Recurring Revenue Helps Cure Procurement Blues

“It just goes to show you. It’s always something. If it’s not one thing, it’s another.” That whimsical summation of how life works, courtesy of the late Gilda Radner’s famous “Saturday Night Live” character, Roseanne Roseannadanna (Google or YouTube it young people!), certainly resonates right now for professional installing security dealers and integrators.

Still licking wounds from a devastating pandemic, these stalwart systems and services providers have been beset with a radical supply chain squeeze and runaway inflation. However, through it all, those companies whose business includes at least some element of recurring revenue among their customer base are likely feeling less pain.

Passive income can be a godsend when times are rough. This realization has long been more prominent among dealers steeped in alarm monitoring than integrators immersed in sophisticated enterprise systems. However, spurred by bottom-line realities and technology enablement, that inertia had slowly been set into motion.

Now, the enormous impacts cited above figure to escalate the trend from a ripple to a tsunami. Those remaining resistant to adapting may find themselves eventually underwater. Providers generating recurring revenue are more effectively setting the foundation for a company built to last over the long haul. But there are mitigating factors and challenges that make the transition a tall order for many.

As emphasized here in the past, recurring monthly revenue (RMR) is not only the gift that keeps giving in terms of ensuring an ongoing stream of income that allows firms to earn money 24/7; it also delivers a host of additional business benefits.

RMR-based or subscription-style accounts enhance company equity and convey the kind of value to investors and the financial community that they comprehend and seek out. Furthermore, RMR customers represent myriad opportunities for selling more products and services, allowing for “stickier” long-term alliances that can foster positive word-of-mouth that spurs referrals and growth.

Now in its fifth year, Security Sales & Integration’s Recurring Revenue Deep Dive survey assesses the opportunities, challenges and identifies key benchmarks dealers and integrators are experiencing. Given the historic and turbulent incidents affecting Americans and the world the past couple of years, security and RMR has held up astonishingly well.

As compared to many fields, the critical importance security and safety plays in everyone’s lives largely buffers the industry from extreme or protracted hardships. According to the study findings, although 94% of the respondents cited the supply chain as an obstacle, the average amount of residential and commercial RMR still rose in total and per account.

The former checked in at $41 and the latter $116. However, some disparity is evident in contrasting presumably better-run (or perhaps more fortunate) companies as more than a third of dealers/integrators reported no growth or a decline in RMR during the past year. Perhaps some of those firms may also not be as highly focused on RMR.

Among the metrics reflecting the harsh realities of today’s competitive landscape, respondents reported rises in both residential and commercial accounts attrition. The latter spiked by nearly 5 percentage points or 29%.

The Great Resignation and talent shortage also reared its head in a big way with staffing sky-rocketing to the top of dealer/integrator challenges in implementing more RMR-based services. There is no doubt building RMR requires committed management along with dedicated sales and administrative personnel.

Flipping back to the bright side, dealers and integrators are projecting double-digit growth in all areas of RMR business as well as overall company revenues for 2022. Dig into all the trends, discover the product features and support mechanisms most coveted by your peers, and learn about offerings from three leading technology partners that are at the ready to help you fortify your company with more RMR.

View the 2022 SSI RMR Deep Dive

Download the 2022 SSI RMR Deep Dive