Build predictable recurring revenue in unpredictable times

 - 
Wednesday, July 1, 2020

YARMOUTH, Maine—The “as-a-service” business model and approach is designed to help build recurring revenue for integrators; it’s no longer feasible to simply install a system, have the customer pay for the system outright, and then move on to the next customer. As-a-service is a powerful enabler to integrators to approach business in a new way, pivoting and being nimble, while embracing what customers are asking for, and in return, reaping the rewards of consistent revenue. 

“What’s happened is that so many integrators, because of COVID, recognize that they are reliant on one-time sales — project-based sales, Capex sales, with the installation and the project — and when things just froze, there was no other source of revenue,” Paul Metzheiser, managing partner, TAMCO, explained to Security Systems News. “So many of them [integrators’ recognized, ‘wow, I’m fragile! I’m relying on what’s in the pipeline.’”

For years, TAMCO has been saying that integrators basing their business on one-time sales is a fragile model. Even when speaking with integrators, TAMCO company representatives would reference an economic downturn to support their argument. 

“We’ve obviously never referenced the analogy of a pandemic,” Metzheiser said, “but unfortunately, so many integrators found out the hard way.” 

It takes one to know one

Everybody at TAMCO comes from the integrator side; therefore, each employee understands the integrators’ world, the vernacular and the sales process and challenges. They have even experienced a shift in their market, which caused them to pivot, much like integrators of today are pivoting due to the COVID pandemic. 

“As it relates to technology, we identified about eight years ago that the premise-based phone system was giving way to hosted and cloud solutions,” explained Metzheiser. “We had to recognize, and we did, that our solution, when you don’t have that full installation, is just a phone, an end point and they’re [end users] are just getting a plug and play solution.” 

Company executives asked where they could take their offering to other integrators and that’s what brings them to security today. 

“We basically had to pivot ourselves, start all over, rebuild the channel … and that’s the foundation of TAMCO,” Metzheiser said. “We were Telecommunications Asset Management Company and now we’ve just made a little tweak to Technology Asset Management Company.”

After successfully pivoting, TAMCO has learned a number of valuable lessons that they are dedicated to teaching to other integrators. 

“What we do is teach integrators not only how to sell the solution, the equipment, the installation but package in the multi-year maintenance, which is their recurring revenue, along with any other service that they can bundle in to help differentiate themselves and really change the way they approach a customer,” said Metzheiser. 

Customers’ perspective drives approach

The subscription consumption model has increasingly gained and continues to be very favorable from customers’ points of view. Metzheiser noted that now integrators can offer packages so it’s more palatable and more well-received by potential customers. 

“The customer’s appetite is changing and they’re recognizing that ownership is no longer of value,” Metzheiser said, “and, at the same time, integrators are motivated to sell more services; they just haven’t had a way.” 

In fact, TAMCO is receiving feedback from integrators that they are trying to sell more services at the point of sale and even compensating their salespeople, but they still aren’t having success. The reason is they are still trying to sell the service as if it’s a cash offering. 

With a service, “it’s all included; it’s a different presentation and positioning,” explained Metzheiser. “You’re identifying pain points in the discovery. So, we align with those integrators and help them make this pivot to sell more services.” 

Pure as-a-service means the customer does not own it, which is a dramatic difference compared to traditional leasing. Speaking of leasing, Metzheiser said that at TAMCO, that ‘l’ word is a dirty word because almost all leases are designed or end up in ownership. “And, this is the paradigm shift of a service,” he said. “Now the subscription consumption mindset is moving more and more into equipment and not just services alone.” 

How integrators should pivot to as-a-service

TAMCO realizes that making this pivot is not just about relevant, meaningful financing. They have outlined the following eight pillars that integrators need to embrace if they really want to make this pivot that Metzheiser shared: 

1.  You’ve got to have leadership buy-in because they have to change the culture and mindset. “They may have salespeople who have been selling for 10 to 20 years, and successful by definition, but it’s [as-a-service] is a completely different sale,” he said. 

2.  You’ve got to be able to have a service offering: the response time, the SLA’s, the contract, a way to price it … all those things to fulfill the service. 

3.  You need to productize multi-year maintenance. “Treat it like a product,” advised Metzheiser. “Make sure you understand what it is; your prospects know what it is; your salespeople know what it is … whether its’ ‘platinum’ or ‘gold’ … and really brand it [multi-year maintenance].

4.  You’ve got to shift the way you sell. “If you’ve been selling a cash sale and now we’re going to a service and a monthly payment, training” is necessary, Metzheiser said. 

5.  Compensation … if leadership wants to make the pivot, they’ve got to compensate accordingly. 

6.  Marketing, tell the story. Explain why you are doing this. “Unfortunately, a lot of people … we call it ‘marketing vapor’… they just put it on the website, and that’s good, but they don’t complete the other seven pillars.

7.  Leadership inspection. 

“So, it starts with leadership buy-in and ends with leadership inspection, and it’s all those things married up with relevant financing,” summarized Metzheiser, adding that this is shared upfront with all integrators and TAMCO, as a company, rallies around each and every integrator to help. 

The whole on-boarding process starts with each of TAMCO’s integrator-partners having a dedicated partner-client sales representative. Next comes an initial 45-minute orientation followed by initial and ongoing training. 

“From the very beginning, we give integrators a four-step blueprint on the training and we break it [all the concepts] down very simply,” Metzheiser said. 

He noted that the biggest challenge for integrators who are embracing the as-a-service model is they don’t know how to start the conversation, and it quickly becomes an awkward situation. 

“To use a sports analogy, they’ve been running the football for 20 years and now we’re saying, ‘Now, you gotta pass!’ So, we teach them how,” Metzheiser said. 

In essence, to have a successful conversation, it starts with positioning and discovery. During training, eight questions centered around service are provided for integrators to ask customers so that the customers are coming back to the integrators and requesting services. This gives integrators the credibility to then recommend multi-year maintenance, for example. 

“You can’t just recommend multi-year maintenance because your boss says it’s important and you get paid more; it has to be meaningful,” exclaimed Metzheiser. 

So, TAMCO trains integrators to start positioning from the very beginning. 

“You make a recommendation on the technology side, but you also make a recommendation on the procurement side, shaping [in the customer’s eyes] that this is a total solution and how you differentiate yourself by looking at technology, finance and business.” 

No one really knows what COVID is going to be, but one thing that is known is that TAMCO is very sincere and knowledgeable about what the integrator is and will go through during a pivot.

“The founders of the company set out to try to give the integrators an easier, more palatable way to sell so customers could say ‘yes’ quicker,” Metzheiser, who recognized that it may sound “kind of hokey,” but that was and still is the mission of TAMCO. 

“We always try to put ourselves in the integrators’ shoes and ask how we can make it easier for them; how we can make this pivot simpler, and that’s why we do what we do,” concluded Metzheiser.