I have worked with dozens of security integrators on how to overcome the challenges they face in growing their recurring revenue, and have found one common bottleneck at each organization. Many of them have the right services to offer, some have reasonable and challenging key performance indicators in place, and practically all of them have buy-in from ownership; however, the salespeople simply don’t want to sell these solutions.
If it takes double the time to build a quote with RMR, and if your sales team is not sure what hosted access control system they are selling this month, and they are not compensated properly, why would they want to sell these services? Why introduce possible conflict to their customer relationships if it is only going to add burden to their day and not offer a financial reward? Why would they shift away from their comfort zone?
The bottom line is, your salespeople control how much RMR your business generates. Unless you want to fire the whole team and start over, you need to address three common challenges that get in a salesperson’s way when selling RMR. Identify these problems and actions to take to eliminate them, and you will make it easier and more lucrative for your sales team to sell more RMR.
1. Make sure it is easy for salespeople to quote services.
In early 2013, I began a “Growing RMR” engagement with a client, and my initial observations concerned me. They seemed to have the right tools, a perfect mix of services to offer, 26 years of impressive past performance, and 100-percent buy-in from ownership.
On the surface, I couldn’t figure out why they weren’t successful — then I interviewed the salespeople. The first conversation went something like this: “I’d love to sell more RMR, but I never quote services because it takes too long and the system is too clunky.”
I initially chalked that comment up to someone making excuses, as I was not convinced that the quoting system could cause that much of a problem; however, all seven of their salespeople said the same thing — their quoting tool was too cumbersome when they needed to quote maintenance agreements, hosted services or managed services. I decided to have the sales manager run me through the process and it was a mess.
Not only did the company learn from those interviews, but I did as well. From then on, I always interview the sales team before doing anything else on a project.
Identify and measure your problem: First, look at the last 60 days of quotes and calculate the percentage of quotes that have RMR included. Then, ask your salespeople — don’t guide their answers, but ask them why they do not quote more services. If they fail to mention the quoting process, ask how much longer it takes them to add a maintenance agreement or managed services. Finally, build a quote using the same process as your salespeople (many owners and managers have the benefit of being able to “eyeball” quotes and don’t use their tools).
Actions to take: The quoting process could be a bottleneck for one or more of these three reasons: the human process, the quoting tool or poor sales training. Here are three steps to take to improve your quoting process.
- Make the procedures easier. Sometimes policy gets stacked on top of policy, and the result is an impossible system. If it takes approval from three people to agree on pricing of a maintenance agreement, you are doing something wrong. Examine the procedure with a representative from sales and make it easier.
- Examine the quoting tool. If you are using spreadsheets, invest in a system — preferably, a system built for security integrators or managed service providers that includes the ability to easily include RMR line items. If you are already using a quoting system but it is clunky and cumbersome, analyze your investment and determine if it is reasonable to purchase a new system. If not, contact your system provider and ask for support in optimizing the performance.
- Train your salespeople on the improvements. Whether you buy a completely new system or simply tweak the procedures, make sure your salespeople fully understand the process. After the training, test their efficiency and coach them on improvements. Think how much more effective your organization would be if your salespeople improved their quoting accuracy and reduced the time required to generate quotes by just 10 percent.
2. Give your sales people a short list of primary services you offer.
I love cheesecake, but I never eat at the Cheesecake Factory because the menu is too large. I do not want to think too hard when ordering my meals. If they had a one-page menu, I would probably eat there every week.
It is the same dynamic with your sales team. One of the first questions I ask when interviewing salespeople is “how many services do you offer that create RMR?” Every time, I get somewhere from 15 to 20 answers across the whole sales team. They might have a fully customizable maintenance agreement, four access control companies that offer hosted services and remote monitoring of everything. The result: they do not sell any of the services because they do not know what to choose — the menu is too large.
Identify and measure your problem: Chat with each of your salespeople one-on-one. Ask them what they have in their arsenal to sell that creates recurring revenue, and get ready to take notes. As they are listing the different services, note any uncertainty and lack of depth in their answers; and note any lack of consistency across your sales team. The answers should be crisp, confident and consistent.
Actions to take: Narrow down your list of services to five or fewer; for example: a standard maintenance agreement, hosted access control, managed access control and remote health monitoring. Build a one-page document with two columns. In the left column, list your services and include a brief definition of the service. In the right column, list the benefits of each corresponding service. Present the one-pager to the sales team, or have them help you develop the benefit statements — turning the session into a workshop.
The result: your salespeople will fully understand the entire “menu” and will know what and when to sell.
3. Pay well for selling recurring revenue.
I recently had a conversation with an owner of a security integration company about RMR. Initially, we were talking about the crazy multipliers that are being applied to valuations of companies based on recurring revenue. Attempting to stress the importance of keeping his customers satisfied, he said “Even that small account that’s paying us $100/month is important. If we lose them, that’s $5,000 out of my pocket when I sell the company.”
Less than 10 minutes later we start discussing commissions for RMR and he was floored by the amount many salespeople make from selling RMR. Even though he knew the value that RMR brought to his company — and ultimately to him — he was reluctant to pay his sales team a reasonable amount on RMR sales. This is a common scenario, and it is killing integrators who wish to grow their RMR.
Identify and measure your problem: Open a new spreadsheet. Select 10 to 15 project sales over the past three or four months that did not include any services that create RMR and list them in the left column. In column 2, list the commissions that were paid or will be paid. In column 3 list the commission that would be paid if they included a maintenance agreement. In column 4, list the commission that would be paid if they sold hosted services instead of the traditional on-premise system (video, access control, visitor management, etc.). If appropriate, keep building columns for other services.
Now, compare the numbers — does it make an impact on their wallets if your salespeople add a maintenance agreement or remote video monitoring services? If not, then you have a problem. For example, if a project paid out $2,500 commission without a maintenance agreement and would have paid $2,650 with an agreement, you have an issue. Why would your salesperson risk adding any conflict to a job for an extra $150?
Actions to take: After understanding where you are falling short on RMR commissions, set aside two to three hours for you, a representative from accounting and your sales manager to modify the compensation plan. If you do not have a sales manager, then invite your salespeople — it is critical to get sales involved in this process. Since it is not wise to change compensation plans in the middle of the year, I suggest you table your solutions until January, but add a spiff or contest and reward RMR sales for the rest of the year.
Chris Peterson is founder and president of Vector Firm (www.vectorfirm.com), which is a sales consulting and training company built specifically for the security industry.
