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It’s Easy to Leave A Channels Event, Distributor Conference, or Mastermind Group feeling good about your MSP business. After all, your business is producing a profit.
You’ve been in business for 20 years or more. And you’ve managed to weather several economic downturns over the past couple of decades.
Don’t get too comfortable…
The high-tech business is a fickle thing…there are economic downturns (recessions, depressions, or whatever you want to call them…) and then there’s commoditization. The latter is your greater enemy.
Like medical and grocery sales, people need their computer. The high-tech business (servers, storage, data center, etc.) has been a high growth industry since I entered the business world out of college. It just has…perhaps it always will…tech is the lifeblood of most businesses today. We can’t work without it.
However, It commoditizes.
Building Sustainability Into Your Business
This week I’m attending a marketing conference in Cleveland OH. Over 1200 small business owners packed into an auditorium listening to some of the greatest entrepreneurial minds in world.
This morning’s session focused on sustainability.
As the speaker unfolded over an hour’s worth of strategies, the MSP business came to mind…a business that relies on long term customer retention.
MSP sales are not transactional. In fact, if your clients only stayed a month or two, your cost of sales would eat your business alive. You really need them to stay.
Historically, retention in the MSP business is 5 years (average). Yours might be more or less, but you should know your number. The goal is to increase it. If you could add just one year to your average (assume you have 100 clients signed on), that’s 1200 months of MRR (Monthly Recurring Revenue) added to your business in that one single act. Or think of it as signing a 1200 year contract with your next client!
5 Things You Should Be Doing To Create Sustainable MSP Business…
Build Evergreen Assets. If you’re taking care of your customer, you’re probably meeting quarterly to review their IT. Hopefully you’re also giving them guidance. During the initial sale you also had to review their business and create some sort of proposal.
However, building everything from scratch is destined to fail. The cost of customization is high, and the likelihood of messing up is high too…Better to productize your offerings…here’s how.
First, you should be selling packaged offerings. There’s your core MSP offering, and then there are add-ons (like riders on an insurance policy). However, when you buy a car, those extras are often bundled into packages. The electronics package with the stereo upgrades. By doing this the dealer eliminates the headache of creating a completing customized quote.
In this case you need at least one (but probably more) security package…one that can be added to their existing MSP agreement (if someone else holds that contract), or attached to yours (now or later).
There’s also a maturity model…if you were to create a maturity roadmap for security, when your new customer joined your program, you would figure out where they are right now, and begin taking them through your 24 step program…certain mail pieces, meetings, assessments, and sales efforts would be made along the way – all predetermined.
Building Identity. Customer loyalty is also a key to sustainability. Not everyone will be loyal, but the hotel and airline industries, as well as Amazon and Starbucks, have all proven that people will join the club if you sell it the right way.
It turns out identity (the people group, brand, or team I identify with) will drive my behavior faster than just about anything else. I’m a lifetime platinum member of Marriott…when it’s time for coffee, I’m waiting in line at Starbucks in the airport, even though there’s a coffee shop right across the hall with no wait. Why?
I’m part of the club. I identify myself as a Starbucks customer, I stay at Marriott unless there just isn’t one…and I’m not the only one. If you’re sitting there telling yourself you don’t do that, remember, you’re not you’re own customer…you want to sell to people who will sign on with a brand and stay.
Sell to The Right People. There is a people group out there worth your time…but there are also people not worth selling to.
Your job is to identify the people group you work well with, and go after them. I was talking to a very successful entrepreneur this week – he told me he sells to men, age 45 – 60, ambitious, hard working, leaners, who are already in business. He also noted it’s best if they are married, politically conservative, etc. You might think he’s too narrow. Yet he’s made millions (plural) of dollars in personal income annually over the past decade.
Signing the wrong people onto a business that demands retention is a recipe for failure.
When identifying your perfect customer (the customer avatar) you’ll want to know how they think…the more you know what’s on their mind, the better.
