MSP

Is Verticalization the Right Strategy for MSP Growth?

admin — Wed, 13 Oct 2021 15:28:14 +0000

Is Verticalization the Right Strategy for MSP Growth? admin Wed, 10/13/2021 - 10:28 MSP ��Ƶɫ

Terry Ledger’s first customer was a “really strange one.”

They were a semiconductor brokerage house. Think of it as a stock market for computer parts. If Acme Corp has an excess of one hundred thousand chips and Wayne Enterprises is mothballing production because they need one hundred thousand parts, the brokerage plays matchmaker.

As the founder of Network Coverage, a managed service provider (MSP), it was Ledger’s job to keep the brokerage’s systems running. But he quickly learned that the semiconductor stock market was a world unto itself, packed with intricate processes and complex software.

Perhaps understandably, Ledger didn’t niche down into the world of semiconductors. Instead, he pursued customers in a wide range of industries, securing clients in manufacturing, engineering, biotechnology, among others. During this exploration, he realized he was attracting more and more customers in one vertical: commercial construction.

Year by year, he acquired more construction expertise and developed a stronger reputation among building companies. Eventually, Network Coverage was seen as the MSP for construction businesses in the Greater Boston area. He says this process of verticalization was key to the success of his company.

If you aren’t familiar with the term, verticalization refers to specializing in specific industries, functions, channels, or regions. In the case of MSPs, it almost always means industry verticalization—that’s specializing in banking, healthcare, life science, and so on.

Ledger isn’t alone in his support of the tactic, either.

Business leaders have been promoting verticalization for years. They promise that niched organizations will gain institutional knowledge, accelerate their marketing efforts, and enhance their reputation.

But the reality is less clear-cut. Alongside all the headline benefits are underappreciated risks and overlooked drawbacks.

For a balanced analysis of verticalization for MSPs, read on.

Learn the ropes—once

There’s a lot of operational overlap between modern businesses. Almost all companies will have email. Most have a cloud storage platform. A lot will have some sort of security. But beneath the basic technology lies a layer of industry-specific technology.

Take architectural, engineering, and construction businesses—jointly known as AEC.

Whether you’re supporting an architectural firm, contracting business, or engineering practice, chances are they’ll be using the same CAD, accounting, and proposal software. Once you’ve worked with half a dozen AEC businesses, you’ve worked with them all. That industry expertise is invaluable.

“We know all the AEC applications,” says Ledger. “We can circumvent the vendor and can provide most customers with first level of support. That’s opposed to escalating issues up to the vendor and relying on them getting back to us in a timely fashion.”

Tap into the marketing network effect

Think of your customer’s business as a premium saloon or coupe. When it breaks down, they’re not going to go to a generic dealership to get it fixed. They’re going to look for someone who knows what they’re talking about.

“If someone drives a Ford, they’re probably not going to bring it to the Chevy dealer to get it fixed,” says Ledger. “The Chevy guys know how to fix a Chevy. The Ford guys know how to fix Fords.”

It’s the same story in managed services. Legal firms will want someone who understands their security needs. Manufacturers want someone who gets CAD.

When you’re the go-to provider for a particular industry, that’s a powerful competitive advantage. In smaller or insular markets, the impact is magnified.

For example, most large construction company owners in any region will know each other. They’ll attend the same conferences, see each other at cocktail parties, and recruit from a similar pool of employees. When they start talking about a provider as a specialist or expert in their field, that’s the strongest form of marketing you can ever get.

Repeatability and profitability

Consider two customers. One is a carbon copy of a different long-term customer—same industry, organizational hierarchy, business processes, and so on. The other is unusual—new geography, new sector, strange ways of doing business.

Of the two, which do you think will be more profitable? The first, of course. You’ve probably spent less on marketing and sales to attract them. Your discovery and onboarding will run like a well-oiled machine. You’ll likely predict any issues and anticipate any opportunities.

In short: When you work with similar customers, you can develop repeatable processes. You can work more efficiently, drive down costs, and carve out more profit.

Consider the drawbacks

Verticalization sounds like a silver bullet for MSPs. More expertise, stronger marketing, improved profitability. What’s not to like? Unfortunately, the practical reality isn’t quite so clear. Alongside all the benefits are a handful of serious drawbacks. Before driving a verticalization transformation, it’s important to consider them carefully.

First, verticalized businesses experience amplified negatives.

“In much the same way cocktail parties lead to referrals, they can bite you in the ass,” says Ledger.

Any negative feedback or commentary gets heard by a significant proportion of your target market. Even if the claims are unfounded, untrue, or exaggerated, they still have a harmful effect. Say the power goes out in a city and an executive decides to blame their MSP. It’s not fair, but people will listen to their complaints.

