Perhaps no other topic has received more press in the custom integrator channel over the last five-plus years than the topic of adding recurring revenue streams to our business models. The financial motivation is clear — the more recurring revenue you have, the less reliant your business is on constantly signing new projects to maintain profitability. And the greater your recurring revenue stream, the more valuable your business becomes to a potential investor.
So, why has our channel, in general, been so slow to adopt recurring revenue as an important component of their business? In my opinion, the following traits of a typical custom integrator have slowed the adoption of recurring revenue plans to date:
Investment and Cost: Most custom integrators don’t have the staff and the software ticketing platforms to provide phone support for their clients 24/7/365. It’s hard for our clients to justify paying a monthly or quarterly fee for a service where no one picks up the phone in the evening or on the weekend to assist with a service call.
Limited Project Volume: Most custom integrators only do 25–100 unique projects per year. It’s hard to build up a large recurring revenue base when you don’t handle as many unique clients per year as a typical residential security system contractor.
Third-Party Skepticism: There is a reluctance from dealers to place trust in a third-party service provider for their client’s service issues.
Change Is Hard: Shifting to a service-revenue-based business model is a change from what has worked for the custom integrator for many decades, namely making good profits from hardware and labor margins.
Related: Get in the Ring
All of these are valid reasons, but as time passes, these objections to adopting a recurring revenue plan are weakened. I believe that 2024 is the year recurring revenue will start to gain significant traction in the custom integrator channel, and here’s why:
- OneVision and Parasol’s recurring revenue remote service plans have been around for over five years. Parasol was purchased by Snap One a few years ago. These remote service plans are not going away, and their expanding customer base provides a wealth of data to help further optimize their remote service offerings.
- Artificial Intelligence is one of today’s most common buzzwords. Try putting into ChatGPT the query, “one of my Sonos zones went offline” and read the responses that you receive. You will receive incredibly accurate service responses, and this quality of AI gives remote service call technicians a very powerful tool to complement their knowledge base and help resolve service calls over the phone.
- Snap One announced in January its new Assist and Assist Premium remote service plan for its Control4 dealers and clients. The Assist Premium plan will do all the heavy lifting for a custom integrator to support their Control4 clients by providing 24/7/365 service call coverage with service engineers that have OvrC and Composer remote access tools to troubleshoot customer issues. (By comparison, Assist is an 8:00 AM to 8:00 PM local time remote service plan). Beyond that, customers and Control4 partners will receive a monthly report that documents the performance of key components of their home, such as internet speeds, usage models, and component reliability and behavior. Having a Control4 partner receive these diagnostic reports helps to ensure coordination and collaboration between the client and the custom integrator. More information on these two new Assist plans can be found at: https://www.snapav.com/shop/en/snapav/control4-assist.
- In January, new technology installation and services company Daisy announced at CES that they are establishing a nationwide branch support center that includes a 24/7/365 call center, dedicated technician assistance, advanced training, strategic growth initiatives, and other value-enhancing services designed to boost profitability. You can read more about Daisy at https://daisyco.com. [Full disclosure: cyberManor joined Daisy on February 26 to be a flagship location of its nationally branded smart home service offering.]
- The remote access tools that call centers have at their disposal are getting much better each year. Snap One has made considerable ongoing investments in OvrC and its Composer software, making them robust tools to assist in remote troubleshooting. They claim that up to 60 to 80% of all service calls can now be resolved remotely.
The need for servicing the smart home on an ongoing basis is crystal clear. When I started cyberManor in 1999, there were only two or three network-connected devices in the home — a couple of computers, a printer, and maybe a networked hard drive. Today, our average client has more than 30 connected devices in their home that they rely on daily for their entertainment, comfort, communications, and security. These network-connected services are no longer “nice-to-have” but are now “must-have” services. To work reliably and consistently day after day these smart home products and services need to be maintained and updated on an ongoing basis. The custom integrator is in the best position to provide this support to their local clients. Often the single point of contact for all the home’s installed technology, they are one of the few professionals with the acumen and skill to service and support all these networked products.
Related: RMR – In or Out?
As a final argument, I am convinced that the most compelling tool for closing new projects is the remote service and reporting plan for clients. While clients care about their years of experience, positive testimonials, top-class products, and great people, they want an ongoing partner who will continually care for and monitor their smart home.
The presentation of a well-thought-out and supported service plan will close more project deals than any of the other more traditional arguments for a client choosing a specific custom integrator for their project. And cyberManor wants to be that custom integrator. Don’t you want this to be your company as well?