Today’s speaker said it like this…”Know what they are thinking about every day as they leave the office…know what they talk about around the dinner table each evening…and if they wake up at night worrying about stuff, you should know it.”
In the End They Need Hope. Dave Ramsey does one of the best jobs of selling hope. He tells his team, when you pack up a book or CD to ship out, it’s not a book, it’s a package of hope.
With MSP; remember, most small businesses are frustrated with computers. They don’t understand them, they don’t really trust them, and when it comes to security, they’ll do just about anything to avoid thinking about it. Security issues just create more stress…
Want To Build The Sustainable MSP Business?
Stop trying to copy the models presented by MSP cloud offerings around you. They don’t know how to sell to the SMB market. They know how to sell to you…I’m talking about the SolarWinds, Continuums, and nAbles of the world…
Be radical…start thinking about what a small business really needs…what would remove all the IT stress from their world. And then start providing it to your ideal customer avatar. Add one year to your average, and then continue to journey. It’s the road to MRR growth…And it’s sustainable.
© 2017, David Stelzl
P.S. Do you have my Security Assessment Report Template…Designed to move prospects into your program quickly?
Your Risk Assessment Is The Fastest Way to Drive New Business, But Only if You Follow This Formula…
On one hand, risk assessments are a great way to start an engagement, or close a sale. On the other hand, they offer great value. Should you give all your value and insight away???
It’s a hard question that demands an answer!
The Point of Assessing Risk Is…
Several weeks ago I wrote an article defining the assessment (if you’ve not read it, I recommend going back to better understand the truth behind assessing risk and growing your business).
The bottom line is, Assessments are like health checkups. If the patient has URGENT issues, yet chooses to NOT take action, the doctor’s efforts are wasted. Even more, if most of that doctor’s patients never enter treatment (and are dying), he has failed.
If there are urgent issues, action is required.
And it’s your job to sell the customer on taking action – not for money, but for the livelihood of that customer’s business. With remediation in mind, your risk report is a marketing document. You goal is to sell your customer on doing something!
Amateurs Focus On Front-End Selling
When I hear, “We don’t give away the assessment”, I think to myself, “Amateur Thinking”. Front-end, is a funnelology term – It is the process of capturing a lead and ascending that lead up your value ladder.
The sales process starts with a lead magnet (some freemium offering) to attract qualified prospects (Think: Opt-in). You provide value and your buyer wants more. So they ascend over hurdles of indecision to the point of becoming a buyer.
Some prospects will drop out immediately, grabbing the free stuff and moving on (grab and dash). It’s okay…I’ll explain in a minute. Others will buy your initial offer, or perhaps engage with you in basic managed services (New Customers).
A select few will become hyper-buyers…your best customers. Hyper-buyers buy whatever you recommend because they see your value and trust you to advise them.
The front-end has to be easy (think, free or close to it). You might offer a white paper (which I seriously don’t recommend). Better choices include, special reports, quizzes, assessments, lunch & learns, etc.
Some front-end options convert quickly. Others, not so much. Signing up for your mailing list or free e-zine doesn’t make much sense these days. No one is choosing to get more spam email.
All great front-ends cost money. The idea is to spend your money with ROI in mind. The company that can spend more upfront (marketing), and still measure a strong return on the back end, wins.
Did you catch that? You’re not trying to minimize the front-end cost (or your marketing budget). You’re trying to maximize conversion and ascension. If your backend works, you can spend more upfront, beating your competition.
The assessment may be costly, but done right, it can have an extremely high ROI on the backend.
Qualified Prospects Only
Conversion (like getting people to a lunch & learn) is one thing, converting from free to fee is another. You don’t want to invite people for a free iPad…you’ll end up with a bunch of IT folks that want free gadgets (these are not buyers).
If you want qualified prospects, you won’t give your free assessment to just anyone. And that means you won’t advertise it on your webpage. Freemium means high-value and special, and should be guarded.
To qualify, you want to have a freemium offer, like an assessment, and have a clear avatar of your target prospect.
