Build A Stronger Managed Services Offering Now. Here’s How

Neal Bradbury, Barracuda SVP
Author: Neal Bradbury

According to a recent report from by The 2112 Group and Barracuda MSP, 64 percent of the channel partners surveyed report that services sold on a recurring revenue basis are their best growth drivers. For those new to selling managed services, however, it can sometimes be difficult to know where to start. Based on years of experience interacting with companies that have successfully made the move — and hearing the lessons they’ve learned along the way — here are three tips to keep in mind as you build or improve your service offering.

1. Sell Bundled Services

Some MSPs believe the best way to sell services is to present clients with a list and allow them to choose what they want. The problem with offering services on an à la carte basis is that it allows clients to dictate best practices, which almost always leads to gaps in protection. This is a lose-lose situation because not only will you earn less money, but when something goes wrong with your client’s network or computers, the blame will still fall on your company.

Rather than thinking about services as a list of separate line items, consider how they complement one another. For example, managed backup is a foundational service every MSP should offer, regardless of vertical market focus or size of customer served. Managed backup can also serve as a gateway to other services, including managed security services such as managed spam filtering, firewall and patch updates. When managed backup and managed security services are sold together, they deliver greater value to the customer, than when sold as standalone products.

2. Create Service Tiers

Not every customer has the exact same IT needs, though, and trying to sell a one-size-fits-all service bundle is a recipe for failure. On the other hand, if you create too many options, it dilutes the value of having bundles in the first place. Most MSPs resolve this challenge by creating three or four tiers of bundled offerings, such as bronze, silver, and gold.

The bronze tier should include remote monitoring and management (RMM), a NOC (network operation center), help desk, antivirus, anti-malware, managed backup, an email protection suite, and a basic firewall. On-site support is typically not included with a basic offering.

The next level up, silver, would entail swapping out the basic firewall with a next-generation firewall (NGFW) to add more security layers to the customer’s network, such as an integrated signature-based intrusion prevention system (IPS), which specifies which kinds of attacks to scan for and report on. An NGFW also allows for the identification of applications using predefined application signatures, payload analyses, and header inspection, as well as enforcement of network security policies at the application level.

On-site hours often come into play at the silver tier. Also, some MSPs try to provide more attractive SLAs (service level agreements) to silver and gold customers, such as shorter data recovery times and faster support response times. If you’re going to take this route, however, keep in mind that it can be difficult to manage. Plus, when a customer calls you with an emergency, are you really going to take the time to determine what tier they are before dispatching a technician?

Your gold level could include more on-site service hours per month along with the option for the customer to roll over any unused labor hours. Additionally, you could offer advanced security services such as security policy management, incident response and remediation, and/or security information and event management (SIEM).

3. Anticipate and Overcome Objections

Despite your best efforts to create bundles that meet all clients’ needs, you’re going to run into objections. A common objection is that a client will ask to manage its own backups and pay a reduced price for the other services in your bundle. Some MSPs take a hard all-or-nothing approach and walk away from the deal rather than making exceptions. Another approach is to have the client sign a letter stating they acknowledge they aren’t following best practices and assume all responsibilities. After seeing the letter, most clients will actually sign up to have you manage their backups as they begin to better understand the risk. But, in cases where the client still insists on managing their own backups, this approach gives you some leverage when their backup fails, for instance, so they can’t place the blame on your company.

The best MSPs use objections as opportunities to educate prospects about why a managed backup service, for example, is a much better value than unmanaged backup. There are many situations that cause an unmanaged backup to stop working, ranging from an operating system update to a random system glitch. The only way the client can ensure backups are working is to pay an employee to manage it. Even if they do that, there’s still the issue of recovery. Specifically, how long would it take the client to get its data back in the event of a computer or server failure? While they’re waiting for their systems to come back online, how many additional costs would they incur in lost productivity?

Taking the time to help clients understand real-world scenarios can greatly improve your chances of overcoming objections. If a prospect doesn’t want to hear your advice or continues to view IT as a “necessary evil,” it’s a sign that the prospect isn’t a good fit for managed services — and likely not to a good fit to become a client either.

Neal Bradbury is Senior Director of Business Development for Barracuda MSP. Read more Barracuda MSP blogs here.