seminars. Cellular back up is a service that one attendee called a "no brainer," while others said it was now so ingrained in their business, they now make customers, should they decline it, sign a waiver saying they were offered cellular back up and they chose not to buy the service. GPS was also a popular topic of discussion, with attendees saying they get anywhere from $30 to $50 per month per GPS beacon. Also frequently mentioned were PERS monitoring, commercial supervision monitoring and reporting, and "latch key" service, where parents receive reports when their children return home from school.
One new RMR offering Eisenstadt discussed was a weather reports service, where customers can receive daily reports of weather predictions based on their exact address, along with alerts of possible extreme weather occurrences; it's a service some installers are selling for $5 to $10 a month, plus $.50 to $1 per event notification.
Regardless of which model an installation company chose, however, every speaker emphasized that more RMR is important for an increasingly healthy bottom line. "Market forces are changing," said Celano. "The incremental market opportunities are very high."