IT channel sales and marketing strategy for the digital era
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Every managed service provider wants a competitive edge.
However, to achieve this goal MSPs know they must have a clear picture of the market they want to serve, recognize what specific IT skills they are best at delivering and tailor a sales and marketing strategy that calms customers' fears and builds a relationship of trust.
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No one doubts that developing a comprehensive sales and marketing strategy has been a struggle for many MSPs, particularly smaller companies founded by engineers that have tended to emphasize technical skills and rely strictly on word of mouth to win clients to their business.
"Most MSPs are led by individuals with strong technical skills but little formal training in, or understanding of, sales and the sales process," said Peter Kujawa, president of Locknet Managed IT Services, an MSP based in Onalaska, Wis., and a division of EO Johnson Business Technologies. "I find that many of these MSPs look at sales as a low-skill occupation and something that anyone should be able to do, and this is not correct. Great salespeople and sales managers are every bit as skilled as great technical employees."
As MSPs find a way to transition from a customer referrals-based business to a more formalized sales and marketing practice, they also have to keep up with customer demands for new technology. With the rise of cloud computing, the elevated concern over cyberattacks and the emergence of other technologies such as mobile devices and big data analytics, MSPs are finding that customers are more tech savvy and their IT demands are constantly changing.
Peter Kujawapresident of Locknet Managed IT Services
Selling IT to customers has also changed. In recent years there's been a shift from selling products to selling services which requires a different sales and marketing model from the one used by other channel businesses such as value-added resellers (VARs).
"When VARs were dominating the channel they had well established sales teams," said Charles Weaver, CEO of the MSPAlliance. "When managed services came along, the relationship and the dynamic changed dramatically."
If MSPs are to embark on a successful sales and marketing strategy a new paradigm is needed -- one that requires a more intimate relationship with customers, Weaver said. He also noted MSPs need to recognize that even a $100,000 piece of hardware or software can be acquired faster than a $5,000-per-month managed service contract.
"You can't sell a managed service in the same way that you would sell a server," Weaver said. "There's a difference between buying a product and buying trust -- the trust that a customer needs when they turn over … access to their data… to an MSP. That's what MSPs need to fully comprehend."
Knowing yourself: The basis for a sales and marketing strategy
As MSPs focus on the best way to reach customers, they should also think about the best way to add value to their client engagements. Many companies use MSPs for a variety of tasks such as outsourced email or help desk duties, managing the network, cloud computing and cybersecurity, as well as consulting services, repair or troubleshooting work. With so many areas to offer IT expertise, MSPs can specialize in various skills, creating competitive differentiation and a powerful go-to-market message.
It is against this background that MSPs must ask themselves what they do best, Kujawa said. He also noted MSPs should find out what clients they are best suited to take care of and identify those clients they have struggled with, either from a standpoint of client satisfaction or profitability.
"It is important for the MSP to know what a perfect client looks like so they can focus their sales and product development efforts on going after those clients," Kujawa said. "It is equally important that they learn to say 'no' to clients that don't fit them and don't try to be all things to all prospects. They may get the deal today, but it will hurt them in the long term to bring on clients that don't fit them."
As MSPs get to know their customers better, Jennifer Anaya, vice president of marketing for North America at Ingram Micro, said it's critical to have a strong brand for the sole reason that their customers are buying their promise: to provide an exceptional service with consistent service levels and competent people who can manage their technology as required.
"It's important to focus a brand around what your company represents and what you do that your customers can't live without," Anaya said. "Take some time to ask your customers and associates why: Why do they work for you? Why do they do business with you? How is your service different from other companies?"
Once MSPs discover their brand, Anaya suggested they embark upon a digital marketing plan that consists of storytelling and dialogue with customers and prospects that takes place over strategic technology platforms. Once MSPs identify the stories that set them apart, they need to dedicate someone to market their business and identify a budget, rather than have someone do this as only part of his job function. MSPs should also select the right media mix of social and web properties to tell their stories.
"We also recommend reviewing your sales process to ensure the digital marketing is tied into your customer relationship management platform, and rules of engagement are set so sales representatives know how to follow-up with ready prospects or nurture those who may not be ready for a sales conversation," Anaya said. "Finally, once those steps are complete, then the right [automated marketing] technology solution can be chosen -- one that will work hard for you."
To go after new clients, MSPs, like other IT channel companies, are increasing their marketing budgets, according to recently released research from CompTIA's 5th Annual State of the Channel report. The survey of executives at 350 IT industry companies showed that 46% of cloud channel firms, for example, are developing new materials to educate customers on emerging tech areas. Forty four percent of integrators and cloud firms are increasing their marketing budgets and 43% of channel firms with a primary telecom focus are rebranding their messaging as a service provider.
