In this month’s feature blog at Business Solutions, Chief Editor Mike Monocello offers a sharp contrast in the effect that selling subscription-based services offers compared with selling break-fix services. Following are five highlights from the article that break-fix VARs looking to make the transition to selling managed services can apply right away:
1. If You’re New To Services, Start Small And Ease Into The Model
If you’re just starting to make the transition to managed services, consider selling services to new customers only. Indeed, you might have trouble convincing old customers to begin paying you on a monthly basis. Then again, you might have some customers that could benefit greatly from proactive maintenance.
2. If You Already Offer Services, Add More
Sounds simple, but many MSPs get stuck with what they currently offer and don’t look ahead. You could be offering network security, antivirus, antispam, mobile device management (capitalize on the BYOD trend!), NOC, managed print (who doesn’t have printers and copiers?), HaaS, Software-as-a-Service, Infrastructure, and so on. Backup and recovery is a great one, too! Many vendors offer a variety of solutions. As you test a vendor, make sure you try out everything, whether you use/sell it immediately or down the road. There’s always more you could be offering.
3. Reduce Expenses, Have A Business Plan, And Get Close To Your Finances
Before writing for BSM, I was part owner of a VAR in Erie, PA. At our peak, we had 23 employees. We were modeled by the company’s founder like the dot com companies of legend. We had lots of young people energized to be using technology to solve problems. Additionally, like the dot com companies, we also had hacky sack, Nerf guns, a toy box, and video games. It was a fun place to work with lots of distractions designed to increase productivity — but they really just created distractions. Generally speaking, the company was poorly run, despite the talent. Things were good and easy when the money was pouring in from one big customer, but when that customer went away, the poorly run company started to struggle.
I liken this to break-fix companies that did great when margins were great, but today, eroding margins mean struggling businesses. This is one of the reasons the as-a-service model is so appealing. But it’s also a reason why the smart solutions providers who adopt the model have a few things in common. Leading MSPs are intimately aware of their finances, they’ve reduced expenses, and they have a business plan for growth. To do this model well, you need to be running efficiently.
Panelists at Business Solutions’ Channel Transitions event recommended that attendees are better off overcharging customers than undercharging. They shared horror stories of having to go back to customers after discovering they weren’t charging enough to be profitable and increase their rates. It’s easier to lower your rates with customers than have a conversation about raising them.
4. Focus Less On Technology, More On Solving Customer Problems
Successful MSPs don’t sell technology to their customers, they sell things like security, peace of mind, and proactive management, all to avoid downtime. Gone are the days of going in and pitching speeds and feeds. Selling technology allows customers to shop you on the internet, looking at the line items of technology you’re providing. When you sell a vision of stability, free from costly downtime and problems. Customers won’t find that line item on the Internet.
Also, spend more time with customers looking for opportunities. Panelist Steve Rutkovitz shared that his company does roadmapping, which gives customers an opportunity to talk about their businesses, challenges, and ask questions. Rutkovitz also creates a matrix of all his company’s services and all his customers to see how much penetration he has with each customer. Doing so uncovered thousands of opportunities for upselling.
5. Automate As Much As Possible
Fully embracing PSA (professional services automation) and RMM tools will allow you to scale, be more efficient with less people, and better manage and service your customers. We featured Platte River Networks a few issues ago and learned that the automation of routine maintenance immediately reduced a burden on the company’s field techs. Additionally, the MSP identified that techs were spending too much time with some customers that had legacy hardware.
Automation can help with reporting as well. It’s important to provide customers with reports that illustrate all the work that you’re doing. You don’t want to do a great job over 12 months and then have the customer want to quit because no problems have occurred.