NSCA Releases Latest Market Report
Recurring Revenue?Selling Service
National Systems Contractors Association (NSCA) recently released its latest Market Intelligence Briefing (MIB) report "Recurring Revenue–Selling Service," which analyzes six key recurring revenue streams for systems contractors.
According to the organization, 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 idea underscores the benefit of recurring revenue streams.
Contractors identified six major categories of service when surveyed for the report:
- Service agreements/contracts: More than 74 percent offer this service in the corporate/industrial, educational, and government facilities.
- Preventative maintenance agreements/contracts: 62 percent of contractors find this a profitable service in the education, corporate, and health care markets.
- 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 percent of gross revenue.
- End-user training agreements: 21 percent of respondents provide product training; 24 percent of which began in 2009, showing recent growth.
- 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.
- Content supply and creation: 20 percent of companies–mostly small businesses–are involved in this niche market.
"The benefits of recurring revenue streams go far beyond cash flow and revenue contribution," said Chuck Wilson, NSCA executive director, in a statement. "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."
Such services lead to an enhanced, ongoing connection to decision-makers by building on customer relations and creating better brand recognition, the organization added.
For more information or to view the entire report, visit www.nsca.org/MIB.