Establishing a strong MSP sales process is an often-overlooked aspect of running a managed services business. By not making the right sales investments, however, even the most technically adept firm can fall short of its growth objectives.
When selling managed services, the aim is usually to establish ongoing, contract-based support relationships with customers. This differs starkly from other types of channel sales, such as project-based transactions, where, for example, a value-added reseller will develop and implement an IT platform on behalf of a client.
Reselling IT products "has a very different tempo, a very different type of sales process [than selling managed services] because you don't need an incredible amount of trust to sell someone a piece of software or hardware," said Charles Weaver, CEO at MSPAlliance, a managed services industry association based in Chapel Hill, N.C.
"[Managed services] is a deep relationship requiring deep levels of trust, a commitment to the provider and reliance that they are going to do a good job," he said.
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1. Acquire MSP sales talent
According to Scott Ford, director of operations at Pronesis Technology Group, an IT firm based in Tampa, Fla., one of the top challenges of MSP sales is acquiring salespeople who understand the technical side of the business.
"It is easy to pick up an engineer, and it is easy to find someone with a sales background, but it is not so easy to find someone with a sales background that truly understands the difference between a switch and a router and a firewall," Ford said.
Peter Kujawa, division president at Locknet Managed IT Services, based in Wausau, Wisc., agreed that staffing can be extremely tough. "Finding great salespeople who can sell a conceptual product … to a C-level decision-maker has always been the biggest challenge in building a sales team," he said.
In lieu of hiring an MSP sales professional, Ford pointed to three practical ways MSPs can develop sales talent at their companies.
- Move a technical employee into a sales role. For this, Ford said, the MSP would take an experienced engineer who has a sales-friendly personality and enable them to sell.
- Train a sales professional to sell managed services. The MSP would hire someone with a strong track record in sales despite being inexperienced in the managed services market, then train that person to have the necessary MSP subject-matter expertise.
- Team up a tech with a sales rep. In this approach, the MSP would pair up a salesperson with an engineer to pursue a potential client. The salesperson can have "conversations with the customer, while the engineer [looks] at the network and [takes] down notes so they can make recommendations," Ford said.
Kujawa noted that Locknet Managed IT Services invests in a range of training to develop its sales talent. The company works with an outside sales consultant, The Leren Group, which provides one-day training to all of Locknet's new hires. The training covers the basics of Locknet's go-to-market strategy, he said. All new hires must also undergo a "highly regimented three-week training program" to learn about Locknet's processes, followed by a ramp-up period of at least six months, depending on the position.
"Most of our salespeople have come from other types of technology sales, which is one of our requirements," Kujawa said. "Anyone that we hire has to have been successful in business-to-business technology sales of some type, and, ideally, it is conceptual."
Weaver said there are two general schools of thought about selling managed services.
The first is that the MSP should have a dedicated sales team, because "if you want to sell [managed services], if you want to grow the business, you have to have people who are representing the company."
The second school of thought is that the best individual suited to do the sales of a managed services practice is not professional sales reps, but rather the owner or person most knowledgeable of the technical and business side of the MSP practice. In this case, the owner will be responsible for interfacing with customers, doing the sales and ensuring that customer accounts are solid, he said.
2. Standardize the sales process
Even with a skillful sales team in place, things can quickly go off the rails if the MSP sales process lacks standardization.
Ford advised MSPs to standardize every step of a managed services sale. "Everything from the initial contact to the discovery meeting, to whose responsibility it is to generate recommended solutions and putting that into a proposal … needs to be addressed and decided on early," he said. That way, everyone's role in the MSP sales process will be clear. "If you have consistency in the process, then it makes it a lot easier to go through the process and you shorten the time."
Ford and Kujawa recommended that MSPs build sales processes within CRM software. Kujawa said using a CRM can ensure that sales reps follow common processes for quoting and order processing. It can also ensure that all customer account information is kept up to date and maintained, especially in the event of a sales rep leaving the company.
"It is really critical to build the sales process into your CRM and require that process be followed," Kujawa stressed.
He noted that Locknet uses Autotask for CRM functions.
3. Take on the right customers
According to Kujawa, the No. 1 mistake that MSPs make is to believe that any revenue is good revenue.
"The most important key to your success over time as a managed service provider is knowing who is a good fit for you and who is not a good fit for you" and to walk away when necessary, Kujawa said. A good fit, he added, will depend on the size of the client, as well as the client's product stack and "philosophy on how much they value technology."
Early stage MSPs usually run into a problem with identifying the ideal customer for their business and turning away the wrong ones, Weaver said. As a new business, "you will typically find yourself in that very precarious situation of, 'I need the revenue. I can't turn [the customer] down, but I know this is outside of where I want to be.'"
Ford agreed that revenue pressures can cause MSPs to make mistakes. "When you take [customers] that you know you shouldn't … it does create problems down the road," he said. "But I get it. I understand. When MSPs are new and they see their savings account getting smaller and smaller and smaller, it makes it really tempting to pick up clients that you wouldn't normally."
Weaver advised new MSPs to clearly define the mission of their company, their target audience and the services they want to deliver. "The sooner they can figure that out ... they will stay fairly true to that mission and find it a lot easier to be operational and profitable faster, compared to the [attitude of], 'I want to be everything to everybody.'"
"If you have the room and the space to be picky, then be picky," Ford said. "If not, you might have to do what you have to do."
Specialist vs. generalist
As MSPs develop their sales strategy and processes, one decision they should make is whether to specialize in a vertical market, customer segment and/or technology area, or to go horizontal.
Weaver said MSPs can excel if they specialize in a vertical market, such as healthcare, and "develop an incredible reputation of trust" within that community. Generalists, on the other hand, will find it harder to build a reputation because their various customers "are less likely to be aware of one another."
Ford said both the specialist and generalist approaches have their virtues and drawbacks. One drawback for the specialist approach is that business development can take longer.
"Being a generalist is great because it does open up opportunities to you when you get knowledge in different industries and the different software that they use," Ford noted. "It enables you to go after a broad set of clients. It makes the revenue-generation process a little bit easier because there is so much out there."
Kujawa, meanwhile, said he firmly believes it's important for MSPs to specialize. About half of Locknet's revenue comes from banking and credit union clients, he said. "As a result, we know a lot about banking regulations, about banking compliance needs, so we are able to develop our products in a way that a generalist MSP would not be able to do for a bank," he said.
"There is no shortage of MSP generalists out there, and they also tend to be the ones that compete primarily on price," Kujawa added.