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 equipment used in a hosted-video environment is 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. Click on photo for full view.Members of the sales team need to have the ability to clearly articulate to a customer how the technology can add value to their business. With the proper training and materials the sales team will find selling hosted video services is easier and more financially rewarding than selling just a DVR.

Jackson, Miss.-based Comtronics, which serves approximately 10,000 residential and commercial customers in 11 states, utilizes hosted video services’ tools to help its sales team educate customers about the solution.  

“To fully understand how to install and operate a hosted video service, we deployed the solution across our five retail stores,” says Gregg Judge, director of sales at Comtronics. “In doing so, we were able to educate ourselves and create a live demonstration environment for our sales team. Our sales staff — through their mobile devices — is able to show customers the features and benefits of the technology. It has been a very beneficial tool for our team.”

Incentivizing the Sales Team

If a sales team is not incented, they will sell what is comfortable, which is a DVR or NVR. It is easier for a salesperson to quote a price of a DVR with the instal
lation and mark-up fees included than it is to sell hosted video services. In most cases, customers are being asked for the first time to sign a service contract and pay a monthly service fee.

In addition to equipping its sales team with the necessary tools to succeed, Comtronics recognized the need to provide a financial incentive as well.

The commission structure for cloud-based services needs to be higher than a traditional video system like a DVR. In general, a salesperson would receive a multiplier of the RMR, and in some cases a percentage of the profitability from the installation. There are many ways a dealer can structure the commission package for their sales team, but the incentive should be focused on the RMR, a goal of most growth-oriented dealers.

“Our entire compensation structure is based off of RMR, and hosted video services create an excellent opportunity for our sales team,” says Judge.

Keep the Pricing Structure Simple

Pricing hosted video services can be conducted in a variety of ways. However, the best approach is to keep the pricing structure easy for the sales team to present to customers. Most pricing packages involve a three-tiered system with a good, better and best offering. This is a pricing structure that end users are familiar with from their own lives navigating mobile phone contracts, cable packages and Internet service plans.

“From speaking with other dealers and the manufacturer providing the service, we implemented a three-tiered pricing model,” says Judge. “We also found that our customers preferred having options to select from.”

Another benefit of keeping the pricing structure simple is it provides flexibility for dealers to easily charge for added-value services such as alarm and event notification, system health monitoring, automatic feature updates, remote event storage, and mobile access support. With hosted video services a dealer can determine how much functionality each customer gets. This allows the dealer to use the features as added-value services to help create packaged tiers and further increase their RMR.

In the case of Security Solutions NW, an approach was implemented to help keep the message simple and focused for its salespeople. “We decided to keep the pricing model as simple as possible for our sales team and developed a single offering for our customers,” says Vos. “Our customers are very receptive to the approach and feedback from our sales team has been positive.”

However, dealers should avoid creating custom solutions to fit the needs of every customer. This will create confusion among the departments and make it difficult for the sales team to communicate the model.

Another component of creating a simple pricing structure is developing a standard contract for customers to sign. In most cases hosted video services are sold as a multiyear contract. Given the long-term agreement of the contract it is important it be easy for a salesperson to read and for the customer to understand. This will ensure the salesperson knows what he or she is selling, and it makes it simple for a customer to know what they are buying.

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