Let’s say its the SMB business owner with 25 to 250 users. Inviting that person to a lunch & learn is a qualifying step that gives you the opportunity to actually meet face to face. It’s costly, but if your conversion is high, you won’t care.
Then converting them (given the right message in your lunch & learn meeting) is easy…We’re converting over 90% right now with a security message designed to instill urgency. It leads to an assessment – we offer this analysis right there in the meeting. But our description is vague…on purpose. You see, we have one more step; it’s a phone call.
On our initial call we have the opportunity to ask them about their business and their role. If they turn out to be someone other than a qualified buyer, we make the assessment a simple over-the-phone questionnaire. If that person is a business owner, in charge of a possible qualified company, we move forward.
Our assessment engagement involves that decision maker all the way through to the deliverable. If our key contact (asset owner, I call them) drops out at any point in time, we stop the process.
Our conversions to business range from 60% to 80%, and our sales cycles averages a couple weeks to a couple of months. (But not 6 to 9 months). These contracts range from $1000 to $5000/month, with a 5 year expected lifetime value. So how much can I spend on customer acquisition (in this case a lunch & learn and assessment)? Do the math, it’s a big number.
Selling The Free One Isn’t Always Easy
But there’s still one more hurdle. Selling free assessments has it’s challenges. Free sometimes means no value. And getting that initial meeting may also prove to be a challenge.
The 60% to 80% close rate is attractive, so I know I want to sell the risk assessment. I am willing to give it away, because my ascension process works predictably well, and the ROI is there. I can afford it and the return is evident.
However, the assessment can’t be the first step in my sales process (or funnel).
Most of my clients sell assessments by using something upfront to attract clients. eBooks, followed by webinars, with an offer to assess, can work. Live lunch & learns, using a hard copy letter invitation work extremely well. And any excuse to get a meeting (such as referrals, product or quotation requests, etc.) can be turned into an assessment.
In my book, The House & the Cloud, I explain how to transition just about any meeting into an assessment (chapter 13), and then later in the book (Pg. 194 – 200) I explain how to move through the assessment in a way that engages asset owners, and leads to a sale.
The most important thing in this whole process is to track your conversion metrics. Make sure you are at least breaking even. Once you break even, start tweaking your funnel to modify and grow your ascension process.
As you perfect your conversion metrics you will be creating a long term, predictable profit machine.
©2017, David Stelzl
You Have a Website, Right?
Does it Do Anything Useful???
What I mean is this…Is your website a billboard online, or does it actually attract prospects? )Take note, I’m about to give you the secret to Internet Marketing with your website…)
Or did you just set up your site to education current customers for free? Probably not.
My guess is you wanted people to visit and buy…but they don’t. Why?
Probably because there’s nothing there to convert them. (In a minute I’ll give you a free sample you can use on your own site…)
When I visit my Amazon account online, I am probably shopping for something. Even if I search for a product, like “Northface Tent”, amazon comes up. But I always buy stuff on Amazon, so I click and see what they have.
What happens when you Google “IT Services”, or worse, “Computers?” I just tied “Computers”. 976,000,000. That’s bad. Are you in there somewhere?
The Lead Magnet Strategy Works, If You Design It Right
I won’t go into great detail here. Instead, I have a free lead magnet you can download right now. But before using it, it’s important to understand it. And if you understand it, you can create more!
My Free Lead Magnet <<< Download it Here
In fact, I was recently listening to a presentation by a guy who writes ebook marketing materials for a living. He’s written dozens of like-ebooks for a single client. In one case a dentist had 26 ebooks on the dentistry website, published under different types of dental challenges.
So if you were having problems with your teenager’s wisdom teeth, you could go to his site and read his 20 page ebook on “How to Deal With Wisdom Teeth”. (As you can imagine, he’s advertising for paid traffic, and directing different dental searches to his site).
Of course you’ll be asked to enter your name and email before downloading…If the content is good, it’s certainly worth the exchange. But expect to be marketed to once you’ve finished your download. And rightly so…if you have a toothache, you’re ready to buy!
