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These days, no business is immune from economic worries. But the burglar and fire alarm industry has something going for it. It's called recurring monthly revenue or RMR and for alarm and central station companies it's quite coveted, albeit sometimes elusive.
It isn't easy to maintain RMR, but it's a lot simpler (and less costly) than generating new accounts. There's also the ongoing saga of attrition—which includes those who move or simply cease being customers.
All things considered, RMR helps keep the industry on a steady course, with no significant losses noted even in these recent lean years. According to Michael Barnes, principal at Barnes Associates in St. Louis, RMR revenues have stayed consistent from 2006 to 2007. Barnes reported these and other findings during his state of the industry talk at the Barnes Buchanan 2008 Conference earlier this year.
Technology changing avenues for RMR
Fewer homes have Plain Old Telephone Service or POTS and wireless and IP innovation is broadening the reach of the traditional alarm market. Video is also changing the future of alarm signaling and RMR and that transformation will continue, at a faster clip, now that technology is in place. For those dealers and central station companies who know what to offer and how to market it, technological changes affecting the alarm industry can mean greater opportunities in RMR.
Innovation in remote monitoring technologies continues to create new ways for installing dealers and their monitoring facilities to garner monthly recurring revenue. These are real services and conveniences customers can sink their teeth into—and many have come to expect.
Technology allows alarm dealers and installers to extend their offerings to logical services customers are looking for, according to Gordon Hope, general manager, AlarmNet, Melville, N.Y. "Consumers want more value from their security system. They want connectivity to anything and everything," he said. AlarmNet is a Honeywell communications network.
"Where RMR is concerned, we believe there's a tie-in, due to changing communications technology," Hope continued. "These changes are beginning to resonate with some dealers who are now finding services that tie into or complement this new, faster communications pipeline."
One communication method overhauling alarm signaling is Short Message Service (SMS)—a protocol that allows the interchange of short text messages between mobile technologies. You know it simply as text messaging and it's finding its way into alarm data and signaling communications, primarily through the cellular telephone.
According to Hope, AlarmNet has focused on services that allow customers to control their alarm from the cellular phone. AlarmNet licenses the short code, "Alarm" (25276) and this allows customers to easily remember where to send text messages to when they want to communicate with their system. From there, Honeywell takes the information and opens a secure encrypted session with the alarm panel, performs the desired function and then sends a return SMS message back to the user.
With this focus on functions and services controlled via cellular, Honeywell released Total Connect digital communications services late last year. Total Connect allows consumers to use the Internet, PDAs, cell phones, video cameras and more to stay connected to their homes and businesses. It is also a way for dealers to increase RMR while addressing the challenges of VoIP and cell phone-only residences and businesses. It's a suite of basic and enhanced services that allow dealers to offer whatever service combinations they choose. Basic services include SMS and Web-based remote system control and e-mail notification of non-critical events. Once logged onto a secure site, consumers can control their security systems and perform other tasks via a virtual keypad using any browser on a PC, compatible PDA or Web-enabled cell phone.
Open opportunities
According to Jim Taylor, president of Integrator Support, Westminster, Colo., many alarm companies that already embrace the RMR model would like to expand their offerings beyond the well-established monthly monitoring fee for a burglar alarm system.
"What we're seeing in our industry are three very powerful forces meeting at the same time," Taylor explained. "One--technology has brought relatively low cost equipment with sophisticated capabilities to the market. On the video side you have analog, digital, IP, megapixel, imbedded video analytics, the list goes on. For access control you see feature-rich systems at reasonable price points along with Web/IP based systems. We've got phenomenal choices in equipment to satisfy almost any application. Two--availability of high speed broadband Internet connections in almost any location. Video images or a card swipe becomes just another data packet we can push up the pipeline. It can be to the next office or around the world. Three--economics teaches us that inefficiency eventually is driven out of products and services. If we can add value or lower an operating cost for a customer, then we've opened the door for integrators to move from just providing equipment and hardware to providing ongoing services that customers are willing to pay for on a monthly basis, thus RMR," he said.
Taylor said companies that provide real value and cost savings to their customer through monthly services will position themselves well above the traditional contractor who pulls wire and hangs cameras or card readers.
"What activity does your customer now do that you could do for them either better or cheaper than they can?" asked Taylor. "As an example: if your customer is paying for 24/7 on-site guards they may be an excellent candidate for replacing some (or all) of the 'warm bodies' with remote guarding services that includes two-way audio. Regular guard tours, remote opening of doors and gates, video escorts can all be provided much more cost effectively using a managed service," he said.
Taylor said access control is another area integrators should look at for RMR. "Does your customer really want the hassle (and the overhead) of managing the enrollment, database management and even the badging of their employees? Those of you involved with access systems know that many customers spend an inordinate amount of time trying to keep up with the day-to-day management of these systems. By offering this as an outsourced service you've reduced their headache and created an RMR stream for your company. "
Keeping it 'real' is something that the alarm dealer has to work on. Being able to work with the customers and all their new ways of trying to communicate takes a hands-on approach and may be more time and training intensive.
"Yes, technology is having an impact on RMR," said Bud Wulforst, president of A-1 Security Ltd., in Reno, Nev. Wulforst is president of the Central Station Alarm Association, Vienna, Va. "Video and wireless is definitely having an effect and it will continue to do so. But overall, the perception of good service is critical when it comes to RMR. We have to ensure we will continue to get RMR with good service. If not, you'll lose the customer," he said.
author: By Deborah L. O'Mara