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Grow recurring monthly revenue without buying accounts
To grow recurring monthly revenue without buying accounts, start with the treadmill: multiply your monitored customers by their average monthly rate, then multiply last year's cancellations by that rate to see what falls off the monthly number and how many new accounts a year you need just to stand still. Then pull four levers on the book you already have — fewer cancellations, a small rate increase net of the cancels it causes, add-ons sold to current customers, and accounts you win yourself — and add what each one is worth a month.
It opens on the worked example from our post on growing recurring revenue — 500 customers at $40 is $20,000 a month, a 10% cancellation rate takes $2,000 of that by year end, and four levers put $4,340 a month back. Those are round numbers to show the shape of it, not industry averages. Put your own in.
Your book
1What you have today
That is a 10% cancellation rate
2Lever 1 — lose fewer customers
3Lever 2 — earn more from each customer
4Lever 3 — sell more to the customers you have
5Lever 4 — win new accounts yourself
That is 48 accounts in a year
The treadmill
What it takes just to stand still. Updates as you type. Nothing is sent anywhere.
Gone by year end
$2,000
a month, off $20,000
New accounts needed
50
a year, about 1 a week
The four levers, added up
$4,340
a month more — 21.7% on top of where you started, and no accounts bought
Fix the bucket before you buy more water
Buying accounts adds revenue the day the paperwork clears. It also costs a check up front, and a bucket with a hole in it leaks bought customers just as fast as the ones you earned.
The levers above are free to pull. These free tools do the legwork on three of them:
- Win-Back Call List Builder — sorts your cancelled accounts into call-first order and writes the opener for each reason they left.
- Rate Change Safety Check — shows how many accounts you could lose before an increase stops paying, and writes the customer letter if you go ahead.
- Install-to-Referral Engine — writes the text that asks for one neighbor’s name and tracks what comes back.
This is one of the 12 tools Inside Edge members get, along with a monthly marketing review. See what's inside
How to grow recurring monthly revenue without buying accounts
- 1
Work out the treadmill
Multiply your monitored customers by what they pay a month. That is your monthly recurring revenue. Then take the customers who cancelled in the last 12 months, multiply by the same rate, and that is what falls off the monthly number by year end. The count of cancellations is also how many new accounts you need in a year just to stand still.
- 2
Lever 1: lose fewer customers
Pick the yearly cancellation rate you are aiming at. Today's rate minus that target, times your customers, times the average rate, is what better retention adds a month. It costs no install and no commission.
- 3
Lever 2: earn more from each customer
Put in the dollars you would add to the monthly rate and, honestly, how many extra cancellations you expect it to cause. Customers who stay times the new rate, minus what you bill today, is the real gain. If that lands negative, the increase is too big.
- 4
Lever 3: sell more to the customers you have
Count the current customers who would take an add-on and what it adds to their monthly bill. Multiply the two. Cameras, video verification, smart locks, smoke and carbon monoxide monitoring, a service plan, a second property.
- 5
Lever 4: win new accounts yourself
Estimate the extra accounts a month that referrals, reviews and being found online would bring you. Times twelve, times the average rate, is what a year of that is worth a month.
- 6
Add them up and compare
Add the four. Divide by the monthly revenue you started with for the percent. The levers overlap a little in real life, so treat the total as a rough guide rather than a forecast, and compare it with what a bought book would have cost you up front.
Where each lever is actually won
The arithmetic tells you which lever is worth the most. This is the work behind each one.
Lever 1
Lose fewer customers
The cheapest monthly revenue you will ever add is the revenue you keep. No install, no equipment, no sales commission.
The math: Today's cancellation rate minus the rate you are aiming at, times your customers, times the average monthly rate.
- Know why each one left. Moving, price, a bad service visit and a failed card are four different problems with four different fixes.
- Treat a move as a sale, not a loss. A customer who is moving needs a system at the new address.