What Topic Is Your Ideal Prospect Going to Read About Right Now? (Hint: Not Managed Services)
It could be a lot of things. If you call on CPAs for instance, they might want to know about recent trends surrounding Ransomware.
But you’ll need a title to grab their attention first. A title about Keeping your CPA Business Up and Running During Tax Season might do it!!!! Or however about…
“What Will You Do If Ransomware Hits In The Height of Tax Season?” Hmmm, can you imagine what would happen if your own CPA were hit right before filing your taxes this year? That would be bad – but worse for him than you.
Get Some Insight Before Moving Forward – This Business Building Strategy Works
Download my latest ebook and read through it. Here’s what I want you to notice (Note, I am not saying this is perfect – but it does have what The Experts recommend).
- A Title That Matters – Digital Revolution is a buzzword that will draw in a certain crowd worried about companies like Amazon (and any big-online business stealing the show).
- Punched Up Copy…this means I’ve applied the rules of copywriting using by many of the great copywriters (Gary Halbert, Victor Schwab, and John Carlton for instance). Meaning, short punchy sentence structure, cliff hangers, transitions that keep the target audience reading, white space and pictures, power words, and much more.
- There’s a Strong Call to Action…and it’s written to your customers, calling them to action now?
- And it’s a Specific Call to Action – an assessment. And justification is given to act now?
- It Starts Where They are Now – Meaning the document considers what the customer might be doing right now before launching into an offer or call…, business growth and competitive advantage (customer experience). From there the ebook takes them where you need them to go (security).
So without going line by line, put on your “Target customer hat”. I mean, think for a moment, as though you were your best customer.
Download the book, and read it.
If it draws you in, perhaps your target customer is the one I had in mind when I wrote this manifesto. If not, use the same format and feel, and write your own…but I highly recommend having someone with Copywriting skills take a look before you go to market with it…chances are you won’t catch some of the subtle marketing-science behind what I’ve done here, making it hard to recreate the magnetic affect you desire.
In any case, give it a try…this is far easier than making another 100 phone calls to people who don’t want to talk to you right now…
© 2017, David Stelzl
Just Because Your Message Is Poor Doesn’t Mean You Should be Selling Harder
What’s Your Value Proposition?
When I look at a reseller’s messaging, I ask myself, “So What?”
Is there a compelling reason to buy here? Will the CPA, doctor, lawyer, or business executive care? Or is this message designed for techies without a budget?
Great Marketing starts where someone is right now…
Then takes them to where you need them to go!
There are Five Components of an Effective Value Proposition…
But before I get to how to build one, let me share with you one memorable experience where the sales rep was clueless and wasted over 3 hours of his day trying to convince my family to buy…
The Product Guy and His Value Proposition Mismatch
Our vacuum died…It was a bad day at the Stelzl house. 6 Kids (Now 7), all very young, full of energy, and making lots of messes…But it gets worse.
You see, I grew up in an “Electrolux” family…if you’re over 45 you might remember the original Electrolux brand (the current Electrolux is not the same). It was like a cult following…
As a boy, our family bought one vacuum and we used it forever. Electrolux was the Cadillac of vacuum cleaners. These high-end cleaning machines were only sold in-home. Stores didn’t carry them. They were expensive. However, they lasted forever. In my mind there were no other options.
Jump ahead to life as a married man. Electrolux is not the same company. Having been acquired and cheapened, it’s nothing special…
I tried buying one of the newer models (a whole story in itself), but it just didn’t last like the original I knew as a boy.
With our dead vacuum in hand we needed something fast!
Skipping through all the shopping disappointments, one salesperson stands out, and that’s what I want to focus on here. He’s the Rainbow guy. A reseller of sorts selling high-end hardware.
Rainbow vacuum technology is compelling. It’s the “Water Vacuum”. You can buy one for about $2000. A refurb might be $650.
