Page 42 - Security Today, September/October 2024

DEALER STRATEGIES
RECURRING REVENUE
Elevate Your Business
BIy Andy Schreyer
n today’s dynamic business environment, companies spe- cializing in physical security are constantly evolving to remain competitive. One strategic shift these businesses can make to give them the advantage is a full or partial transition to a recurring revenue model, popularly called
a subscription service. This approach will bring numerous ben- efits that not only enhance business stability but also improve customer relationships and drive innovation. RMR (recurring monthly revenue) or RAR (recurring annual revenue) are two recurring cadence choices that work simply and effectively.
FINANCIAL PREDICTABILITY
The most immediate benefit of a n RMR model is financial stability. Traditional business models often experience revenue fluctuations as projects flow through the process of ordering equipment to installing the systems to billing upon completion.
This multi-step process leaves room for errors and makes financial planning and investing challenging. Subscriptions, on the other hand, provide a steady and predictable income stream, enabling companies to plan and allocate resources more effectively. This stability supports sustained growth and allows for consistent investment in technological advance- ments and service improvements. Reliability of income helps companies better manage head count and cash flow.
With a promise of recurring revenue, companies are incen- tivized to continuously improve their offerings. Regular up- dates, enhancements, and proactive maintenance start to be- come standard practice, ensuring customers always have access to the best the provider can offer, whether that means software updates or advances in hardware technologies as the market demands and competition creates.
This commitment to ongoing improvement sets companies apart from competitors who may rely on static, outdated solu- tions, and positions them as leaders in innovation.
RMR models encourage a shift from reactive to proactive maintenance and support. Companies can offer regular system checks, updates, and prompt issue resolution, reducing down- time and enhancing the overall reliability of security systems. This initiative-taking approach not only improves system per- formance but also builds customer confidence and trust in the provider’s commitment to their security needs.
GROWTH TO FIT CUSTOMERS’ NEEDS
A subscription model provides scalability and flexibility, ben- efiting both the business and its customers. Clients can easily adjust their security solutions based on ever-changing needs, without the burden of significant upfront costs.
This flexibility ensures that customers can maintain the right level of protection as their operations grow or change.
This adaptability also allows businesses to cater to a diverse range of clients, from small retailers to large corporations, each with unique security requirements.
PARTNERSHIPS OVER PROJECTS
An RMR model promotes a long-term perspective in business operations. Team members are incentivized to think beyond immediate sales and focus on delivering sustained value over time. This shift in mindset fosters a culture of continuous im- provement and innovation, as companies strive to retain and grow their customer base through superior service and ad- vanced solutions.
Subscription models truly evaluate a provider’s ability to prove competence and build long-term relationships with cus- tomers. When a contractor is hired on a project basis, the mo- tivation for satisfactory performance is based on short-term goals to complete the project and submit final billing.
With a subscription, businesses engage in a continuous partnership. This ongoing interaction allows companies to bet- ter understand and anticipate customer needs, providing tai- lored and evolving solutions. The result is increased customer loyalty and satisfaction, as clients view their security provider as a trusted partner dedicated to their long-term success. If the provider is not capable of meeting a customer’s needs, the defi- ciencies quickly become apparent.
Understanding this truth should steer buying decisions and contract language. Picking a “partner” should mean more than which contractor has the lowest price. But customers will want to ensure that any contracts contain language enabling termi- nation should a necessity arise to go another direction.
END USER BENEFITS
End users also stand to gain significantly from the RMR mod- el, provided the products used are of high quality, and expe- rience shows that satisfaction of the individuals who directly interact with these systems cannot be overlooked. This model ensures that end users — daily users of the system, receive con- tinuous, high-level support and regular updates, enhancing the overall reliability and effectiveness of their security systems.
Subscriptions often include proactive maintenance, which minimizes downtime and quickly addresses potential issues be- fore they escalate. Additionally, with the ongoing relationship inherent in a subscription model, end users
can expect more personalized service, as pro- viders are invested in maintaining long-term satisfaction and loyalty.
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Andy Schreyer is the chief sale and marketing officer at Stone Security.
DS12 SEPTEMBER/OCTOBER 2024 | DEALER STRATEGIES TODAY