Ramping up recurring revenue

With interactive services, security dealers are pitching alarm systems in unprecedented ways and taking their recurring revenue to new heights. This new technology offers convenience to virtually any customer segment: the single working parent, the jet-setter, or the tech-savvy consumer.

With a simple click on a compatible smartphone or tablet, homeowners can remotely arm and disarm their system, set arming reminders via text or e-mail and create no-show alerts if a family member (say, their child returning from school) did not disarm at a certain time. They can set specific codes for users who have panel access, receive severe weather alerts and track the system’s event history. Video monitoring and home automation (remote control of lights, locks and thermostats) offer more upsell opportunities.

Companies have seen a distinct boom in the last 18 months, and the gradual extinction of telephone landlines is no coincidence. According to a 2012 report by the National Center for Health Statistics, 34 percent of American homes now have wireless-only service – nearly double from the end of the decade. (Households are defined as "wireless-only" if they include at least one wireless family and no working landline telephones.) With some 165 million active smartphones in the U.S., security sales reps are covering fertile ground.

How much extra revenue can a dealer produce by offering interactive services? It depends on the dealer – how they go to market and how much they’re willing to charge. Dealer programs have varying policies on rates, but a comfortable RMR range for these applications is around $50.

Another benefit for dealers is initial payment. Customers are willing and able to put more money down in an agreement for state-of-the-art services. It’s a strong indicator for the quality of an account and the likelihood that it will remain with the dealer long-term.

There’s also an element of defense. Dealers can protect themselves against competitors and slam campaigns simply by offering the most cutting-edge equipment.

As alarm systems become more highly sophisticated, salespeople must refine their pitch accordingly. Gone are the days of flipbooks and generic door-to-door tactics; reps must provide an exciting visual and interactive presentation that engages the potential customer. The younger demographic (20s, 30s and 40s) is likely more tech savvy, but older prospects need a clearer demonstration of the system’s many capabilities.

The key, sales experts say, is emphasizing the day-to-day value of interactive services to customers. Rather than manually setting their alarm once or twice a day, they now can manage their system anywhere at any time, and in turn, enjoy greater peace of mind.

The logic is simple: the more a customer uses their panel, the stickier they’ll be.

"From an attrition standpoint, a customer is less likely to discontinue their service or feel like their system is not as valuable if they’re using it every day," says Travis Miller, senior manager of dealer development at Monitronics International. "They have access to it at their fingertips on their phone or their tablet."