How to Make the Cloud Rain RMR

Hosted video services are one of the most promising areas for installing security contractors. Yet questions persist about how these services work and the technology’s benefits. Here are straightforward answers on how hosted video can increase RMR, reduce installation/service costs, and improve customer satisfaction and retention.

The substantial buzz that hosted video services garnered in 2012 is largely expected to grow throughout 2013. This is a result of the adoption of cloud-based services, and the technology’s ability to increase dealers’ long-term business value through recurring monthly revenue (RMR) and “future proof” a customer’s investment.

Security dealers and systems integrators looking to sell hosted video services in combination with, or as a replacement to, traditional DVRs or NVRs  have to adjust their traditional hardware sales model to accommodate a service-based approach. The key difference between a traditional and services sales model is the requirement that a dealer establish a service contract with the customer. Under the contract the dealer is taking on the responsibility of maintaining and managing the hosted video service.

Let’s take a closer look at the rationale for offering hosted video services, selling strategies, incentivizing sales associates, packaging and pricing schemes, and other great tips for success. Additional real-world insights are provided by dealers that have undertaken implementation and are reaping the rewards.

Why Hosted Video Services?

Manufacturers are often asked by dealers how they can grow their businesses while simultaneously delivering more value to their customers. Hosted video services can address both challenges. It gives dealers a new source of RMR, while reducing the costs associated with managing a traditional video system. Additionally, a hosted video service allows dealers to provide customers value-added services such as system health monitoring, and alarm and event notification. This is something a dealer can have a difficult time achieving with a DVR.

Hosted video services are a modern replacement for end users looking to upgrade or replace an existing DVR. As a cloud-based technology, the solution frees end users from having to manage or maintain the system. The equipment used in a hosted-video environment is instead supported by the manufacturer and security dealer. The manufacturer provides the cloud-hosting infrastructure and maintains the Web-based interface, while the dealer takes care of systems management and maintenance.

For end users, this is a substantial value-add compared to a DVR. It removes the headache of having to download and install software updates, and check that the system is working correctly. It also removes the need for dealers to roll a truck every time an update is issued by the manufacturer.

Additionally, dealers are able to monitor and receive notifications if a customer’s camera or the appliance goes offline. This enables the dealer to quickly respond to and notify the customer of any potential problems with the service. In most cases the dealer can fix the problem remotely or dispatch a service technician, if needed.

Security Solutions NW of Bellingham, Wash., found its customers were motivated to make the switch from a DVR to hosted video services when they learned the security company could monitor the system’s health to prevent downtime.

“We train our customers to check their DVR each day to ensure it’s working properly, but generally customers do not learn their DVR has failed until they go to retrieve video footage from it,” says Jamie Vos, general manager of Security Solutions NW. “Informing our customers about the health monitoring service helped us drive a spike in our sales.”

Having the capability to monitor the health of a video system is a substantial benefit for dealers as they look to deliver more value and stay connected to their customers. With a DVR, the initial sale is likely the only interaction a dealer will have with the customer. Once the DVR is installed, it is up to the user to manage and maintain the system. In turn, this places the dealer in a reactive position to a customer’s request and restricts the dealer’s ability to provide value added-services such as system health monitoring.

How to Sell Your New Offering

To be effective at selling hosted video services, dealers must make it a business-wide initiative. The addition of a services-based sales approach alongside a traditional hardware model is a significant change for a business. It can be much easier to sell a standalone security product than a long-term, services-based contract. Customers know what they are buying when purchasing a piece of equipment like a DVR, but they are often confused by cloud-based technologies like hosted video services, where the majority of the equipment is hosted by the manufacturer and security dealer.

Hosted video services are a modern replacement for end users looking to upgrade or replace an existing DVR. As a cloud-based technology, it frees end users from having to manage or maintain the system.This is why it is important for dealers to develop a sales model for services that aligns all of its departments such as customer service, finance, installation and sales. An important step in this process is educating these departments about hosted video services and how the technology can benefit the business long-term. This conversation should address items such as the creation of a new stream of RMR, the ability to deliver higher levels of customer service through value added-services, and how the sales team can be encouraged to sell services first (or solely). 

“At our weekly sales meeting, success stories are shared by the team, and we make sure to keep our other departments up to date on where the company is and where we are going,” says Vos. “All of our departments recognize that RMR is the blood that pumps through the company.”

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