- Chase failed payments the same week. A declined card is often an expired or replaced card, not a decision to quit.
- Answer when they call to cancel. A customer who reaches voicemail finds the cancel form instead.
- Call the ones who already left.
Lever 2
Earn more from each customer
Raise the rate, carefully, and count the cancellations it costs you in the same breath. If the extra cancels swamp the increase, this number goes negative, which is what you want to know before the letter goes out.
The math: Customers minus the extra cancels you expect, times the new rate, minus what you bill today.
- Put a yearly price review in every contract, so an increase is expected, not a surprise.
- Keep it small and steady. A few dollars a year is easier to accept than a big jump after five years of nothing.
- Give written notice, and check your contract and your state's rules for how much notice you owe.
Lever 3
Sell more to the customers you have
Your customers already trust you and pay you every month. Adding to that bill beats winning a stranger.
The math: Customers who take the add-on, times what it adds to their monthly bill.
- Common adds: a camera package, video verification, smart locks, smoke and carbon monoxide monitoring, a service plan, and a second property like a rental or a shop.
- The best time to offer is when you are already talking: a service visit, a move, a renewal, or right after a break-in on their street.
- Offer it plainly and let them say no. A hard push on a happy customer can create the cancellation you were trying to avoid.
Lever 4
Win new accounts yourself
This is the lever that replaces buying. It takes longer to build, and it costs you effort instead of a check.
The math: Extra accounts a month, times twelve, times the average monthly rate.
- Referrals. Ask at every finished install, while the customer is happy.
- Reviews. Ask within an hour of the job.
- Being named when buyers ask. More homeowners now ask Google and ChatGPT which alarm company to call, and many independent dealers never come up in those answers.
Buying a book of accounts is not wrong. It is the fastest way to move the monthly number, and it makes sense when your cancellations are already low, your techs have room for more service calls, and the book is in your area on equipment you support. It costs a check up front, the customers never picked you, and you buy their old equipment and their cancellation history too. Ask for that history before you price a book.
Read the full post this came fromQuestions dealers ask
- How do I figure out my own cancellation rate?
- Take the number of monitored customers who cancelled in the last 12 months and divide it by the number you had at the start of those 12 months. In the example, 50 divided by 500 is 10%. The planner does this for you once you put in the two numbers.
- Is a price increase worth the customers it costs?
- Often, yes, as long as the increase is modest and the service is good. Run the math before you send the letter: the new rate times the customers who stay, compared with what you bill today. If the planner shows a negative number on that lever, the increase is bigger than your book will carry.
- How long does it take to grow recurring revenue this way?
- Retention fixes and rate changes show up within a few months. Referrals, reviews and being named by Google and ChatGPT build more slowly, usually over many months, but they keep producing once they are working.
- Does this help if I want to sell the company someday?
- Yes. Buyers look at how much recurring revenue you have and how long your customers stay. Every lever here improves one or both. The planner deliberately does not multiply your revenue by a sale multiple, because what a book actually fetches depends on the contracts, the equipment and the cancellation history in it.
- When does buying accounts make sense?
- When the bucket is already tight. If your cancellations are low, your techs have room for more service calls, you have cash you do not need elsewhere, and the book is in your area on equipment you support, buying can speed up a plan that already works. Ask for the cancellation history and read the contracts first.
- Why does the total say it is a rough guide?
- Because the levers overlap. Better retention changes how many customers a rate increase reaches, and an add-on sale is easier on a customer who was going to stay anyway. Adding four separate figures slightly double-counts, so the total shows the size of the opportunity, not a forecast.
Lever 4 is the one that replaces buying.
Accounts you win yourself come from referrals, reviews, and being the company people find when they look. More homeowners now ask Google and ChatGPT which alarm company to call, and many independent dealers never come up in those answers. See where your company stands.
While you are here: work out what to charge for a service plan. A paid service plan is the other way to lift what each customer pays you every month, and the price comes out of your own costs.