Selling Managed Services
Yesterday, we took our one-year-old daughter for a day out to a local fruit farm and tried to go to their play complex. I asked ‘how much to take our kid in’?
‘We charge £4.25 per adult’ said the attendant, I said, ‘Sorry, did you say £4.25 per adult’, making a quick calculation that it would cost me and my partner £8.50 to take our one-year-old child in (who was just about due for a sleep).
Consequently, it was somewhat likely she’d be tired after 20 minutes and the money would be wasted.
I was really irritated by their pricing policy. So much so that I filled in a complaint form and stuck it in the box. Then I ‘tweeted’ it and because my ‘tweets’ appear on my Facebook, twenty or so of my friends responded with other negative comments about their pricing. And because I’ve got a bunch of friends on Facebook I presume many of them read it. And, no doubt the friends of my friends read their comments also.
Anyway, I was lying awake that night trying to work out the implications of that pricing strategy, when I got round to thinking about my own industry – IT guys.
In general, nobody has a problem paying in return for some value, so I jumped out of bed and wrote down all the things my customers paid me for (when I was an IT guy).
- Fixing IT problems fast.
- Doing minor changes before they were required, eg: new starts, etc
- Uptime! Keeping things working as they should be, almost all the time.
- Keeping capital investment at bay by excellent pro-active maintenance.
- If it was needed, advising on, offering to purchase and supply new equipment and installing it with the minimum of fuss and inconvenience.
- In the case of third party software problems – at least ‘owning the problem’ until it was fixed (even if I couldn’t fix it myself).
- Giving good long term IT advice, reducing costs, increasing their return on their IT investment, adding to scalability and efficiency of my customers business.
So, how I made my money when I was an IT guy was… I charged them by the hour which made it worth my while to fix things slowly and it rewarded me for not getting things right first time. I also liked it when things went faulty because it was extra hours work and maybe if I couldn’t fix it, I could sell them new equipment and earn money on the kit and installation. I installed things during the working day because I played football at night and baulked at doing other people’s dirty work for them- ‘it’s not the server, it’s the ISP, you need to speak to them.’
Actually, I’m only joking, but I know plenty who do. And as you see, the way their IT business is set up to earn its money is diametrically opposed to what their customer wants.
In order to align the IT guy’s needs to be paid and their customers’ needs better – I’d say that charging a fixed fee (selling Managed Services) for doing the above is a somewhat suitable method. I’d say there are better. How about a fixed monthly rate which more or less covers the costs of the IT guy for doing the work and the rest as rewards for meeting and exceeding the things your customer really want? (Beware this will involve measuring them and some investment in systems).
Essentially, it should really pay for you to truly understand the needs of your customers and if you can measure and deliver what they want,
(a) they’ll like you a lot and tell their friends
(b) they’ll understand why you’re good versus your competitors
(c) and hopefully they might even agree to some extra incentives based on your performance against their needs
(d) and most customers I know want the same thing – so its repeatable/scalable and unique.
So, going back to the fruit farm example: My needs were:
(a) my daughter has a lot of fun and grows confident playing with new things and new environments
(b) Our family leaves happy and looking forward to our next visit
(c) We’d probably tell our friends how great it was and perhaps we’d even consider signing up for their season ticket.
So, what would have been the best pricing for me?
‘Hey, its two pounds to get in and our ‘smile-ometer’ and ‘shriek-ometer’ will measure how much your kid likes it and we’ll charge £1 for every 15 minutes of happiness’. Now, that might be farfetched with regard to a kids play-complex (or is it?) but it’s certainly not difficult in the world of IT (especially given that GFI MAX is to some extent already the IT ‘shriek-ometer’).