A few years back, Inc.com laid out six different types of recurring revenue models
— and included this gem of an example:
“What's the holy grail of recurring revenue? Look no further than your cell phone contract.”
That contract is the basis of the business model for a company like Verizon — it’s a service, first and foremost.
The gear is secondary.
And that may be one of the reasons why RMR has been a somewhat tougher sell in the CEDIA channel. The notion that issues of networking and interoperability will create the need for ongoing service is a high hurdle. The client, after all, expects the stuff you installed to work exactly the same way every time, software updates be damned.
But 2016 isn’t just a new era in home technology — it’s a new universe. Exhibit A: CEDIA teaches a three-day hands-on boot camp dedicated to advanced networking. The IoT, as we learned dramatically when an as-yet-unknown Bad Actor sent bots to create havoc on the net one recent weekday, can be a fragile thing.
Ongoing digital security, monitoring, troubleshooting — these are things that can be monetized.
Still, for residential integrators, RMR accounts for only about two percent of their annual take. (You’ll see all those numbers come December when CEDIA drops the Size and Scope Research report.)
So how does one make RMR work for their business?
Big Hits and False Starts
Joey Kolchinsky, who went on to found OneVision Resources, started with what was effectively “The Joey Club”: “In 2008-2010 I had a group of clients who were demanding for me to be available 24/7, respond instantly, and keep things simple. In 2008, I charged $300 a month and then I would bill hourly on top of that.”
And that service started, as Kolchinsky noted during a panel session at CEDIA 2016, as a computer-troubleshooting shop. From there, he “backed into” the industry, eventually creating a call center and “Instant Triage” service that’s available to integration firms. Client having problems? A number connects to Kolchinsky’s bank of phones, and they respond using the name of your firm in 30 minutes and work it out. You buy the service, you mark it up, you’ve got RMR.
There are also integrators who’ve built their own RMR programs through trial and error — check the story from Henry Clifford of Livewire in this webinar from 2014
. Clifford, after implementing an Ihiji Invision system, changed his approach to selling the service and saw truck rolls to sites with Invision drop by a staggering 90 percent.
Speaking of Ihiji …
“We continued to see a lot of interest in recurring revenue but over the past seven years have also seen how difficult it has been for CEDIA as an industry to find success with RMR,” says Ihiji’s Mike Maniscalco. To juice interest in RMR (pun intended, as you’ll see), Ihiji sponsored a contest called “The Race for Revenue, Margaritas and Retirement” — Mike’s stated target is to bring $1 million in RMR to integrators’ businesses by the time the ribbon’s cut on CEDIA 2017 in San Diego.
Find more info on that here.
There’s an App for That
Another firm committed to RMR solutions is SnapAV. Kenny Kim, Category Manager for the company’s OvrC/OvrC Pro, explains the product: OvrC allows our dealers to remotely monitor and manage SnapAV connected products (Araknis networking, WattBox power, and Luma surveillance). OvrC Pro extends those capabilities to give dealers visibility and access to the entire network. In addition, we give the dealer the ability to customize and provide an application called OvrC Home to their clients that enables them to resolve common issues instantly without having to call the dealer. This reduces the number of late night calls dealers get while improving the experience for the clients.
The product was built for the need that SnapAV saw. “With the increasing complexity and frequency of the service calls taken by our dealers, a once-complimentary ‘customer service’ was going to soon diminish the dealer’s profitability.” The product was designed to reduce those margin-slashing trips to troubleshoot — and although the app’s a part of it, Kim’s quick to note that “We developed OvrC Pro
as a service enabler for the dealer, not as a product for the client.”
RMR from Day One
When I ask Kim about the pitch — ensuring that the integrator knows how to sell “Smart Home as a Service” — he echoes what others have said: Start that conversation out of the gate.
“I think the most important first step is to help dealers to understand and acknowledge how valuable their services and expertise are to the clients,” he says. “I’ve seen success from dealers that start the conversation early with their clients, educating them early on the importance and benefits of having a service contract, even including it as a default in the proposal.”
Like everyone else who’s evangelizing for RMR solutions
, Mike Maniscalco understands that firms have to adapt to changing market realities: “The industry is changing quickly and services are becoming a bigger part of a technology professional’s business.
“We truly believe that for the industry to thrive and stay competitive that dealers must find new revenue streams around service, and recurring revenue is an excellent model for this.”