A key to success for any business is growing its customer base. It’s typical when speaking to a firm they refer to “their base”, as repeat customers. That may include clients who come back to them for equipment purchases, upgrades, enhancements, repairs, service, etc. This is a fair representation of a customer base, but it doesn’t differentiate the most sought after base by most highly successful firms.
RMR, (Renewable Monthly Revenue), is the most profitable and dependable revenue for firms across all industries. On average every $1 of service agreement base generates $3 – $5 in additional work. The firm that has the current relationship with the client will have an advantage when it comes time for additional purchases. I consider transactions of that type a bonus. The real benefit of that RMR base is the highly profitable revenue that the firm has available as its foundation for its future.
It’s money in the bank when the firm has a downturn in new sales of equipment. It’s the security a firm has when making investments to grow its business. It’s the security that banks look for when reviewing a loan, or when a buyer bids to purchase a firm. There is a big difference between firms that have a stable customer base and those that have a signed contract service agreement base. I think of a customer base like the stock market. It goes up and it goes down. I look at a firm’s service agreement base as cash, or gold, safe in a vault.