Not long ago, the goal for most NSCA integrator members was to bid/win, complete jobs on time, get paid, and move on to the next project. We could make plenty of money doing that, and we knew exactly how to do it.
Today, however, the new normal for systems integrators has become building recurring revenue through ongoing managed services. Many have made the transition and are thrilled with the results. Others just don’t get it. So we asked some of the integration companies that are further along in their RMR journey to share a tip or two on their transformation to managed services. And here’s what they said …
“We had to become much better at telling our story. We used our stories to build trust. This seems odd, but the level of trust is so different in terms of being a contractor vs. a services provider. For example: You may not need the same level of trust in a company that puts shingles on your house one time as compared to a company you allow to continuously access and/or monitor your home security system. We first build trust as a services provider, then talk about the systems we provide.”
“We look at the system as a necessary first step – or, in some cases, an investment rather than a finished product. Most of our competitors race to finish a job and move on; we see it as a marathon that will pay far greater returns over a longer period of time.”
“We don’t bid jobs anymore unless they have an RMR component on the backend. With margins the way they are, we would either lose money (or the project) if we didn’t have the ability to make a profit via our managed services model over time.”
“I’d be happy to never install a system again if we could find customers in a different fashion. To us, new systems are just a means to an end. We want that ongoing relationship and managed services contract. We’ve done the math, and our cost structure just doesn’t support low-margin sales like it did 20 years ago.”
“We found that selling services was really hard, but worth the struggle. Our contract salespeople couldn’t do it, and neither could I. So we found salespeople who could talk financing, and the magic started to happen.”
“We now offer capex (capital expenditures) and opex (operating expenditures) pricing and payment options for every system we sell. We see a definite trend toward clients favoring the opex (ongoing) payment models if they have any type of IT background. If the buyer comes from facilities, it’s usually a lump sum and they initially resist a service agreement.”
“We have learned to start and end the discussion with financing. The middle part is a conversation about how the technology solves or prevents a problem. The important thing is to offer technology in whatever way the end-user wishes to consume it.”
“The younger our clients get, the more they just want to know how much things cost per month or per year. They don’t even ask how much it is to buy the system anymore.”
All of these topics were discussed in detail during the recent Pivot to Profit event in Chicago, where we helped integrators learn how to start their own journeys toward RMR. One of the many things our attendees learned that week in September: Their clients (or the “right” clients) actually want this new type of relationship.
Many integrators think that they’re pushing something on their customers that they may not want; in some cases, clients will continue to favor the capex purchase and a break/fix services model. But now you have a way to say “yes” when opex and service level agreements come into play. –Chuck Wilson, NSCA Executive Director
Image by: Ambro