Four Tips to Masterfully Grow Your Recurring Monthly Revenue

By Richard Brimhall, Co-founder of AlarmHive

Recurring monthly revenue (RMR) is, traditionally, a significant revenue source for independent alarm companies. Compared to one-time revenue, RMR offers a predictable monthly revenue stream without the stress of creating a high number of new sales opportunities. However, RMR presents challenges such as a need for creating long-term value for your services, as consumers always scrutinize monthly subscription costs. Facing this challenge is best addressed by having a deep understanding of RMR.

Calculating RMR can be done in a couple of ways. First, add up all your recurring monthly fees paid by your customers. An easier alternative is calculated by using average revenue per account. This method is simply taking your average recurring monthly charge and multiplying it by your total number of customers. 

Calculating RMR growth is not as simple. The formula to measure RMR growth is, New RMR (RMR from new customers) + Expansion RMR (RMR from upgrades/cross-selling) – Churn RMR (RMR loss from downgrades and cancels) = Net New RMR. The reason for calculating RMR growth with this formula will help you understand the effectiveness of sales campaigns and identifying sales strengths and opportunities. Use the following four tips to apply to the growth formula.

Tip 1: Be willing to adapt your product and services to stay current with whatever the market demands. Rory Russell at AFSSmartFunding.com describes it best, saying, “Technology is advancing rapidly, and consumers are no longer simply accepting the high level of connectivity associated with the Internet of Things – they are expecting it.” Adding products like thermostats, cameras, and door locks are great ways to increase your RMR. It also shows your customers that you are paying attention to the market and staying relevant. Think outside the box as well; what security products and services are your customers purchasing? Services like credit monitoring, cybersecurity, and data protection. 

Tip 2: Execute an internal plan that increases engagement with your customers. Your plan should include digging deep into customer data. You have the data of customer routines when they are arming, disarming, home automation schedules, etc. Use that data as an opportunity to connect with your customers and enhance their experience with your company. Have you ever gone to a service call, and your customer has a Ring doorbell that you did not install?  Your customers cannot buy from you what they do not know you sell. Your customers should not be going to Home Depot or Best Buy to purchase home automation products; they should be buying them from you. Not only do you offer a customized personal experience, but you can also add service and maintenance agreements that benefit them and increase your RMR.

Tip 3: Protect your customers from take-overs. Losing a customer in the summer is the worst because we know that a young kid knocked on your customer’s door and sold them a convincing story that their company is somehow superior to yours. However, you can stop this bleeding by taking a proactive approach to these sales tactics. Call your customers at the beginning of the summer and let them know the tactics that you are aware of, things like, “I’m here to upgrade you” or “Your company wanted me to come and talk to you.” Offer a quick way to communicate with you and your team if someone is at their house trying to sell them a new alarm service. 

Tip 4: Use software that aligns with your RMR goals. Your goals for increasing RMR, whether, with new RMR, expansion RMR or reducing churn RMR, the software you use can drastically increase or decrease your chances to meet or exceed your goals. While there is no shortage of alarm business management software options, they are not all created equally. Use software that gives you the flexibility to define your workflows, adjust your plans and goals, and give you the visibility you need to do any of those things. Your software should be easy to use and offer the ability to add RMR conveniently, quickly, and transparently. 

If you find you have a need for better back-office tools or a more robust presence with your existing customers, the first step is to identify the issue, create a strong plan, and have excellent execution.