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5 Ways to Improve Your MSP Service Level Agreement (SLA)

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5 Ways to Improve Your MSP Service Level Agreements (SLAs)

SLAs are the foundation of your MSP business. They are essential to building strong client relationships and must be clear, reasonable and well-constructed.

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Transitioning from Referral Only to an MSP Sales Powerhouse: Part 2

Posted November 22, 2016by Mike Barnes

Transitioning from Referral Only to an MSP Sales Powerhouse- Part 2.jpg

In the first part of this series, we discussed the time in every MSP’s development where a decision needs to be made: Do we take the business from a referral-only operation to a sales operation?

This is a seminal moment in the life of a growing MSP, and the choice should not be made lightly. There are many angles to consider in putting together a legitimate sales effort in the MSP space. In this installment, we are going to examine a few elements that move an MSP from a referral business to a sales machine.

This is, admittedly, a lot of ground to cover, but here we go.


Part-Time vs. Full-Time Sales Help

In my opinion, atop the list of reasons why an MSP would hire part-time sales help: budget. Hiring a part-timer allows for creative compensation plans and can save money by avoiding the benefits full-time employees are granted.

The trouble with part-time sales help is that it often delivers part-time results. Sales is not something one dabbles in. It’s a position that requires constant attention and consistency. A part-time investment in labor could yield a return of contractors with part-time attention, little to no allegiance to your company and no opportunity for a sales professional to truly gain traction on behalf of the MSP.

Still, bringing someone on part time does give you the leeway to see if there are gaps in your current sales and onboarding process, in addition to establishing baseline conversion rates on leads, prospects and new customers. That will provide a basic understanding of what is required for the role with a less risky investment.

Full-time help is very different, and there are no guarantees of success, either. In theory, a full-time employee will apply her full-time effort to selling an MSP’s products and services. Putting all available work hours toward a sales effort allows for a true “deep dive" into existing customers and their needs while affording time to track down new business. Of course, a full-time employee means that there are benefits to be attached to the expense of the employee. There is also the ever-present threat of a bad hire. That is just part of the risk of having a sales team (or any team, for that matter).

Each option has its pros and cons. Set aside and budget for six months in the position without any true return on the investment. That will help in determining the type of hire that makes the most sense for your organization.

Hiring a Hunter, a Farmer or a Hybrid

Before hiring sales reps, you need to determine what primary function they will serve. Are you adding these employees to help find and close new business, or are they responsible for nurturing existing client relationships and growing revenue by upselling and cross-selling? Or possibly a little bit of both?

By determining priorities and goals, you’ll shape the ideal candidate profile and see whether someone you already employ is a fit, or if you need to search for that candidate.

A hunter is going to help you close net-new business, which is a great way to grow. However, first make sure you can handle the onboarding and management of new clients. Will your present customers’ experience be impacted by potentially adding two to three new clients per quarter? Are your techs able to handle the added workload?

Common wisdom says that it costs six to seven times more to acquire a new customer than to retain an existing one. So, why consider a hunter? For one thing, new customers can inject new excitement into a business. They could also allow you to discontinue relationships with clients whose contracts are less profitable.

Adding an account manager, or “farmer," to the team is a great way to solidify your relationships with clients and free up technicians or yourself to focus on strategic business objectives. Without an account manager, the business owner or a technician assigned to the account becomes the default resource for your client when issues arise, whether technical or just business-related. Having someone field requests and then distribute to the correct team member helps your business run more efficiently and provides the customer with a go-to contact for any and all issues that they face. 

Essentially, an account manager can be more relational and help grow and nurture customers to buy more of their current service, or branch out and buy other services that the MSP offers.

In essence, farmers are a more proactive extension of the referral mentality. By getting to know their customers’ businesses on a deeper level through consistent interaction and planning, they can more readily introduce new opportunities into an account. One way to tell that you have a strong farmer is an ability to leverage relationships in getting more referrals that lead to new accounts.

Often times, you might find you need an employee who can fulfill both of these functions. While it is one possible solution, keep in mind that you’ll probably find that employees focus on specific goals (net-new sales or account management) based on your compensation model and their natural abilities and personalities — and you will see less overall impact as they are stretched across multiple goals. 

Compensation Considerations

Sales professionals are often motivated by direct rewards through compensation for their sales. This is an in-depth subject, but there are a few guidelines to employ:

  • Be fair: Compensate your sales professionals commensurate to the revenue they add to the business.
  • Don’t limit their success: One of the more exciting ideas surrounding sales compensation is uncapped income. As long as your business is growing from their sales efforts, don’t limit them.
  • Offer a base salary to reduce turnover: The surface appeal of paying someone on a commission-only basis is great for the owner, but not for the sales pro. It is an indication of little faith and one that makes salespeople much more itinerant than they need to be.

That’s a lot of ground we covered, yet lots of questions have not been answered, right? Come back for our next installment as we look into techniques to retain and develop sales talent for your MSP.

Catch up on Part 1 here!

The preceding article was adapted from Mike's Channel Partners guest blog post.

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Mike Barnes is Director of Partner Engagement at Continuum. Mike brings years of experience in the software industry, having specifically focused on the SMB and Channel space. A life long New Englander, outside of the office Mike enjoys various winter and summer outdoor sports and playing with his adorable shorkie, Murphy.

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