Business

Yes, You Can Begin Generating Recurring Revenue in 60 Days

Step 1: Create a new Terms of Service agreement outlining your service policies. Step 2: Present clients with tiered membership plans. Step 3: Wait for the opportunity to upsell.

Yes, You Can Begin Generating Recurring Revenue in 60 Days

Joseph Kolchinsky · May 24, 2017

Making the transition from a strictly project-focused business into one that also embraces service as a profit center of its own is difficult. The urgent demands of your project-based business being what they are, finding the time to craft a whole new set of strategies around service-based pricing and recurring revenue can feel all but impossible.

Building an effective and profitable service team is hard and requires a different way of thinking than building a project team does. But with a deliberate, step-by-step approach, just about any integrator can build an effective RMR program within 60 days. Here’s how.

Set New Terms

If you’re like most integrators, your existing client base has a loosely defined set of expectations surrounding service.

When something breaks, your clients use a personal email or cell phone to directly contact their employee of choice, be it a technician, programmer, or perhaps even the business owner. Maybe that employee answers right away, or maybe not. Sometimes, the client is OK with waiting a while for a resolution. Other times they’re kicking and screaming and expect you to drop everything right away. They may or may not expect to receive a bill for your service. And if you do send one, they may or may not readily pay it.

Dealing with service in the ad-hoc manner described above results in an inconsistent experience for everyone — not something your clients will pay a premium for. The first critical step in the fast path to RMR is to put a uniform structure to these wildly varying client expectations.

The path to generating recurring revenue starts with drafting a formal Terms of Service (ToS) agreement, something surprisingly few integrators have.

This process starts with drafting a formal Terms of Service (ToS) agreement (something surprisingly few integrators have) which clearly outlines all service policies. This includes methods of contact, hours of availability, billing policies and guaranteed response times. You can use a variety of tactics to get your client's acceptance of these new terms, but the key is to make their acceptance mandatory.

Whether you utilize email campaigns, appropriately-timed phone conversations, or a combination of both, you should begin letting clients know that they have a fixed period of time (60 days, for example) to review and accept the new ToS. Clients can be gently warned that those who have not accepted the new terms after this grace period will be limited in the types of support they can receive.

It’s up to you to chose what these limits are, but they should be significant enough to drive home the point that accepting the new terms is mandatory. It’s important to note that all you are asking for here is the client’s acceptance of terms and conditions. This does not mean that they are required to pay for an RMR plan to continue receiving full and unconditional support. We’ll get to presenting paid plans in the next step.

Demonstrate the Value of Service Through Membership Plans

The process of accepting the new ToS agreement creates a perfect opportunity to present a new tiered approach to service offerings. At this stage you can present your client with multiple service plan options (what we call Memberships at OneVision).

These options should include a free tier which provides a solid, base-level of support. Alongside this free option, you can present one or two premium plans which include valuable services such as priority advanced support and proactive monitoring.


Also Read: Why Customer Service Is the Last True Smart-Home Differentiator


By requiring 100 percent of your clients to review your new ToS, you provide an organic, low-pressure opportunity to present the value of premium service, while still leaving your clients free to elect your basic plan. Either they’ll see the value in your premium offerings and opt-in, creating a new RMR stream right away. Or they’ll opt for the free plan, allowing you to provide them with a solid, base level of support under a well defined agreement that puts limits on, for example, your need to roll a truck for an after-hours service incident.

This allows you to focus your energy on elevating the experience of those who value your service the most — driving more “stickiness” in your RMR program. 

Time-of-Need Upsells

The membership approach allows to you to clearly demonstrate the value in the elevated levels of service you can provide. You should, of course, strive to provide clients who opt-in to the free plan with an excellent service experience through quick, remote support at no charge.

However, offerings like priority on-site support and proactive monitoring should be reserved for your premium members.

Eventually, a time will come when the proposition of such offerings will hit home for your free clients.

Eventually, a time will come when the proposition of such offerings will hit home for your free clients. For example, a house audio failure on a Saturday before a dinner party. Or arriving at their vacation home to find a completely non-responsive home automation system.

These situations represent ripe membership upsell opportunities, albeit requiring a delicate touch. Using an emotionally intelligent sales approach, these situations should be used to reinforce the value of your premium membership plans. When presented properly, be prepared to watch new RMR streams materialize steadily over time.

Sales Now, Sales Later

Converting your service operations into a profit generator and leading value proposition for your company requires hard work and new ways of thinking. But with a clearly-defined roadmap for the process, meaningful progress can be made in a relatively short time.

By initiating a transitional phase in which all of your clients are required to review a set of well-defined service plans, you gently force them to make a decision about how much they value your service. A portion of your clients will opt-in immediately, allowing you to focus your energy on providing them with an exceptional experience.

For the others, you’ve set a clear set of expectations, and put a framework in place for upsell conversations when the time is right.

RELATED: Check out our online workshop designed to build your managed service practice.


For more information about service and using it to create RMR, visit www.onevisionresources.com/blog.



  About the Author

Joseph Kolchinsky is the founder of OneVision Resources and investor of companies in the personal and home technology industry. He is also a frequent speaker on the evolving nature of supporting the connected home and related IoT. Have a suggestion or a topic you want to read more about? Email Joseph at [email protected]

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  Article Topics


Business · Service & Recurring Revenue · News · Blogs · Customer Service · OneVision · Service Contracts · All Topics
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