The topic of recurring monthly revenue (RMR) has been at the top of my mind within the AV industry for some time now. While the idea of RMR is appealing and makes sense to many people, getting started and building a sustainable business is a challenge for many system integrators – Benson Chan, VP business development at Pakedge Device and Software.
With Pakedge’s BakPak Cloud Management System, now established as a proven technology platform that enables dealers to remotely monitor, manage and maintain A/V networks, a common refrain we hear from our dealers is how to get started.
I’ve listed five tips to help dealers develop this potentially lucrative stream to their business:
Tip one: Understand what you are really selling – peace of mind
Unlike selling products, which customers can see, touch and experience, a managed service is less tangible to the customer. While one can talk about the benefits, and maybe even quantify the benefits through financial analyses, those are simply justifications for the real customer need.
Whether it is for security, or assured network uptime during critical periods, the customer is ultimately buying peace of mind. Focus on discovering this key unstated need during the initial discussions with the customer, and build your differentiating service offering and proposal around this requirement.
Tip two: Build your RMR business around differentiation
A common mistake made by many dealers is their inability to differentiate their managed services business sufficiently, resulting in a commodity offering and lower margins. To design a successful and differentiated RMR business, the dealer must think in terms of customer outcomes, or the end-state desired by the customer. Dealers must constantly ask deeper questions: “why, what and how?” in order to look beyond what the customer is asking for, to what the customer wants.
Accomplishing this may require the integration of multiple and separate technology/service offerings into one solution, managed through new processes and delivered in new ways.
Tip three: An integrated selling approach – product + services together
Many dealers approach the sale as two parts: sell the product first and then sell the services “after the fact”. The need to “re-sell” to the customer a second time for the service sales yields a low success rate and a longer sales cycle. A best practice is to present the product and the services together as one integrated solution upfront, designed to meet the customers’ needs. By treating this as an overall solution and bringing the services portion of the solution early in the sales cycle, your rate of success increases significantly.
Tip four: Adjust your sales compensation structure
Product sales compensation structures are based on “one-time” transactional revenue collected whenever a product is sold. This model does not work with RMR because the revenues are collected over a period of time. RMR compensation structures based solely on the revenue collected per period will demotivate the sales person from selling the service and instead focus on selling products instead.
Best practice RMR compensation structures should include a one-time upfront commission (based on a percentage of the Total Committed Service Contract Value – i.e. total value of the service contract, including penalties and other guaranteed fees, over the committed period), and a monthly/quarterly commission (based on a portion of the recurring revenue collected over the measured period).
Tip five: Demonstrate your value continuously after the sale
The selling process does not stop once the customer signs the service contract. While the services you render may be in the background and be transparent to the customer, you must be proactive and keep the customer informed continuously.
Whether it be monthly reports, incident alerts and resolutions, status emails or phone calls, regular proactive communication is critical to the value that you provide to your customer. When it comes time to renew their service plans, clients will be certain – through your continuous updates – that you have played a valuable role in their system maintenance. Make sure they are constantly reminded of your value.
Pakedge is a manufacturer of enterprise-level, end-to-end networking platforms for residential and commercial AV applications. Pakedge specialises in integrating high performance engineering innovations, operational simplicity and systems engineering to develop technology that enables customers to unleash the power of their network.
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