Second, recruitment becomes harder. When you niche down into specific verticals, you’re adding another layer of challenge to talent acquisition. Not only do you have to find a competent tech, but you have to find one who understands the ins and outs of education, energy, or public sector work. If you can’t find the right people, you have to invest in specialized training and education to bring generalist new hires up to speed.

Finally, there’s an opportunity cost. By targeting one specific vertical, you are ignoring others. The markets and opportunities you overlook may be highly profitable and rewarding.

To verticalize or diversify?

Unfortunately, there’s no one answer. Each business has unique strengths, circumstances, and goals. Often, organizations will land somewhere in the middle.

Take Terry Ledger. Although he has an enviable reputation as the MSP provider for commercial construction companies, around 40% of his business comes from other industries.

“We have manufacturing and engineering,” he says. “Some biotech because of where we're based. We’re just north of Boston so biotech is an obvious one for us.”

When considering verticalization for your MSP, evaluate your own circumstances, weigh up the pros and cons, and make a choice that’s right for you and your business.

If you’d like to work with Network Coverage, you can contact them here. And for more insightful perspectives from other expert MSP leaders, check out our Rockstars of MSP series here. In this series, we dive into several managed service partner success stories.

The Future of MSP

Breaking Down Microsoft’s Updates: New Commerce Experience and Price Changes

admin — Fri, 17 Sep 2021 14:45:09 +0000

Breaking Down Microsoft’s Updates: New Commerce Experience and Price Changes admin Fri, 09/17/2021 - 09:45 MSP ��Ƶɫ

Updated 01/10/2022: Microsoft’s New Commerce Experience (NCE) is now available through Secure Cloud for customers and partners.

Microsoft recently unveiled a multi-stage, multi-year investment in the Cloud Solution Provider (CSP) program to help partners better support their customers’ digital transformation efforts. This New Commerce Experience (NCE) for CSP includes new licensing and monthly subscription options to help companies reduce complexity and achieve better purchasing flexibility. NCE was introduced for Azure in 2019, so many partners are already familiar with what to expect. The new commerce experience brings the CSP program into alignment with other programs, such as the Enterprise Agreement, so that all customers have a consistent purchasing experience and are subject to the same terms and conditions for cloud purchases regardless of the Microsoft sales motion.

As one of Microsoft’s top CSP’s, we participated in the NCE pilot since April of this year, so we’ve had a chance to get ready. And now we’re here to help you get ready for when the new commerce experience goes live in January 2022. The first thing we need you to do is REALLY pay attention to these changes; not going to lie – there are a lot of them.

Those of you in the ��Ƶɫ/AppRiver partner family know we pride ourselves on having your back and being Phenomenal everyday. This is one time that we feel you’ll really want to lean on our partnership as we guide you through the changes and the corresponding effect on your business.

Let’s dive in.

Product subscriptions simplified

��Ƶɫ will have access to a consistent and simplified purchasing experience for Microsoft 365, Dynamics 365, and Power Platform. The new commerce experience will include:

Discounted pricing on annual agreements
Discounted pricing on multiyear agreements
Premium pricing for monthly subscriptions
New cancellation policy: Prorated refund for first 72 hours of term
Changes to policy re: adding and subtracting users

Microsoft will include an additional premium price for monthly subscriptions, so we strongly suggest looking at annual or multiyear agreements for your customers. Microsoft will be offering multi-year term options to lock in subscription pricing for Dynamics 365 and Microsoft 365 now, with additional offers coming soon.

Moving to the New Commerce Experience

We are here to make the transition to the new commerce experience seamless and ensure partners are positioned for growth. This new program will run in parallel with the legacy CSP program until March 2022, allowing partners time to transition over to the new commerce experience.

New customers will also have the option to choose between the legacy program and new commerce experience. The new subscription orders, offers, and renewals for seat-based offers in the CSP program will become exclusive to the new commerce experience in March 2022.

Starting January 1, 2022, we will launch incentives and promotions for new commerce transactions in the CSP program for partners. More information on these earning opportunities can be found here:

– A 20% discount on the new M365, D365, and Power Platform monthly-term offers to align monthly term to annual. Basically, you’ll avoid the newly introduced monthly price premium though March 2022 with this promo.

– A 5% discount on M365, D365, and Power Platform new commerce annual term offers.

Microsoft 365 Price Changes

In addition to launching the New Commerce Experience for CSP’s, Microsoft also announced pricing changes for some key SKU’s Microsoft 365. This pricing increase reflects the value of the solutions and the added areas of innovation around communication and collaboration, security and automation.

