It’s the season for New Year’s Resolutions and Almo Professional A/V was certainly in that spirit during the recent Commercial Integrator webcast, “Jumpstart Service Revenue: How to Make Good on Your New Year’s Resolution.”
Panelists Jay Saret, Eric Olson and Rob Voorhees, each business development managers for Almo Pro A/V, suggested steps that integration firms can take that should add significant service revenue – all moves that don’t require reinventing their business model since each rely on programs and infrastructure already put in place by the distributor.
It’s well-documented that traditional AV integration firms rely on product- and project-based revenue, both of which are dwindling.
Meanwhile, Commercial Integrator’s 2019 State of the Industry Report (to appear in the January issue of Commercial Integrator), shows that the struggle continues:
- More than a quarter of the 137 integrators and consultants surveyed for the report, 26%, earned $0 via service in 2018.
- A small portion, one-third of surveyed integrators earned between 1% and 5% of their revenue from service in 2018.
- Only 4% say that over one-third of their revenue stems from service.
- A disappointing quarter of surveyed companies even have a goal to earn at least a third of their revenue stemming from service by 2025.
The biggest barriers to transitioning to service, according to the State of the Industry Report, are:
Support of services: In other words, “How the heck am I going to be able to provide this ongoing service?” was the biggest obstacle cited by respondents.
Overall Services: This comes down to not knowing what to package as a service and how to create it.
Sales Training: Selling service is a different animal and traditional integration firms have often had trouble tweaking their messages or changing the setup of their sales department.
Almo Pro A/V, for its part, is trying to help traditional integration firms overcome these challenges. The solutions that Saret, Olson and Voorhees propose include support for the services, suggestions for overall offerings and training.
When most companies think of service revenue, they likely think of service contracts. That obstacle cited in the State of the Industry Report survey, that support of services is a challenge, well, it’s tough to argue with that.
Integration firms are able to earn recurring revenue as a result of service contracts that include remote diagnostics.
However, Almo Pro A/V does have an answer for it, says Olson. The distributor offers enterprise IoT monitoring via Watchdog.
It’s essentially a cloud-based asset monitoring platform that’s vendor agnostic.
Integrators that deploy Watchdog for their customers’ systems can track the systems’ health and remotely determine the live status and health of the equipment.
Olson says there are several national AV integration firms that have reverted from their own remote diagnosis or service paths and adopted Watchdog. The reason, he suspects, is that it makes it easy for integration firms to put customers’ concerns to rest when it comes to their critical systems.
“We can easily sell them [customers] a low-cost monthly contract that would allow you to keep your hand on the pulse of that system and respond accordingly – whether it be break fix, troubleshooting or actual live on-site reporting,” he says.
Of course, integration firms are able to earn recurring revenue as a result of service contracts that include remote diagnostics. In doing so, they can reduce van rolls and offer valuable historical data reports and analysis to customers, Olson says.
“You can add a tremendous value to what you’ve already done by integrating these products into their offices.”
Voorhees isn’t suggesting that traditional AV integration firms reposition themselves as cable guys. Instead, he’s suggesting they take advantage of a unique program set up by Almo Pro A/V that allows integrators to sell broadband upgrades, for instance, when it naturally fits into the sales conversation – and to earn recurring revenue every time that customer pays their cable bill.
“With business communications the revenue is a percentage of the monthly bill,” Voorhees says.
Almo Pro A/V has forged partnerships with over 160 of the largest business communications providers in the U.S., Voorhees says, including Comcast, Spectrum, Verizon, Cox Cable, Centurylink, DIRECTV, and New Horizon.
The Almo providers network includes specialists in Internet, voice, video solutions, security, surveillance and mobility.
Integrators that are partners in the Almo business communications program, can be the point-people for their customers as they’re discussing their AV needs.
If they need to upgrade their broadband connection to accommodate video streaming, they can make that sale. If the customer simply needs a surveillance or mobility solution, the integrator can offer them what they need.
“We aren’t looking for our partners to become the stereotypical door-to-door cable sales people for residential settings,” Voorhees says. Instead, commercial integrators can “use our network that we’ve already built for you.”
Meanwhile, it opens a new recurring revenue stream for integrators.
“With business communications the revenue is a percentage of the monthly bill, so the best way to think about it is every time your customer pays their utility bills or anything else on a monthly basis, you’re now getting a percentage of that,” Voorhees says.
Most AV integration firms, when they sell digital signage, they do so in a way that scuffles any potential to sell services, according to Saret.
In short, they sell it from a hardware perspective instead of focusing on the all-important content that probably resonates more with the customer – and, by the way, continually evolves.
Not only does selling content creation services add that service revenue but it allows integrators to connect with their digital signage customers in a more meaningful way.
“In the mind of the rep they’re seeing a display, a mount a media player, how much to install it and quickly turn around a quote,” Saret says.
Customers, on the other hand, when they’re considering digital signage they’re not thinking about any of the hardware.
“What they’re really talking about is what’s on the screen,” he says.
“The only thing that matters to them is the content itself, not the hardware involved in making it happen. And if you don’t get involved in this conversation at the outset you run a range of risks.”
One of those risks, of course, is that integrators lose the opportunity to sell a mutually beneficial content creation service contract. Traditional AV integration firms, of course, tend not to have content creation in-house, but Almo Pro A/V offers services to its partners allowing them to sell it as their own.
The idea, Saret explains, is that not only does selling content creation services add that service revenue but it allows integrators to connect with their digital signage customers in a more meaningful way.
There are a few ways that outsourcing labor can tie into an integration firm’s plan to boost service revenue, says Saret. In the AV integration industry people tend to think of outsourced labor as a means to address:
- An influx in projects and labor needs
- Projects outside a firm’s geographic comfort zone
- Need for expertise that isn’t currently in-house
Saret, meanwhile, cites an often-overlooked benefit of qualified third-party labor. “One of the biggest ones is managing your labor or your pay roll.”
Labor costs on any project are difficult to predict, Saret points out. However, labor costs become a lot more fixed when dealing with hired labor services. This allows integration firms to better manage the profitability on their projects. Meanwhile, qualified third-party labor may help integration firms struggling with finding the infrastructure to support services.
Being able to rely on third-party labor that will help a firm put its best foot forward opens up possibilities. Almo Pro A/V, for its part, offers labor services to AV integration firms.