According to BCC Research, the global managed IT services market could be worth more than $250 billion by the year 2021. This sector in flourishing, and the potential for value-added resellers (VARs), break/fix providers, or emerging MSPs to achieve scalable, profitable growth in IT is tremendous.
Capitalizing on this proactive, preventative approach to IT services is more efficient than running around putting out fires. Additionally, this model can lead to higher margins, scalability and recurring revenue, while improving customer service. To get there, however, you will need the right business plan, technology and partnerships.
So, what’s the key to unparalleled success in managed IT services? Focus on these four elements:
1. Executive Buy-In
This may seem obvious, though many companies fail at building out a managed services practice due to lack of executive buy-in. To succeed in this market, you need to fully embrace managed services, meaning your entire organization (from the top down) should be bought into this model. To do so, some areas to focus on include:
Creating sales compensation packages and quota requirements will help incentivize sales teams to sell managed services. Your sales reps are likely used to getting large commission checks based on large product or project sales. Therefore, paying the sales team a percentage of managed services revenue on an ongoing basis will likely not incentivize them to sell managed services, as this is a completely new way of earning money for them. Instead, you will want to create a compensation plan similar to what they are used to. For example, you may pay out a full month of managed services revenue up front as part of their commission, rather than a small amount monthly.
Prioritize Managed Services Over Competing Service Offerings
Many companies sell blocks of their techs' time in advance, so that their customers can then use it for support requirements as needed. However, after shifting to managed services, the sales team may want to fall back to selling these blocks as soon as they get pushback on the managed services solution. It is up to the executive team to put rules in place that prevent this from happening. While eliminating time blocks may not be an option—as too many customers may be leveraging this service to remove it entirely—restricting them to be only available for project work will help keep the support options focused on managed services.
Fuel Managed Services Revenue
At the end of the quarter, managed services still need to be a sales priority, even if other products or service lines have not hit their goals. I see this all the time with office equipment dealers and VARs. The mindset is that selling hardware is what pays the bills, so if hardware sales are down, the executive team redirects all sales resources to focus on hardware—forgetting about managed services. This sends a clear message to the sales team that the executive team is not actually bought into managed services as a revenue driver, and will kill any excitement they might have had around selling it. This sets up a negative cycle of expecting revenue from managed services while not devoting the time necessary to sell it to secure recurring revenue contracts.
2. Productize Your Offering
Why do you need to productize your MSP offering? The answer is simple: confusion on all fronts.
Your sales reps are comfortable selling something that is clearly defined. Even if your team has been selling project services, it is likely that these services were sold as part of some product purchase. Whether it be a new firewall or a server upgrade, there was still a clear project/product that they could explain and sell to the client. On the flip side, your prospective customers know what managed services are, but it’s likely that all of the competitors in your market have a slightly different take on managed services. This results in a lot of confusion in the market, and also makes it challenging for you to differentiate yourself from the competition.
Productizing your services allows you to effectively identify what you will be delivering—a catalog of deliverables underneath the umbrella of a single name, so to speak. In turn, this creates a foundation for your support processes. By identifying everything in your deliverables, it can maximize profitability, as you have created a defined scope of work for each service. With this scope of work in place, your team will be able to identify out-of-scope activities, allowing you to bill separately for these or include them in the overall product—increasing your pricing as needed.
Ultimately, having a product your sales force can “see and touch” eases the sales process by helping them understand the deliverables, the value proposition and what differentiates you from the competition.
3. Create Solid Processes
Having processes for both sales and operations is critical to success when selling and delivering managed services.
At a minimum, most companies have an informal sales process, and many have a formal one, even if they might not follow it on all opportunities. Many sales professionals can look back at lost deals and pinpoint where they strayed from their sales process, and ultimately lost the deal because of it. Selling managed services is a value-based sell, so having a process that walks through the entire sales cycle is critical to success. Sales reps that followed that process are typically more successful than those that did not.
If you’re partnered with Continuum, for example, we provide you with instant operational maturity for your managed services practice. But services such as these are not typically “set it and forget it” technology. To succeed, you will need clearly-defined processes for everything; from onboarding new customers, to escalating issues to vendors and handling billing questions and concerns.
4. Build the Right Team
When you are first launching your MSP practice, it’s important to identify a couple of “champions” to help you build out the program. You will need a representative from sales as well as from service. These champions will be responsible for helping build out your product, create processes and ultimately, be the subject matter experts that the rest of your team will rely on as you start selling your services.
Once you are ready to build out your entire MSP sales force, there are four key roles that are critical to its success:
Account Executive (AE)
The AE is responsible for prospecting and generating new commercial business. In organizations that offer multiple services or products, the AE will typically be responsible for identifying opportunities across the entire product suite. These products may include office equipment (copiers and printers), telephony (carrier services, VOIP phone systems), computer hardware and software, cloud solutions, IT project services and IT managed services.
In organizations focused primarily on product sales, it is customary for the AE to also perform the ongoing account management responsibilities. However, in a managed services delivery model, the day-to-day account management can be quite time-consuming. As such, we recommend that this function be divided into a separate role.
Account Manager (AM)
The AM’s primary responsibility is to act as an advocate for the business and handle the ongoing account management for the clients. They will handle issues ranging from customer satisfaction to contract renewals and quarterly business reviews. They will be responsible for all new product and service sales within their client base. They are also responsible for ensuring all clients understand what products and offerings are available to them.
Sales Engineer (SE)
The SE is the primary technical resource for the AE team. This role is responsible for actively driving and managing the technology evaluation stage of the sales process, and working in conjunction with the AE as the key technical advisor and solutions expert.
Virtual CIO (vCIO)
The vCIO is responsible for providing an executive IT leadership role for clients, guiding them in selection, implementation and ongoing support of technological solutions to address their company’s goals and objectives. In smaller organizations, this position will often incorporate both the SE and AM roles.
Bonus Role: NOC Manager
By partnering with a Master MSP like Continuum, you’ll be spared from the challenges associated with hiring the talent required to deliver managed services to your customers. This enables existing technicians who are looking for career advancement or growth opportunity to be redeployed as supervisors or managers of outsourced Help Desk or Network Operations Center (NOC) teams. This role handles escalations from Continuum, manages and updates your processes and customer documentation, and is generally responsible for the day-to-day operations of the managed services delivery. And, by monitoring and facilitating this vendor relationship, these personnel can continuously optimize processes, maximize service delivery and ensure client issues are properly prioritized and resolved.
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