The pricing changes will go into effect on March 1, 2022 and will impact the following products:

For non-US partners: these increases will apply globally with local market adjustments for certain regions.

There are no changes to pricing for education and consumer products at this time.

Looking ahead with Secure Cloud

To provide a one-stop-shopping experience for our partners, we are working to incorporate this into the Secure Cloud and expect to have it available this Fall. We’ll continue to update our partner community as we learn more, so be on the lookout for additional webinars and blogs.

Current partners can view and register for one of the upcoming training sessions we have available in our Partner Resource Center.

We look forward to sharing how the new commerce experience will allow you greater flexibility and growth opportunity.

What should you do now?

Schedule an NCE consultation with your CAM.

Attend our upcoming New Commerce Experience session on 9/29/21 at 10CTL.

The Future of MSP

Making the Leap from Consultancy to MSP

admin — Thu, 05 Aug 2021 18:06:09 +0000

Making the Leap from Consultancy to MSP admin Thu, 08/05/2021 - 13:06 MSP Carrie Simpson, CEO of Managed Sales Pros

In the world of IT service providers, there are two business models to choose from: the break-fix, charge-by-the-hour IT consultancy, and the per-seat managed service provider (MSP).

Many consultancies see the MSP model as a natural next step as they move from a small team to a more mature company. It’s true that the MSP model is more profitable in many cases, but for consultancies looking to take the leap, where do they get started? And how do they know if it’s even the right move?

The reality is that the MSP model is completely different from that of a consultancy, and there are a number of considerations you’ll have to mull over before you can be sure your business is ready.

Don’t believe me? Try this: go to a Reddit forum for MSPs and look for the simple, Day One questions people are asking about running an MSP. You’ll see a lot of posts from people trying to start their own MSP who are completely stumbling through the transition. They had the enthusiasm to succeed, but they didn’t do enough planning and preparation to actually hit the ground running.

The good news is, you can learn from their mistakes.

The main things you’ll need to transition to an MSP are a tolerance for uncertainty and a structured plan for how you’ll grow. That said, there are also a number of concrete steps you can take to get your business to where it needs to be to flourish as an MSP.

Step one: Do the numbers

For many consultancies, moving to an MSP model feels inevitable. It’s just what you do when you reach a certain size, with a certain number of clients. But just because you could do something doesn’t mean you necessarily should. There’s no reason to move to an MSP model if it’s not going to be profitable for your business.

You owe it to yourself to do a deep dive into financial analysis well before you make the call to change your entire offering. There are a number of drastic differences between consultancies and MSPs: consultancies tend to run on a break-fix, hourly rate model, while MSPs typically charge a fixed monthly rate per seat.

It’s your job to figure out ahead of time how that monthly price will break down: what’s included, and what’s your margin on top of that? You can’t just pull a number out of thin air.

I recommend creating a matrix of all your current clients, with a breakdown of what they buy, how often they need support, and whether they’re a profitable client for you or not. You don’t have to do this from scratch, either. There are services like MSP CFO that will help you determine profitability per client by showing you the margin on each of them.

Keep in mind that best-in-class margins (or EBITDA) in the MSP world are around 18%. Operationally mature companies usually have an EBITDA of between 20 and 25%. MSPs that are failing have an EBITDA of less than 10%.

Take the time to project your EBITDA for each client under your proposed business model. If it makes sense to move to an MSP, do it. If it doesn’t, stay where you are.

Step two: Outline your offering

Next, you’ll need to solidify your offering as an MSP. As we know, most MSPs charge their clients a monthly rate for their services. Now you need to figure out what will be included in that price.

Here’s where you work out the basics. For example, are you bundling security into your product offering? If so, is your business competent enough to do that well? Which vendors are you going to work with? Do you have the resources to offer top-tier services, like IT roadmapping?

Many consultancies are used to selling boxes and hours. Pivoting to the more nebulous offering of high-level business concepts can be difficult, and it can be tricky to know how to communicate that value. It’s like selling insurance; it’s something ephemeral that you can’t look at or touch. With MSPs, what you’re really selling is the value of not needing to go through 18 steps in order to get tech support.

Most MSPs take a tiered approach to their service offering, which is something you might want to consider. A three-tiered offering will look something like this:

Tier one: Bare bones

This tier contains the “basics” for price-conscious clients who don’t need much. In other words, all the IT essentials that every business needs (basic hardware, and software like email).

Tier two: Best practices

This tier typically includes all the necessary licensing that a business needs, but doesn’t include the full suite of support that makes it a fully managed service.

