How Using Video-as-a-Service Can Strengthen Customer Relationships
By Adam Blair
This security integrator is realizing the advantages of a recurring revenue model.
Among the many reasons Daytona Broadband offers ongoing service as a key feature of its video security installations is the opportunity for continuing contact with customers. “Service contracts force me to stay in contact with customers on a periodic basis. And, at least half the time when we visit clients, they will ask for a quote on an upgraded system or an additional camera, or they will refer us to another potential customer,” says Ron Poulin, owner of the South Daytona, FL, company. “It’s a sales builder, and it establishes customer loyalty like you wouldn’t believe.”
Poulin is looking to take the benefits of service even further with Video-as-a- Service. This model trades higher short-term margins from upfront equipment sales in exchange for monthly fees for the life of an installation. Essentially, it creates a recurring revenue stream. It’s also a good fit with the rapid improvements taking place in video technology: HD and IP systems and faster methods used for uploading and recording captured images, including greater use of the cloud.
“Video-as-a-Service will emerge as a real opportunity to increase recurring revenue,” says Poulin. “Once the pieces are in place, the ability to offer cloud-based video solutions with a very small up-front cost and a monthly per-camera fee for service will become the largest source of ongoing revenue.”
Virtually all support can be included in a single fee. The concept is to install only cameras and a networking device at the customer location, with no need for the customer to purchase on-site recording hardware. He explains, “The customer pays a reasonable fee to cover installation costs, and the cameras are provided free of up-front costs. A single line item for Video-as-a-Service is generally easy for organizations to incorporate into their budget, and any equipment repair or replacement is included in the monthly fee, so there are no surprises or unexpected costs.”
While specific payback periods will vary depending on the size of the installation and other factors, Poulin estimates that, on average, he can reach a breakeven with such a model (compared to a traditional sale) within 18 months.
Building these service fees into his own budget is good for the long-term health of Daytona Broadband: “A business exit strategy is a reality for any integrator, even if an exit is not anticipated for years or even decades,” he notes. “One essential element in building value into a business is a recurring revenue model. Businesses with a strong recurring revenue stream can attract a substantially higher price when it comes time to sell the business.”
Trending Toward HD And IP
Video surveillance technology that offers superior image capture with less on-site hardware contributes to the viability of as-a-Service contracts. And while some customers aren’t yet ready for these more advanced solutions, they are often interested in a phased approach to improved security.
The VAR’s role here is heavily educational. “In nearly all cases, the decision makers do not have knowledge about video security systems,” says Poulin. “Their knowledge is sometimes limited to seeing a low-cost, low-quality system on a shelf at a big box store. The customer must understand the differences between consumer-grade products and professional video systems, and the pre- and post-sales engineering and support an integrator is able to provide. Resolution, focal length, frame rate, and recording capabilities are a few areas where there can be substantial differences between the two.”
For example, with traditional analog video systems, customers will not likely be able to identify a face from a longer distance. “If customers are interested in license-plate capture, they need to understand the need for a special camera installed at a specific location for that purpose. If an integrator does a good job in educating the customer and demonstrating the difference in technologies, the buying decision will usually be an HD or higher IP system,” Poulin explains.
Moving customers into the system they need is often a multistep process. Poulin notes that “scalability can help a customer get the right system over time and keep them loyal to the integrator as the phases of installation occur.”
“Video-as-a-Service will emerge as a real opportunity to increase recurring revenue. ”
Ron Poulin, Owner, Daytona Broadband
Cloud Still On The Horizon
While using cloud storage for video security shows great promise, its biggest current challenge is bandwidth availability. “Pushing HD video from multiple cameras to the cloud is simply not a viable possibility for most private enterprises at this time,” says Poulin. “But improvement in Internet speeds is occurring constantly, and we are fast approaching the reality of IP systems with cloud-based recording and management, as well as bringing HD video to the cloud.”
In preparation for these technology advances, Poulin has partnered with video surveillance vendors that offer cloud-friendly solutions. But perhaps the strongest indication of his belief in both the cloud’s potential and the benefits of the as-a-Service model is Daytona Broadband’s choice of a future online domain name — videosecurityasaservice.com.