Perhaps you’ve seen Rainbow’s demo in your home at some point. My wife came across this amazing water machine while researching healthier vacuuming options. If you’ve studied this out you know that there are some nasty microbes nesting in your rugs, on your beds, and even crawling on your skin. Under a microscope everything looks like a Creature Double Feature. Yuk!
So the guy shows up…He’s the Product Guy w/ a Value Proposition
Immediately he launches into the technology. His system doesn’t use traditional filters It’s water based filtering technology. Even the smallest microscopic stuff is sucked up, defenseless against this thing.
And then he did the most amazing thing…
He took my vacuum, spread out some dirt on my rug, DISCONNECTED the vacuum hose from the machine, and vacuumed up the dirt! Did you catch that? The vacuum attachment wasn’t even connected!!!!! But the dirt still disappeared.
His message was obvious. Our the traditional vacuum was just pushing the dirt into the rug to make it look clean. Hmmm. (Pretty cool sales strategy…you have to admit).
But there was just one problem. He didn’t understand us. Here we were, sitting in the living room of a two story house, with 6 kids (we have 7 now), all quite young at the time, and going crazy.
All we could do was try to keep up with everything including homeschooling all of the kids. With all the busyness, our kids did a lot of the cleaning, but we had toys, schools supplies, and stray sock everywhere (Legos and all kinds of tiny army men all over the floor).
So, when I asked him to let me pick this thing up, I found out it weighed a TO! “How are my kids going to transport this thing up and down the stairs? It’s a daily occurrence that the vacuum is upstairs and there’s a spill in the kitchen.”
“Well,” he replied. “You might have to get it for them…”.
Then, what about emptying the water after vacuuming (something that must be done after each use)? “You just dump it in the woods,” was his answer.
Outside? Who’s going to do that? And what about when it’s snowing or freezing outside?
“Well, you might have to do that too.” Whoa…
And then the final blow, “What about all the Legos and army men that are going to get sucked up into that monstor? What do we do about that?”
“Well, you could run the water through a stainer or something.”
Are you kidding? With all kinds of fuzz, hair balls, and food particles, you expect me to be out in a rain or ice storm, straining toys out of dirty water? (Are you picturing this?)
You see the problem here. His technology is great. But for a family with a bunch of little ones, homeschooling, etc., operational efficiency is what’s important. Not than getting dust mites out of carpeting (Even if the rep things otherwise.)
What was my wife thinking? Did this sales guy have a clue?
Where were we (mentally) at the moment he came through our door? We were busy, stressed out, needing relief. The Rainbow guy probably should have greeted us, observed the chaos, and admitted, “This is not a great solution for a family like ours,” and moved on.
On the other hand, the wiser rep would have approached our home, not with cleaning technology, but with ease of use.
Operational efficiency is one of the 4 THINGS BUYERS BUY (from my book, From Vendor to Adviser). And then (knowing there are hundreds of lightweight vacuums) he might have focused on longevity, knowing we can’t afford for this thing to be out of commission for even one day with all of these kids. And from there, moving to a risk mitigation sale…
You want your kids to be healthy, right? Vacuuming keeps the allergens down so your kids will be healthier! And families that have easy-to-use vacuums, vacuum…in fact, the kids will do it all, if you let them.
Here’s a Simple Strategy for Getting Your Value Proposition Together. It has 5 Components.
Trends are like sound bites. They bring credibility. But remember, great marketing starts where someone is right now. So using the marketing Avatar I discussed a week ago, you are choosing trends and sound bites that matter to that person.
But, facts alone are NOT that interesting.
In fact, if you call on the CIO, he probably knows what’s going on in the news before you do. So, coming up with a news-bite that matter won’t be easy.
I talk more about Sound Bites and how to use them in my book, The House & the Cloud [Page 69]. READ it, DO what I’ve recommend, and people WILL see you as the expert! (That coveted TRUSTED ADVISOR status).
Instead of just quoting day-old news, take your sound bite and add some INSIGHT to it. Matthew Dixon in his book, The Challenger Customer, does a great job of explaining why insights are so powerful and how to use them in the sales process.