Tier three: Expert support

This tier contains everything: licensing, security, and roadmapping for the years ahead. It’s the tier for businesses who don’t want to have to worry about their IT, and who see it as an investment that will enable their growth as a company.

Step three: Step up your staffing

Part of the challenge of offering managed services is being able to balance your workload with your overhead. If you have too many technicians, your profit margins drop. Not enough technicians, and your service quality dips. There’s a constant seesaw of new business to new staff that you have to be mindful of all the time.

At the end of the day, it comes down to being realistic about your planning. If you bring on a 50-seat client, you’d better have the resources to support the amount of work that will bring.

I talk to so many MSPs who hire their first sales representative in June with the intent of tripling their business by next year. Let’s think about what that means. Most MSP sales cycles mean that very few contracts will be signed until the end of the year. These businesses hired someone and gave them a target, but that target was completely unreasonable. Now they’re going to have a sales rep who’s disgruntled and burnt out before the business has brought on even one new client.

It’s natural to be aggressive with your growth goals, but you have to be realistic about what you can actually support.

Step four: Understand your roadblocks

Once you’ve set up and staffed your business to scale, your next hurdle will be doing the actual work of growing your company.

Of the roughly 50,000 MSPs operating today, only 6,000 of them make over $2 million a year in revenue. This figure seems to be the tipping point; if you can make it happen, you can do pretty much anything.

Of the MSPs I’ve worked with, growing a business from $1 million to $2 million in annual revenue seems to be the most difficult leap to make. Most will peter out at the $500,000 mark. Those that do make their way to $1 million in revenue will find that this is where the rubber meets the road. Businesses have to be focused, organized, structured, and process-driven to grow past this point.

One of the major hurdles that impedes this growth is the staffing issue I just mentioned. If you fail to balance client attrition and onboarding with staffing, much of your business will be stuck managing churn. It’s important to continue to monitor where your business is at, whether you’re staffed to grow sustainably, and whether the clients you’re onboarding are ones that you can support with quality service well into the future.

Remember, you have a network to rely on

There are a number of things you’ll need to plan for before you make the transition to building an MSP, but don’t fall into the trap of thinking you need to figure this out alone. There are tens of thousands of MSPs operating today, and many of them are doing best-in-class work that you can learn a lot from.

Look at the companies you respect in your market, and reach out to them for advice. Most of your peers in the IT space will be happy to share knowledge with you and pass along their best practices. To help you get started, read and subscribe to “Rockstars of MSP”! It spotlights stories from MSP leaders who talk about how they built their businesses.

With proper planning, packaging, and staffing, as well as a realistic set of expectations, you can make the leap from consultancy to MSP.

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Editor's note: if you ever run into trouble, let us know. We offer a lot of great external resources to direct you to, like Carrie (the author of this blog post and CEO of Managed Sales Pros). She has built an entire business around helping MSP founders who have bitten off more than they can chew!

Also recommended for you:

Rockstars of MSP

The Land and Expand Playbook: MSP Pipeline Growth Starts With Saying Yes

The Future of MSP

Fix your sales-service handoff to enhance the customer experience

admin — Fri, 25 Jun 2021 17:25:45 +0000

Fix your sales-service handoff to enhance the customer experience admin Fri, 06/25/2021 - 12:25 MSP Carrie Simpson, CEO of Managed Sales Pros

There’s no doubt about it: we’ve reached the age of automation, and today’s MSPs are using it to streamline their services in a number of ways. Whether it’s using email templates and workflow automation in CRM (customer relationship management) systems to eliminate hours of repetitive work from the sales process, or pushing customers to self-service portals for logging tickets, automation can allow you to eliminate the repetitive and redundant parts of a job, which in turn can improve employee satisfaction and increase productivity.

Automation can also help you find cost savings in a number of areas of your business. Find enough efficiencies, and you might be able to lower your headcount or retrain your employees for new roles.

Given these advantages, it can be tempting to automate everything. If one automated process is good, two will be better, right?

Not always.

Here’s the thing: automation misfires. Systems break. Employees make mistakes. Software gets buggy.

Automation will never be able to override human error. If your process now allows you to do more things faster, it stands to reason that a mistake will impact your business on a much larger scale. The thing that you praised when it allowed you to contact 500 prospects in two minutes? You will be cursing it when all 500 of those prospects receive the wrong email. Let’s take a look at the pluses—and pitfalls—of using automation to streamline your sales to service handoff.

Where automation works

Look, I am by no means saying that automation is a bad thing. Automating certain tasks can really, truly make a difference in your day-to-day life. When people ask me what should be automated, the answer is easy: any task that makes people bored and/or complacent.

