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9 Show Highlights From ISC West 2014

SSI Editor-in-Chief Scott Goldfine reviews his top highlights from ISC West 2014.
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How to Transform Your Company Into an RMR-Generating Machine

Learn how to build your company's recurring monthly revenue by implementing a three-step model.

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I was fortunate enough to be able to sit in on a couple of educational sessions I had handpicked as being among the most intriguing on the ISC West schedule. One was titled “Structural Challenges in Converting Product Companies and Product Offerings Into RMR” and featured Brian Lohse of Secure-i and ASG Security’s Bob Ryan.

One of the great things about the RMR model is it is a win-win for the company and the customer since the latter obtains products/services for a low upfront cost while the former winds up with at least three times the value. RMR is all about building incremental value for the business. They walked attendees through the three-step process of:

  1. developing an RMR model
  2. creating a sales model
  3. instilling an RMR cultural change

Lohse and Ryan pointed out how a project-based business and a perpetual business are entirely different propositions. In fact, they said owners/operators should look at the business as being an RMR enterprise rather than specifically security or anything else. The model should be based on four elements:

  • properly structured contracts
  • automatic payment
  • fixed term with evergreen clause
  • the ability to institute price increases

Not so coincidentally, those are also key factors both prospective buyers of the company and creditors look for as well.

Lohse and Ryan offered some formulas to help better illustrate RMR concepts. They said while it takes about $20 (products, labor, etc.) to create $1 of RMR, that $1 becomes worth $50. In other words, $100 RMR costs $2,000 but is worth $5,000. The Rate Creation Multiple (RCM) is an important metric that is calculated by determining the number of months required to pay off the cost of acquiring a customer. RCM variables are: equipment + labor + sales commission = direct job cost. And so the RCM formula is: direct job cost – customer installation charge = net investment / RMR = RCM (direct and excluding overhead that would yield fully loaded RCM).

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Article Topics
Business Management · Blogs · ISC West · Managing Your Business · RMR · All Topics

About the Author
Scott Goldfine
Scott joined SECURITY SALES & INTEGRATION in October 1998 and has distinguished himself by producing award-winning, exemplary work. His editorial achievements have included blockbuster articles featuring major industry executives, such as Tyco Electronic Products Group Managing Director Gerry Head; Protection One President/CEO Richard Ginsburg; former Brink’s Home Security President/CEO Peter Michel; GE Interlogix President/CEO Ken Boyda; Bosch Security Systems President/CEO Peter Ribinski; and former SecurityLink President/CEO Jim Covert. Scott, who is an NTS Certified alarm technician, has become a respected and in-demand speaker at security industry events, including presentations at the Central Station Alarm Association (CSAA) Annual Meeting; California Alarm Association (CAA) Summer and Winter Conferences; PSA Security Network Conference; International Security Conference and Exhibition (ISC); and Security Industry Association (SIA) Forum. Scott often acts as an ambassador to mainstream media and is a participant in several industry associations. His previous experience as a cable-TV technician/installer and running his own audio company -- along with a lifelong fascination with electronics and computers -- prepared Scott well for his current position. Since graduating in 1986 with honors from California State University, Northridge with a degree in Radio-Television- Film, his professional endeavors have encompassed magazines, radio, TV, film, records, teletext, books, the Internet and more. In 2005, Scott captured the prestigious Western Publisher Maggie Award for Best Interview/Profile Trade for "9/11 Hero Tells Tale of Loses, Lessons," his October 2004 interview with former FDNY Commander Richard Picciotto, the last man to escape the Ground Zero destruction alive.
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Managing Your Business, RMR