The bottom line , INSIGHT is what grabs a prospect’s attention. For instance, the vacuum guy might have looked at our crazy home and quoted a statistic on how infrequently the average home is vacuumed and why that creates an overabundance of health issues. (Sound Bite).
His [insight] would then be, “That’s because most vacuums are so hard to use. Only the parents can vacuum and they don’t have time. But mine is so easy, even a child can operate it. In fact, most kids think vacuuming is fun. My kids wanted for toy vacuum for Christmas. So I give him a real one and now he cleans for us.” What mom would ignore an insight like that?
2. What I See (Further Insight)
What have you observed? Your client lives in a vacuum of sorts. They don’t get out much. So they don’t get to see what you see.
Failed IT projects, IT Budget overruns, poor IT decisions, major security disasters and system downtime,… the list goes on. If you’ve been in this industry any length of time (and have been taking notes) you have wisdom you are probably take for granted.
Think of yourself as the hub or portal of IT wisdom and insight.
(And if you are not that person, become him. You have everything you need to be the go-to source for IT strategy and chances are you competition isn’t doing anything with this knowledge.)
Note: CRN, MSP White Papers, and Continuum & Kaseya data sheets
are not a substitute for personal development.
So what are you seeing? A digital transformation is taking place without regard for real security. Malware is traveling surreptitiously through a global maze of routers and switches, undetected. And is hitting companies where they can’t see it until it’s too late.
3. My Concern (Great Place to Shed a Tear)
Are you concerned for your clients? This is where the Successful sales people stand out. They care…do you?
When your client senses that you actually care about their business, and that you are in fact passionate about helping them survive, it shows. The rep who is just after another product sale ($$$$) to make quota falls short here.
So, take a moment and consider why you are in this industry. If you believe you can help people, then start focusing on their problems and helping them find lasting solutions.
If the Rainbow guy really cared about us, he would not have told me to take point on transporting his dinosaur, and cleaning out filthy water in the middle of the night, in the snow, with a strainer (YUK!) Instead, he would have admitted that his product wasn’t a good fit for our situation.
4. What We Are Doing About It (Your Lab)
What you are doing is coming up with solutions. At least I hope you are.
Anyone can sell JBOD (Just a Bunch of Disk). But what about securing data and keeping people from cybertheft?
Is your company looking at the best ways to secure a small business? Or ways of providing security intelligence to a mid-market or enterprise account?
As a sales rep, it’s your responsibility to study. When I drive or fly I am constantly listening to audiobooks, podcasts, and recorded coaching sessions. That’s right. I do everything I tell my clients to do.
I offer monthly programs to keep my clients on top through webinars, podcasts, blogs, and training programs. But I also subscribe to several programs (Which I personally fund) for my own business to keep me moving in the right direction.
College never ended for me. I’m taking new classes every day! I hope you are.
5. Specific to You
Now it’s time to apply this to the client.
Here’s what I say. “As I see your company (Fill in something like, moving into the cloud or going through a digital transformation), I believe you will be at risk if you don’t take steps to ensure (Fill in something here such as assessing your risk levels with the impact vs. likelihood graph, another concept from The House & Cloud).”
At this point you should have the client’s interest and a proposed next step. In most cases you’ll move to an assessment or discovery process to validate your concern in their situation. (Impact vs. Likelihood).
Write It, Memorize It, Use It…
Your value proposition should be powerful and well rehearsed.
Only the “Specific to you” needs to be modified. The trends/insights are updated occasionally, and the “What we’re doing” changes slowly over time as your company’s solutions evolve. Minor changes should be made as you observe your target market’s response.
Effective selling demands a strong value proposition, not more brute-force selling. If you’re staring to sound like a used car sales person, it might be you just don’t have a great message and you are trying to make up for it with manipulating sales tactics. Join us in the SVLC Insider’s Circle Facebook Group and let’s collaborate on your message for 2017!
© 2017, David Stelzl