CEDAR RAPIDS, IA--NSCA’s latest Market Intelligence Briefing (MIB) report, Recurring Revenue – Selling Service, analyzes six key recurring revenue streams for systems contractors.
Contractors acknowledge that the financial health of the business is not measured by total annual revenues, but rather by the timing of those revenues against the outlay of expenses. This fact underscores the benefit of recurring revenue streams.
Contractors identified six major categories of service when surveyed for this report, including:
o Service agreements/contracts – more than 74 percent offer this service in the corporate/industrial, educational and government facilities
o Preventative maintenance agreements/contracts – 62 percent of contractors find this a profitable service in the education, corporate and healthcare markets
o Managed service agreements – while remote monitoring of systems is relatively new, 21 percent of those surveyed are involved in it and attribute it to 5.9% of gross revenue
o End-user training agreements – 21% of respondents provide product training, 24 percent of which just began in 2009, showing recent growth
o Security, life safety or fire alarm monitoring services – 24 percent of contractors are involved in this specific section of the industry; almost half of this group has offered these services for more than 16 years
o Content supply and creation – it’s no surprise that of the 20 percent of companies, mostly small businesses, are involved in this extremely niche market.
Chuck Wilson, NSCA executive director, said the effect recurring revenue services have had during the economic downturn over the past couple of years was significant.
“The benefits of recurring revenue streams go far beyond cash flow and revenue contribution,” Wilson said. “Many contractors increase their service business – recognizing that service is a ‘product’ that companies should strive to make tangible and easy for customers to understand.”
These services lead to an enhanced, ongoing connection to decision-makers by building on customer relations and creating better brand recognition.
NSCA’s quarterly MIBs provide NSCA members with current data on key industry issues, complete with statistical results, interpretation, implications, market knowledge and implementation goals. For more information or to view the report, visit www.nsca.org/MIB.