Many MSPs use an automated quoting tool that integrates with their Professional Services Automation (PSA) platform. Automated quoting is great, because it really does allow your salespeople to get out of the drudgery of clicking over and over, and streamlines something laborious that may not always be worth the amount of work it demands (a prospect is not yet a client, after all).

Likewise, setting up a sales nurture email campaign can be a great way to warm up colder prospects and coax them back into the sales funnel. If a prospect is too early on in their buying journey, or if they’re still working out what exactly they need in order to solve their problems, keeping them in the loop with an automated email cadence isn’t a bad idea.

… and where it doesn’t

There are some major caveats to the examples listed above, however. Let’s look at the example of using quoting software first. Let’s say you use quoting software to fire off a quote to a prospect, and that prospect wants to go ahead and sign a contract. The contract gets sent off and e-signed, and the prospect signs on for an onboarding date. You got a new client and no one had to lift a finger, right?

But now let’s say five other prospects just went through the same process, and they’ve all been promised the same onboarding date. Here’s where reality ruins everything. When the entire process from quoting to signing on are automated, there are no checks and balances in place.

There needs to be a place between service and sales where a human can come in and flag something. If there’s no capacity to onboard a client within the timeframe that was promised, that needs to be caught before the papers are signed. If not, you’re off to a not-great start with a new client when you have to go back on your word right away.

Now, let’s look at the example of using an automated sales nurture email flow. As I mentioned, they’re a great tool to use on colder prospects. And that’s it. Put yourself in the prospect’s shoes: if you just had a great call with a sales rep for an hour, and then an hour later you get an automated email from them, it feels impersonal and doesn’t fit the experience you just had. Automation should be overridden for warm prospects. You owe it to them to give them your full, human attention.

The lesson? Automation works well for many parts of your sales process, but it’s never a blanket solution. There are many points where you can easily differentiate yourself from your competitors by putting on your “white gloves” to treat the prospect with care.

Be aware of your limits

The trick is to find where the limits of automation exist within your business. The larger your company is, the more you can benefit from automation, but also, the more likely you are to experience automation gone awry.

Taking stock of your sales process and flagging all the parts where automation needs to end and a human needs to step in is important. A good rule of thumb is to look for the points in the sales process at which things stop being straightforward. This is often the point at which work is scoped and promises are made.

No client or prospect wants to feel like the work you’re doing with them is mundane, repetitive, or redundant, so you need to be aware of when things could start to tip this way. I’ll never forget one MSP that sent me a proposal with the name of my biggest competitor in all the places where my business’ name should have been. How is a prospect supposed to feel confident that an MSP can provide a unique or special service if they fail to catch something like that?

Quality control is key

One big lesson that seems to be difficult for some MSPs to learn is that automation is never a “set it and forget it” scenario. One MSP I know of changed over to a new PSA system to manage their ticketing process, but failed to realize for three months that the ticketing process wasn’t firing effectively. They lost three clients in a month because of it. This is more of a quality control issue than an automation one. Who was there checking the system to make sure it actually worked?

Let’s use an analogy that’s well-known in the IT world. People buy backup and disaster recovery products that are supposed to automatically check your backups every night. These things often misfire, though, so they’re often checked to make sure things were backed up correctly. The stakes are high, and no MSP wants to be held responsible for losing a client’s data simply because they forgot to check if something was firing properly.

You should approach your automation quality control the same way. You would never not check your backups, so why not apply the same vigilance to your sales and marketing software? Make sure you’re looking at each stage of the process to see where the bugs are, and check in frequently to make sure everything is still working as planned.

A final thought

There’s no doubt that automation can help you get out of the weeds and focus on the parts of your business that need attention. At the end of the day, how much you automate is up to you.

It can help to put on your “customer” hat. As a customer, automation is great when it makes sense. Who doesn’t love using the self-checkout line at their local grocery store? But if you walked into Tiffany’s and they had a self-checkout line, you’d be confused.

If you want your prospects and customers to feel valued, think about where that value shows up in the sales and onboarding process. Then, make a vow to yourself to never automate that part of the process. You owe it to your customers—and your business—to show up where it counts.

Also recommended for you

How to Harness Your Employees to Collect Valuable Customer Data

The Land and Expand Playbook: MSP Pipeline Growth Starts With Saying Yes

6 Red Flags from Your Next Potential Vendor Relationship

The Future of MSP

How to Harness Your Employees to Collect Valuable Customer Data

admin — Thu, 27 May 2021 17:00:34 +0000

How to Harness Your Employees to Collect Valuable Customer Data admin Thu, 05/27/2021 - 12:00 MSP Carrie Simpson, CEO of Managed Sales Pros

Imagine one of your customers is nearing the end of their contract. You check your PSA and decide they’re a good fit for an upsell—decent turnover, growing headcount, stable industry.

