Anyone remember Certified Cyber Solutions, Nuage Nine and CytexOne? Back in 2009, those pioneering remote systems management (RSM) companies were among the first to tout the potential for a recurring monthly revenue (RMR) service business model in the custom installation industry. As is often the case, bleeding edge firms end up in the dustpile.
“I literally thought [in 2009] everyone in the industry would be earning RMR and selling service agreements within 2 years.”
Back then, one of the key executives at CytexOne was Martin Roseman, who today runs MC Group, a marketing and consulting firm for the industry, where he shares with clients some of the painful lessons he learned from being on the forefront of the RSM trend.
“I literally thought [in 2009] everyone in the industry would be earning RMR and selling service agreements within 2 years,” says Roseman. “But it wasn’t until 2016 that many integrators really started to play with remote systems monitoring when Domotz, Ihiji [now Control4], and SnapAV’s OvrC opened the door.”
Today, Roseman sees the positive momentum in the industry among many integrators, but still sees room for improvement.
“The world is moving to the cloud and subscriptions. The custom electronics industry should have embraced this model top to bottom,” adds Roseman, who is collaborating with long-time industry veteran Richard Frank of Frank Marketing as a coach for the development of a new RMR Marketing Kit. The kit is an agnostic program on how to establish RMR that can be used for any platform.
Roseman believes every integrator, at minimum, needs to address the gap between the manufacturer’s warranty and their own installation warranty.
“It’s only a matter of time before manufacturers start charging for their software. Dealers need to have service agreements in place so they can roll five or six manufacturers’ software fees into a single, comprehensive service and maintenance contract for customers,” he speculates.
With that, Roseman identifies the three biggest mistakes integrators are making in regards to RMR.
Mistake #1: Integrators Are Not Charging for Remote Service
“It’s 2019 and many integrators finally installing remote managed systems hardware and software, but they aren’t charging for it. I am shocked,” exclaims Roseman. “With new customers and with existing customers, deales need to reset the clients’ expectations.”
He believes every integrator—even a one-man shop—should be charging for service.
“Clients expect their systems to require service today. Dealers are already servicing those systems… why not get paid for it?” he asks rhetorically.
He recommends integrators creating tiered service plans and contracts and then stratify their client base into each of the tiers.
Mistake #2: Dealers Are Not Sure How to Price Their Service
Once an integrator makes the determination to charge for remote service, then they encounter the question of how much to charge for it. Roseman says that stumbling block forces many dealers to abandon the idea.
“I recommend dealers find their own ‘sweet spot’ for pricing based on what their average system installation cost is,” he says.
So how does a dealer do that exactly? Roseman has developed a formula for integrators that is based on not just the installation price, but adjusted for the region and the metro area, such as Los Angeles, Chicago and New York City.
The formula also accounts for various exceptions based on the complexity of the client’s personality, the distance to the job site from the office, the reliability of the local ISP, and other factors.
Mistake #3: CE Pros Don’t Know How to Sell Service
“Integrators need to express the value of a service contract to clients,” he says simply. “It needs to be weaved into your sales pitch ‘early and often.’”
He believe is it vital for dealers to write down talking points for the value of service, then put it on their website and in all their literature.
“The biggest obstacle many times is the owner. I find that the customers are often wondering why it took so long for the integration company to offer service,” he points out.