Steps to a sales and marketing strategy
1. Know yourself
- Where do you add the most value?
- What are your key areas of differentiation?
- What would the perfect customer look like?
2. Create a sales organization
- Separate sales from services.
- Assess in-house skills and hire sales people if you lack expertise.
- Build a comp plan with a solid base salary and commission incentives.
3. Develop a marketing approach
- Launch campaigns that build awareness and generate demand.
- Offer promotions to close deals.
- Pursue digital marketing techniques.
Building a sales operation
The survey also highlighted the fact that many channel companies are concerned about the results they are reaping from their sales and marketing efforts. While 32% of channel companies said their sales and marketing plan is highly effective, 55% said their efforts are only moderately effective and 11% described their sales and marketing plan as a hit-or-miss endeavor. Two percent said their plan is ineffective.
On the sales side, one way to launch an effective sales organization within the MSP is to separate sales and service, said Andra Hedden, chief marketing officer at Marketopia, an IT marketing firm based in St. Petersburg, Fla.
"When sales and services are combined during the pursuit, the MSP can lose credibility with the client and then the firm is perceived as very small and perhaps not capable of supporting even modest client demands," Hedden said. "The end result is a lower probability of converting the lead into a client. Simply put, specialization increases the skills of each role and the client's perception of trustworthiness."
Hedden said the smallest MSPs that only have either sales or services should conduct an honest assessment of the skills of the one they have in house, then hire or contract a company to complement those skills. If they are better at service, hire a sales person.
"Your business will have a difficult time growing if your natural tendency is to service your current clients but no one is hunting for new business," Hedden said. "At the same time, if you are more of a sales person and you can really sell your services, but there is no one to actually deliver, then you will falter as well."
One company that has resisted hiring a sales person is Fluid Designs Inc., a full- service IT services provider in Union, N.J. Company president, Stanley Louissaint, said he hasn't hired a sales person because "nobody can sell the company better than me."
Instead, Louissaint spent what he describes as "a good chunk of money" on sales training for himself because he recognized that as the company owner he's the best sales person to sell his company to potential clients.
"It was one of the best investments I've ever made and it has proved to be invaluable," Louissaint said.
For those MSPs looking to hire sales people, Kujawa said MSPs should provide an equal level of respect and organizational focus to their sales efforts as they provide to their technical performance. As for compensation, great relationship salespeople, which are sorely needed in IT sales, will require a decent base salary, but there should be significant commission incentives to align the salesperson with the organization's growth goals.
Kujawa also recommended if an MSP's assessment is they don't know much about sales and how to build sales distribution, they should turn to companies that specialize in helping MSPs in this task, such as The Leren Group and Endurance America which do sales management as a service and can help MSPs get their sales efforts off the ground.
Creating a marketing approach
As MSPs take the necessary steps to market their business, Hedden recommended a strategy that includes many avenues to broadcast a company's value on many different digital platforms because the more customers receive the message the more likely they are to respond.
Hedden specified three key categories that need to be included in any MSP marketing strategy. These are:
1. Awareness: To generate leads, MSPs must target potential clients that need to know what they offer and why it would benefit them to engage. Market yourself as the expert and share information with them so they can get to know your brand and expertise. Use:
- Press releases
- Social media
- White papers
- Community organizations
- Join social organizations
2. Demand: MSPs will then need to create a strategy that generates demand as well as captures and reports leads. Implement:
- Appointment setting
- Email marketing
- Direct mail marketing
- White paper & case study downloads
- Website visitor tracking
- SEO and marketing
3. Incentives: Create promotions and incentives to close the deal and reduce the sales cycle:
- Offer promotions for current clients for upgrades and add-ons to their services.
- Offer contract signing incentives to prospects.
- Offer referral partner promotions to capture referral business.
MSPs can also turn to vendors and distributors to hone their sales and marketing efforts, but they'll need to decide the best way to engage with distribution or vendor programs.
According to Anaya, MSPs should find out what distributors or vendors can offer in terms of training, events or through-market programs that will support their plan and their ongoing business growth. Additionally, MSPs should pull together a marketing plan that outlines their sales objectives, and the marketing strategies they've decided to put in place to address those objectives. The plan should also include activities they know they'll be budgeting for, or sponsoring and summarize opportunities for areas where they need help from their distribution or vendor partners.
"This plan will serve as an excellent foundation for any discussion with business partners. Why? Because it will clearly articulate an MSP's business strategy in a way that partners can engage in and support," Anaya said. "Additionally, it will help MSPs focus on where they want and need to spend time and dollars to achieve their goals."
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