Three months out from their renewal date, you call them up and give them your best sales pitch.

And then it all falls apart.

It turns out your customer has been complaining about dropped tickets and slow service for months. They don’t want to talk about a new contract until you’ve fixed all their current problems.

You hang up the phone and click back to your PSA. What just happened? There’s nothing there to even suggest there was a problem with this account to begin with.

The likely cause is that your employees aren’t documenting their work properly. If I’m being honest, I don’t even blame them. PSAs are clunky and everyone develops quick workarounds and shortcuts to speed up their work, especially when business owners haven’t implemented Standard Operating Procedures (SOPs).

But as we’ve just seen, poor documentation wreaks havoc on subsequent resells. Let’s talk about fixing MSP data practices and harnessing your employees to collect valuable customer data.

The problem with data

Before we dive into fixes, let’s hammer out the two distinct challenges MSPs face with customer data: data access and data reliability.

First, data access.

In most cases, day-to-day customer data lives in a PSA like Connectwise, Autotask, and ServiceNow. That’s where you see things like contract details, documentation, projects, and calendars. It’s also where techs’ notes should live. When a tech fixes a ticket or goes on-site, they should document what they did.

While PSAs are great for customer data, they’re woeful for sales. Even so, account managers have to use them because that’s where the customer data is.

In order to sell more effectively, MSPs need to manage data in a way that allows visibility across both PSA and tools that are designed for sales like CRMs. You can integrate the two tools, but it’s often expensive unless there’s a one-click integration. The alternative is to work between the two systems. It’s not ideal, but it’s immediately accessible.

But behind the data access challenge is a more fundamental problem: data reliability. This comes from employees not properly documenting their work. When your data is unreliable, it’s unusable. Say your PSA doesn’t have any ticket notes. Does that mean everything is going well, or that your techs didn’t remember to document their work? You don’t know.

It’s this second problem we’re going to focus on. Because unless your data is reliable, it doesn’t matter whether or not it’s accessible.

Set behavior benchmarks

The goal here is simple: techs should take proper notes when they go on-site. While simple in theory, it’s a problem that all MSPs have to deal with. Techs are busy. They prioritize metrics like time to resolution or average ticket completion time. If they’re rushing from one ticket to the next, proper documentation is one of the first things they’ll cut.

The reason they prioritize speed is that they’re (usually) appraised on speed. If you set an SLA for ticket acknowledgment at 30 minutes, resolution plan at two hours, and resolution at eight hours, they’ll move to hit those targets. Since ticket resolution isn’t contingent on record-keeping, it makes sense to skip over their notes.

Once you know what behavior you want to encourage—record-keeping—you have to work it into your incentivization structure. Companies have adopted strategic platforms like the Entrepreneurial Operating System (EOS) to benchmark the behavior they want and incentivize against it.

Drive consistency

As with all change management, the moment an owner takes their hand off the wheel, progress and standards slip. This is no different. Once you have your revised incentive plan in place, you need to stick to it, come hell or high water.

If you’re fortunate enough to have a superstar tech who consistently closes tickets in one call, you likely will give them a lot of slack—outcome is important. Process is also important, so what do you do when they’re skipping or putting off completing their documentation? It’s tempting to let it slide. After all, they’re your superstar.

When you let their behavior slip, the people around them think, “Oh, it's okay not to take notes.” Then their behavior begins slipping, too. They’re now also skipping taking notes and closing tickets without proper documentation, and they feel justified in doing so. It slowly ripples through your business, and it begins to undo all of the processes you’ve spent years building.

As you see the change unwinding, you might come down hard on your B- and C-players. Ultimately, this just builds resentment across your entire team. Why is the superstar getting away with the things they’re being disciplined for?

Now, you’re back to solving the same problems you experienced early on in your managed services business—and you’re going to have to start over. Retraining people is challenging when they know they can let standards slip. Disciplinary action is not advised when you’ve enforced an uneven or unfair policy. A consistent policy—documented, trained, and acknowledged in writing by your team—is mandatory if you want to provide corrective counselling or build a performance improvement plan.

Identify the behaviors you want to promote. Find a way to incentivize them. Then drive unrelenting consistency.

Find the problem and work backward

Creating reliable data might seem like a thankless task—but it can drive improved sales performance. To understand why, start at the problem and work backward.

Your MSP business isn’t growing? Ask why: you’re not bringing in more revenue.

Why isn’t your revenue growing? You’re not adding enough new opportunities. Dig deeper for an answer: one reason might be you don’t know what’s going on with your current customers.

