- The market of clients who wait for their IT to stop working before they call someone is larger than the market of clients who know about managed services
- Building a relationship of trust with a client over time has value and lends itself to long-term engagement
- There’s still profit in non-fully managed service delivery (just not as much)
- It’s easier to sell a fully managed plan to an existing client than a cold prospect
The SMB IT services market has changed over the past couple of years. We saw it first in a maturing of the vendor side of the market and an injection of private equity money. We’re now seeing the same thing happening in the services provider side of things. Private equity backed MSPs are bringing professional sales and marketing teams to bear on an industry that has traditionally survived mostly on referrals. The good news is those private equity backed providers are still aimed at the upper end of the market and at customers who already understand the need for managed IT. This leaves a healthy portion of small to medium sized businesses who need more guidance than those providers are willing to employ.
Helping customers move to managed services
The typical break/fix engagement is initiated by a customer in panic mode. Resolving the issue and bringing the customer back to normal creates a natural sense of gratitude towards the provider—it’s the first step toward trust. In these circumstances, you have an opportunity to show them how proper maintenance and security can help them avoid this problem in the future. Even if you only get them to subscribe to an à la carte service such as endpoint protection or backup, you’ve moved them in the right direction by one step. Once you’re in a regular relationship through a monthly recurring revenue service, you’ll have the opportunity to reach out on a regular basis to inform and educate. These marketing actions should spark interest and a small amount of fear so they inquire into how they can further reduce the risk of downtime or worse.
If all of this sounds like work, it is. It’s a different method than the pure-play MSP, but it can be just as effective (or even more so) long term. The hardest part about this process is managing customers through the process from break/fix to fully managed. You have to spend time communicating with each client and tracking their progress to make sure they are progressing forward. And if some customers refuse to progress over time, you’ll have to decide when it’s time to remove them from your service.
We all know it’s easier to sell to an existing customer—it just takes time. On the flip side, a lot of sales and marketing expense goes into converting a cold prospect directly into a managed services contract. It’s totally worth it, but it’s expensive. The alternative is to spend time rather than dollars.
So, what do you say to a prospect looking for hourly break/fix services? You decide. There are many ways to deal with both prospects and clients. Build a system that works for you and caters to the clients you want to attract. Engage that system and improve it over time to make sure a large majority of your customers end up as fully managed.
Eric Anthony is the Head Operations Nerd at SolarWinds MSP. Before joining SolarWinds, Eric ran his own managed services provider business for over six years.
You can follow Eric on Twitter at @operations_nerd
Watch Eric’s video