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What are you doing to boost RMR in general? Are you struggling with attaching RMR where you think there’s an opportunity?

REHMAN: As far as RMR, it’s almost like it comes with the system. If they get cameras, they really never want to have it just for them to be able to do something. They can go to a box store and buy a camera system and put it in themselves and monitor it themselves. But sometimes they’d rather have the service plans for it. They like to pick up the phone and say, ‘Hey, it doesn’t work. Can you fix it?’ And it gets done. That’s the quality service we like to provide to our customers.
More than anything, we’re able to create RMR in the commercial division. We can do fire inspections, inspections on camera systems, camera maintenance packages, all the way throughout certain industries that require more stringent code or anything like that. We’ve dealt with pharmaceutical facilities that are growing marijuana now in the United States. We’re dealing with them, and they require something extra.

We’re able to find additional RMR. It may not be across the board for every client of ours, but we are able to offer it and think beyond the basic monitoring or basic radio communicator. We’re able to expand upon it. Our company is very customizable. Filtered monitoring, where you’ve having monitoring only active when a client needs it. If throughout the year the client doesn’t use the system but they’ve decided to go away for a few months, you can do filtered monitoring where you can turn it on and off. It’s on-demand now. Things are becoming at a click of your hand. You want something, you tap it, touch it or click it.

Faraz, when you say filtered monitoring how are you defining that?

REHMAN: We don’t lock people into an annual contract or a five-year, three-year or two-year contract. As far as our recurring revenue monitoring goes, we will just say it’s this much per month. You own the equipment outright. And you’re not held hostage to a contract. If you were to decide to leave tomorrow morning, you could. Technically, we’re on a month-to-month basis.

Have you always been month-to-month?

REHMAN: Yes, we’ve always been that way. A lot of customers do shop around, and I’m glad they do because they’re educating themselves. When they do shop around, they say, ‘This company had a one- or two-year contract. The other company said $99 dollar free install as long as I sign a three-year contract.’
I say, ‘Yes, our plan is we’re going to charg
e you X amount per month, and you own your system outright. We’re not going to lease it to you. I can’t give it to you for $99, as much as I want to, unless it’s a keypad maybe by itself, without getting power to it.’

But here’s the benefit of being with us. The client will usually ask us, ‘Why are you not having a contract where four out of five companies do?’ I tell them, ‘I don’t need to have a contract for you to stay with me. My service, my company’s capability of providing what you need should be good enough for you to stay for years to come.’

DePREE: We would love to apply RMR everywhere. One of the things we’re trying to do is figure out how to tie RMR to access and video. The difficulty with it is as much as we can believe that operation expenses make more sense than capital expenses, not everybody believes that way. There are a lot of people who want to pay one time and be done with it. Especially with a video system and that sort of thing, where maybe it’s not being recorded in the cloud or anything that, it’s just being recorded locally. ‘Why am I going to pay you a service contract? Are you planning on your system breaking down?’

We would love to attach it to everything. We try to. We have models that work for access control with RMR, that work with video for RMR. Obviously the alarm stuff is self-explanatory. What we looked at is if we can’t grow the number of RMR aside from what we’re already doing, how do we increase the average RMR per customer? What add-on services can we provide to our existing customer base to grow the RMR? Obviously, everybody thinks growing RMR means getting a new contract, getting a new agreement.

There is a lot of stuff going on right now with 2G and 4G. You have to go and convert your customers from 2G to 4G. If you convert all those customers and don’t raise your RMR when you do that, by either taking them to a connected home service or something like that, you’re missing a huge opportunity to raise RMR. Every single customer we’re replacing a 2G radio to 4G radio, we’re doing everything we can to upsell them. It may be only three dollars of RMR or six dollars of RMR, but for however many radios you have out there that’s a big deal for monthly revenue.

How do you add RMR? Well, you increase the average per every one of your agreements. If you’ve got somebody at $ 36 a month now, how do you get them to $39? What other value or service can you provide to bump that up? It’s not just looking for new agreements; everybody is looking for new agreements. But how do we bump up that average?

FEW: This whole industry is the RMR business. Traditionally it was alarm companies and central stations. Now it’s radio companies. It’s the Honeywells and Telguards and the like. Everybody is looking for a piece of that RMR.

It goes back to what I said before. If you add value, you should add RMR. You add services, you add RMR. Everyone wants security, so that’s going to be your burg and fire protection and personal protection, or PERS or whatever it is. You’re going to have that base. That’s where you start. It’s not the end. People should be charging for RMR for radio or cellular backup. They should be charging more for video storage, whether it be cloud storage or anything else. You want access to your account? Here’s a bit more RMR.

It’s not to say that the customer starts getting the feeling like, ‘Oh, great, so now you’re nickel and diming me.’ You package it. That’s what we do. We figured out what was our cost and margin and said for all this service it doesn’t cost us any more to monitor two cameras versus one. We charge for the equipment so we don’t have to eat any of that cost.

We leave the RMR the same. But you want to store that? You want to store it for X amount of days: Here’s your price. You want to do more? Here’s your price. You want to lock yourself into a service agreement so you never have to worry about a battery or anything else? Here’s your price. It all adds value.

But again, you don’t want to be like, ‘You want arm and disarm, there’s a dollar. You want to be able to view your camera while you’re away? There’s two dollars. You want to do this? That’s an extra dollar.’ You’re going to lose customers. Someone will come in like me and say, ‘It’s X dollars a month.’ And they’ll say, ‘What if I want to do that?’ Yeah, it’s in there. ‘What if I want to do that?’ It’s in there. ‘What if I want to do this?’ Well, that’s only this much more. I think it’s each tier you have to worry about.

We are in the RMR business. Anyone who doesn’t think they’re in the RMR business won’t be in this business long. To [Rehman’s] point about contracts, I am a huge believer in contracts. With the monthly at least you’re getting all the legal stuff taken away, but when you’re working in the industry like I have, which is family businesses, that’s their 401(k) and pension. Without those contracts, your end game changes and gets more difficult.

With contracts, we know that business. We’ve all been in that business for the last 20 years. So we have a contract at IntelligentHome and it’s 18 months. Basically it’s in the middle of what the average was, and then it goes month-to-month after that.

The other thing is we decided with all our contracts that after term it’s month-to-month because with all these states changing their laws – with New York and now California – it’s easier to go month-to-month and not have to manage state-by-state. We operate in 28 states. It’s a pain in the neck, especially for the guy who handles all the regulatory compliance. That’s the business decision.

As far as RMR, every time you talk to your customer, it’s an opportunity to sell. They lose a battery, sell a service plan. They’ve got an addition on their house, sell more door and window sensors. Always be selling.

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