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Solving the MSP Sales, Marketing & Revenue Challenge

What’s the fastest way for MSPs to address their revenue challenges? The simple answer involves marketing and sales, according to former minSHIFT CEO Paul Chisholm.

Plenty of folks can paint with broad strokes. But Chisholm is no ordinary MSP advisor. He filled in plenty of details and offered some practical revenue-generating tips during Continuum Navigate 2016 today in Boston, Mass.

First, a little background. Chisholm spent two decades in the IT services market. First, he built Colt Telecom Group into a $1 billion company. Then, he grew mindSHIFT into a $100 million MSP that Best Buy acquired in 2011. Chisholm retired shortly after that deal. He now serves on Continuum’s board, advises Synoptek, and consults with New England-based small businesses.

The Value-Add Challenge for MSPs

Much like resellers two decades ago, MSPs now face a value-add challenge, Chisholm asserts. “Technical people can build anything with enough time and enough money,” he says. “But the real question is who is going to buy it — and at what price?”

The simple first step is to set up a strategic business and financial plan –and then outperform the desired metrics in the plan. “It has to be disciplined, organized and well thought-out.”

Hockey-stick growth (up and to right) often isn’t realistic for MSPs. So build a plan that’s realistic, he asserts. Focus the plan on these five areas, he says:

  1. Protect and grow your base. It’s easier to sell to an existing customer who already knows and trust you. “Your existing base is a hot revenue lead, not a warm revenue lead,” he quipped.
  2. Invest in sales and marketing to win new customers and grow your revenue.
  3. Experiment.
  4. Measure results.
  5. Use your assets.

Your Strategic Plan: A Closer Look

To protect and grow your base, make sure you build rock-solid services that don’t suffer from ongoing “reputation” hits. He points to security and business continuity setbacks at Target (Point of Sale malware), Delta (outage) and Yahoo (500 million users hacked) as major “reputation” hits from which MSPs can learn.

In an always-on world, your job is to protect customers from those types of disaster. When there’s an outage, glitch or setback always ask “are these losses preventable?”

paul-chisholm-6Admittedly, all losses and outages are not preventable. “But your job is to minimize disruptions that cause impact to your revenue stream,” he says.

To do so, you’ll need to:

  1. Document and analyze service metrics: Look for trends month over month, quarter over quarter, year over year. As you grow and the overall volume of incidents increases, then it’s time to break the metrics down to a per-unit increases. “Continually remind your customers about the high level of service you’re delivering,” he adds.
  2. Recognize Patterns: One incident may be isolated. But if an issue pops up three times or more it’s no longer an isolated incident. Instead, it’s a pattern that you need to recognize and correct. Have a quarterly objective to eliminate a fault in a certain area. Ultimately, take your troubles from “many to few,” he says.
  3. Meet the Commitments: “Your corporate culture has to say, ‘We don’t let customers down.’: That has to be true during every interaction – not ust on the install day.
  4. Understand Price Trends. “IT is NOT a business where prices rise. If you don’t change a price proactively you could lose the customer.” Don’t react to every price change. Instead, study and understand the differences in products and pricing, and then make appropriate business decisions for customers.
  5. Bundle Offerings: “It’s harder for competitors to figure out price of each component. The more you bundle, the more difficult it is for a customer to reach a decision to leave you.”
  6. Build Multiple Relationships within a Customer Account: If your first contact leaves or moves to a new position, the extra relationships will come in handy as you attempt to retain the business. Those relationships, in turn, can act as an advocate for your services.
  7. Listen: Be a good listener in sales. The more you listen the more you can be proactive.

Selling and Relationships

Here, lean heavily on cross-sell campaigns and focus on one quarterly campaign that drives one specific offering. Offer the sales team a specific quarterly incentive to move that product or service.

Embrace a virtual CIO (VCIO) mindset. This sets the technical stage for your company to lead a customer to a higher-level of function. But don’t make the mistake of having two or three VCIOs advising the same customer with slightly different advice.

Forget pipelines and complex deal status metrics. Instead, measure how many customers you are adding each month, each quarter and each year. If you want to win three new customers per month, make sure you’ve got 10 really good potential engagements to pursue that month.

During M&A buyout discussions, several MSPs made “red flag” sales statements that made Chisholm move on to other targets. They included:

  • “We depend entirely on referrals”
  • “Sales are too costly.”
  • “I have enough business. I’m comfortable for now.”
  • “We tried that before.”

As a CEO, he says, you should never be comfortable. You should always worry – particularly about sales.

Sales and Marketing

You have to make a commitment to succeed in sales and marketing. There’s no magic formula. But “Zero” (i.e., doing nothing) is not an option. A Zero approach means you’ll be standing at a cliff at some point, he asserts.

On the sales front, always remember:

  • The “owner” sales model doesn’t scale. “It’s not predictable because as CEO you have multiple priorities every day.”
  • You need dedicated professional resources because IT is too critical for amateurs to sell.
  • It doesn’t take 20 sales people to hit a specific market. Hire the right expert in the right target sector.

On the marketing front, always remember:

  • Effective branding implies strength and longevity.
  • Awareness is a must in an online world
  • Marketing sets the stage for sales effectiveness.
  • Marketing broadcasts your assets.
  • It takes at least six months of patience to see a marketing outcome.

“The only good sale is a sale that lasts,” he says. So once you win a customer’s business, the customer experience is especially important during the first 120 days. That’s when customers are especially sensitive and reacting to initial engagement results.

How to Target Customer Segments

Chisholm doesn’t like to target particularly small businesses. The vast majority of companies with 25 or fewer employees ultimately go out of business. He prefers to target businesses with 25 to about 300 employees. mindSHIFT’s best customers were in the 100- to 300-seat range.

Not sure where to start? “Look at the customers you’ve won in the past year and find out why you won them,” he says.

Sales is a process that must happen daily. MSPs must eliminate the hurdles that slow a customer’s buying decision, he says. “A sales process comes down to one word: Discipline.”

Moreover, MSPs should experiment and use their unique assets to win business. Those assets include:

  • Locality
  • Peace of mind: “You are a security protection for the customer,” he says. “You have to sell that trust and respect factor.”

Here endeth the keynote recap.

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1 Comment

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    George Mach:

    Excellent write up! This message is clear and rings true!

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