Why don’t you know what’s going on with your current customers? Your employees aren’t keeping accurate records.

When you’re in the weeds, it’s tough to see the link between accurate record-keeping and increased revenue—but it’s there.

When all of your employees document their work in a standardized format and single platform, you gain a much deeper understanding of both your prospects and your customers. You’ll know what you should offer for upsells and when to push for renewals. You can increase your sales performance without adding sales headcount. With clear visibility into the entire lifecycle of your customers, and clearly defined standard operating procedures enforced consistently across your organization, it won’t be long until your business begins experiencing the best-in-class margins and year over year growth you desire.

The Future of MSP

The Land and Expand Playbook: MSP Pipeline Growth Starts With Saying Yes

admin — Thu, 18 Mar 2021 20:49:12 +0000

The Land and Expand Playbook: MSP Pipeline Growth Starts With Saying Yes admin Thu, 03/18/2021 - 15:49 MSP ��Ƶɫ

Even though Veeva is a publicly-traded company with revenues of $1 billion, its sales reps are happy to sell small projects.

There has been an industry trend to "say no" to any non-MSP customers or small projects with the mindset to protect MSP growth at all costs. However, if it’s done correctly, landing those projects could be the reason for growth if it’s viewed as a partnership opportunity. We have seen this with some of our top partners here at ��Ƶɫ and outside of the industry.

Say, for example, that a company recognizes a minor gap in its regulatory system and contacts the California-based cloud touch company to plug it. Instead of discarding the lead as a low-value contract, Veeva’s sales reps treat it like gold. Because securing a small project is the first step in their “Land and Expand” strategy.

This sales strategy works by pitching buyers on small deals. Once a sales rep has their foot in the door, they double down on relationships, building trust and earning rapport with stakeholders. With strong connections throughout the account, the sales reps then pursue larger, more profitable deals with the customer.

At Veeva, the strategy is working well. As Brian Witherson explained in The Motley Fool: “If Veeva is able to install a module that solves the customer's first challenge, the door is opened for other areas of business and a longer-term relationship.”

Over the past eight years the cloud technology company has expanded its customer base 9.5 times what it was before, but they have grown their product base by 15 times as much. By focusing on expanding its existing accounts, Veeva compounded its growth without acquiring net new customers.

Although it’s common in many industries, the Land and Expand approach has yet to take hold in the MSP space. Indeed, in recent years, MSPs have turned away from small contracts. Instead, they offer large, predefined packages. If a customer wants something smaller or more customized, many MSPs are prepared to pass on the deal. This approach does have its benefits. In particular, it’s simple to implement from marketing through sales to delivery. However, its rigidity risks leaving money on the table.

Meanwhile, Land and Expand capitalizes on a particular quirk in the IT landscape. According to SWZD, 76% of businesses plan to implement long-term IT changes after the pandemic. But there’s a concern among MSPs that IT leaders see them as competition, rather than as an asset. By focusing on smaller projects with less resistance, partners can get into accounts, build trust, and then pivot to larger projects.

In this article, we’ll unpack the basics of “Land and Expand” sales for MSPs. We’ll explore how to assess target accounts and design smaller deals to hook buyers. Then we’ll touch on rapport and relationship building. Finally, we’ll learn what it takes to turn a small existing contract into a large, lucrative deal.

Step 1: Identify target accounts

Land and Expand is a powerful growth strategy—but only in the right circumstances. For example, if you spend time landing an introductory deal only to find the company has zero expansion potential, that’s not great. You’ve tied up marketing, sales, and support resources that you could have invested in more profitable deals.

Before you kick off your Land and Expand campaign, it’s worth identifying what type of customers are worth your time. You can do this by writing your ideal customer profile (ICP).

Begin by looking through your existing client list for “good” companies—the ones that make you the most money for the least hassle. Search for similarities in industry, size, location, business model, and so on.

Once you have a feel for what companies offer the best expansion opportunity, create your ICP by answering the following questions:

What industry are they in?
Where are they located?
How many people work there?
What is their revenue?
What’s their budget?
Who are your main stakeholders?
How well do they understand your product?
What are they looking to achieve?

If you answer those questions, you’ll end up with a description of your ideal customer. It’s important to remember that most businesses you deal with won’t match your ICP exactly—and that’s fine. Your ICP is the kind of customer you want, not a specific example.

If a lead matches most of your ICP criteria, your sales reps should focus on them. And if a lead doesn’t hit any, it’s probably worth passing or de-prioritizing them.

Step 2: Land smaller deals

Now you know what sort of customers you want to work with, it’s time to design your smaller deals. These are the little, unobtrusive contracts that’ll get you in the door. For MSPs, you have two options: Consulting projects, and Limited MSA.

