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MSP sales: Cloud business calls for new tactics, skills

This rise of cloud computing is transforming the MSP sales landscape, cloud solutions providers and other channel partners. Here is how to cope.

The task of hiring and retaining successful salespeople has become increasingly challenging for IT service providers dealing with changing business service models that call for different sales skills.

That's the view of industry experts who contend the shift to cloud computing has significantly changed the nature of sales for managed service providers (MSPs) and other channel partners. In the past, customers purchased specific software and hardware products from vendors such as IBM, the former Hewlett-Packard Co. and Cisco. But today, small, medium and large businesses are transferring more of their operations to cloud platforms, curtailing traditional purchases. Such customers increasingly buy cloud services in a subscription model. That approach can involve longer MSP sales cycles as sales representatives convince their clients to buy solutions that involve ongoing service agreements for the use of hardware and software as a service.

Lane Smith, senior director of partner development at Continuum Managed ServicesLane Smith

This change requires a different sales approach that relies more on the reputation of the IT service provider, and less on the support of well-known vendors whose products possess brand awareness among customers, said Lane Smith, senior director of partner development at Continuum Managed Services, a company based in Boston that provides channel companies with an IT management platform.

"IT channel companies now need to create a much more unique value proposition for their company and for all the different solutions they offer, and they need to train their sales reps to no longer lean on vendors but to lean on their companies' internal resources. That's a big shift," Smith said.

"IT service providers that are really growing have created their own unique brand, they've created their own unique value proposition and they are standing on their own without the need of outside support in their sales process," he added.

Developing new MSP sales tactics

Moving to the cloud also requires channel companies to recruit salespeople who can develop new sales tactics to take advantage of shifting opportunities.

Mike Schmidtmann, consultant who coaches IT business owners on improving sales growth and profitabilityMike Schmidtmann

"Cloud is a business conversation, not a price-and-product conversation," said Mike Schmidtmann, who coaches IT business owners on improving sales growth and profitability.

He noted in the past salespeople solved a company's problem by introducing them to the latest products and quoting a product price. That selling approach worked when customers had their IT operations on premises. But with business operations moving to the cloud, sales representatives must convince customers that an external service provider can become another branch of their operations.

Winning comes down to the quality of the salespeople that show up.
Michael Cummingsdirector of sales transformation programs, Taylor Business Group

"Sales reps, particularly at managed service providers, need to remind potential customers that they are more than an IT company," Schmidtmann said. "They enable a customer to concentrate their attention on their core business. During the business conversation, sales reps should convince potential customers -- such as financial companies, manufacturers or retail firms -- that the MSP, cloud service provider or other channel companies they represent can manage IT operations far better than the customer. By doing so customers can focus on their competitive advantage."

However, many MSPs, cloud providers and systems integrators are crimped by company owners that place a heavy focus on their companies' technical capabilities, but don't pay enough attention to sales development, said Michael Cummings, director of sales transformation programs at Taylor Business Group, a St. Charles, Ill., IT solution provider-centric consulting firm. "Their offerings are not going to be distinctive or differentiating, so winning comes down to the quality of the salespeople that show up.

Michael Cummings, director of sales transformation programs at Taylor Business GroupMichael Cummings

In most cases, MSPs hire salespeople who fail in the first year, according to Cummings. This can be particularly harmful to companies with revenues between $1 and $2 million, Cummings said, because a successful salesperson can double the size of a company in 18 months.

He added company owners should only hire people when they are willing to personally invest in making that salesperson successful. That means owners should commit to spending time to coach and train their sales staff and should only hire sales reps when they can spend 50% of their time managing that salesperson.

"Those IT service companies that double in scale are the ones that go from being service-driven to being sales/client management-driven," Cummings said. "To scale, owners have to change -- and be all-in as a sales leader and coach. This is a new competency and is foreign to many MSP owners."

Top attributes of MSP sales reps

As companies scout for new MSP sales talent, identifying specific characteristics in a salesperson is a key factor to boosting the company's sales team. According to Cummings, IT service providers should look for a salesperson with qualities and attributes that include:

  • a proven ability to get appointments with business owners;    
  • the ability to be trained, molded and coached to behave like a business advisor. Salespeople with 20 years' experience selling one product in one way are not good candidates;
  • experience selling customized and intangible solutions for different types of businesses, such as accounting services. The more they've sold intangible products the better; and
  • experience in building his or her own pipeline of business. Preferably, owners should look for someone who has not been a salesperson at a known company such as Apple or Microsoft, where they've relied on the brand name to build their list of clients. 

Invariably, companies looking for sales success must set up a different kind of business that allows salespeople to thrive, Cummings said, noting cloud computing is a tough market in which it is difficult to gain a competitive edge. Channel businesses, MSPs and cloud providers in particular, will find it difficult to win over customers solely on the strength of their services, he suggested.

"Their offerings are not going to be distinctive or differentiating, so winning comes down to the quality of the salespeople that show up," Cummings said.

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