Most MSPs move away from consulting as they grow. It’s seen as less scalable and profitable than Managed Services Agreements (MSA), and it is. Once you’ve maximized your available consulting hours, that’s your revenue ceiling. But don’t discount it as a smaller deal. We’re not talking about launching consulting a standalone service line. Instead, you’re using it as a first step to larger projects.

Your second option is a Limited MSA. For example, you could offer a contract without desktop support. For companies with a little more trust and buy-in, this is a good option as it’s closer to the full contract you’ll sell them later.

Your sales reps should also consider the opportunity profile. Broadly, there are two varieties: takeouts and greenfields.

With takeout opportunities, your prospect already has a competitive solution in place. Through the sales cycle, focus on differentiation and education. Your goal is to make your buyer understand why your service is better than your competitors and how much they can gain from switching.

On the other hand, greenfield opportunities have no incumbent competitors. Your prospect is exploring your product for the first time. Spend your time on education, but lean into the problem domain itself, rather than your specific solution.

Finally, avoid deal creep. Fair warning: This will feel counterintuitive. Ordinarily, salespeople want to expand their deals and add more scope. But in Land and Expand strategies, you keep your initial contract tight to maximize its chance of landing. If your conversation balloons and the contract bloats, it’s much more likely for the deal to fall through—losing you the initial contract and the potential expansion deal. Instead, focus on a specific problem, get the contract signed, and deliver the best service your customer has ever received.

Step 3: Nurture customer relationships

Through the duration of your small contract, your goal is to win over as many stakeholders in the account as possible.

Search your customer’s organization for decision-makers and influencers for other potential projects. Is there an IT director you don’t know? Perhaps the company owner holds the purse strings and you haven’t met them yet. Reach out to the people with their boots on the ground, too. Find out how they’re using technology, explore their pain points, and lay the foundations for your upcoming sales pitch.

This work is a whole-company affair. Don’t leave everything up to your salesperson. If you’re the boss, reach out to executives and owners. If you’re the product manager, get in touch with technical stakeholders. If you’re an administrator, connect with the individual contributors.

Step 4: Expand your account

By now, you have a lot invested with your customer. You’ve sold them on a small project and built strong connections through the account. While these small projects can be profitable, they probably aren’t driving the sort of revenue growth you’re aiming for.

So let's up the ante.

Once you feel confident in your rapport and relationships, begin thinking about how you can expand the account. Here, you have three main options.

First, selling within. Your first option is to go back to the team or business unit you’ve already dealt with and look for new sales opportunities. For example, if you’ve wrapped up your consulting project, pivot the conversation to an MSA. If your Limited MSA is running smoothly, push them to expand the scope.

Your second option is selling across. Larger businesses have different functional departments, business units, and subsidiaries. If you have internal stakeholders willing to introduce you and vouch for your work, you can open up incredibly valuable opportunities with very little work. Alternatively, your relationship building in the previous step may have opened up new conversations already.

Finally, the mother of all expansion options is selling up. Your goal is to have someone senior make your service the standard for the whole company, rather than individual business units or teams. If you do it right, you can double, triple, or quadruple your contract value overnight.

Land, expand, grow, and thrive

Veeva is just one company among many growing on the back of a Land and Expand strategy. Other enormous companies like Twilio, Dropbox, and even Microsoft all rely on the sales strategy to grow their business. When you look at the numbers, it’s clear to see why.

Repeat customers are five times more likely to purchase products or services than new customers. They’re also five times more likely to forgive a poor experience, four times more likely to refer a new customer, and seven times more likely to try a new offering. Ultimately, that means more revenue. Repeat customers spend 33% more than new customers.

So before you chase after a white whale, stop and ask yourself a simple question: Would it be better to Land a small deal and Expand it into an enormous contract?

The Future of MSP

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admin — Tue, 10 Mar 2020 20:53:06 +0000

Content Syndication with ��Ƶɫ admin Tue, 03/10/2020 - 15:53 MSP Kayla Sanderson

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Step two: Outline your offering

Step three: Step up your staffing

Step four: Understand your roadblocks

Remember, you have a network to rely on

Fix your sales-service handoff to enhance the customer experience

Where automation works

… and where it doesn’t

Be aware of your limits

Quality control is key

A final thought

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The Land and Expand Playbook: MSP Pipeline Growth Starts With Saying Yes

Step 1: Identify target accounts

Step 2: Land smaller deals

Step 3: Nurture customer relationships

Step 4: Expand your account

Land, expand, grow, and thrive

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Content Syndication with ��Ƶɫ