The recurring revenue model on which managed services business is based depends on the constant addition of customers to drive margin and sales.
In theory, it’s simple. You need to:
- Sell existing services to new customers
- Sell additional services to existing customers
- Develop new services to sell to both new and existing customers
But while it sounds easy, achieving this can be much more difficult – particularly when it comes to bringing new customers on board.
Increasing the volume of net new customers over the next two years was cited as a ‘major priority’ by almost two-thirds of respondents to CompTIA’s 5th Annual Trends in Managed Services. The 6th Annual State of the Channel survey similarly reported expectations of higher sales coming from new business than from existing customers (46% versus 39%) – a reversal of the trend seen over the previous two years.
That’s not to say that existing customers will be neglected: expanding business with the existing base is reported as a ‘major priority’ for 58% MSPs, while expanding into new, emerging services is cited by 57%, according to the CompTIA 5th Annual Trends survey.
If we accept that this feedback reflects the general mood, new business selling is going to keep many MSPs busy this year. This might be a daunting prospect for some: it’s not easy to engage with companies who have no direct experience of your services – and may not even have heard of your business.
CompTIA notes that many channel partners, especially MSPs and Cloud-focused firms are redoubling their marketing efforts, with some 33% creating incentives to drive sales in new business areas and 31% increasing their marketing budget.
Ticking over or scaling up?
Your current lead generation activities, combined with regular referrals from industry partners and happy customers may be keeping your sales team ticking over quite nicely.
But is ‘ticking over’ enough? Are you happy just to take on a couple of new clients every few months – or is your goal to scale up for volume growth?
The further along the growth spectrum your ambitions lie, the deeper the sales funnel needed to deliver new signed contracts. This means investing in an effective lead generation process; one that has been carefully planned, properly resourced and is supported by a range of marketing activities.
It also means asking some basic questions as a starting point.
Is your sales and marketing function properly resourced?
You may be struggling with lead generation because you don’t have the right sales resources in place. Perhaps you are basically the sales team, selling alongside your other responsibilities. Or the team may be drawn from your technicians who know technology and your services inside out – but can they communicate the business benefits of these to prospects? Many can’t. Different skills are needed. And selling is not a part-time activity.
Lead generation should be part of a wider process, rather than the result of a series of isolated campaigns – with marketing activities driving the initial contact and engagement, nurturing interest and ideally also pre-qualifying leads prior to your sales people making contact.
As an MSP you understand the importance of being process driven – but you will also be aware that putting in place a successful lead generation process can’t be done overnight. You need to make the time to build up a sales and marketing engine over time that will generate leads and feed the pipeline. And these processes should include a range of marketing activities: website, direct mailing, event attendance/organisation, thought leadership pieces, customer testimonials and so on.
If your business is too small to justify a fully staffed marketing department – or a sizeable marketing budget, another option is to outsource key marketing and sales support activities to one of the many specialist agencies. We will be involving some of these in our blog series
How many leads do you need to feed the sales funnel?
You may already have a sales and marketing programme in place that is capable of feeding your sales funnel with qualified leads and engaged prospects.
But do you know the size of the task ahead? Have you worked out your lead generation plan – in other words, how many leads do you need to pour into the funnel to produce the required number of signed contracts at the bottom that will meet your monthly revenue targets?
There’s an easy process for calculating this figure:
1. Establish your monthly revenue requirements (MRR) goal.
2. Work out your average contract size:
- This will vary across MSPs, but for this example, let’s assume your typical monthly contract is worth around $2,000.
3. Calculate the number of new contracts needed per quarter to meet MRR.
4. Correlate your ratio of leads to closed deals and use the resulting figure to calculate the number of leads necessary to deliver your MRR goal:
- For example, if you need to add five new customers each quarter and on average you close one deal for every ten prospects in your pipeline, you’ll need a starting list of 50 leads.
And don’t forget to continually review how you are doing in terms of achieving the goals you have set. Various software packages are available to help track progress– or you can just use a spreadsheet, if your prospect/client base is relatively small.
Review the marketing activities you are using to generate leads too – and if they are not delivering the volume you need, don’t be afraid to change tactics and try a different approach. Flexible is good.
Is your sales team receiving qualified leads?
Sales people are expensive resources. You don’t want them to waste time in following up a lead from a company which is not a good fit for your services. It makes sense then to do as much qualification as possible within the marketing process.
Successful qualification relies on you having a clear idea of the type of company most likely to buy your services: typical size, vertical market, geographical location, industry/technology affiliations – or whatever other attributes make up the ideal profile for you.
It is equally important to identify the different buying ‘personas’ who will be involved in any decision to sign contracts. Who calls the shots in other words? The owner of the company in the case of an SMB? Or a combination of IT and business managers/directors for a larger company?
Much of the information needed for this kind of qualification can be collected during early marketing contacts: think of the company and job details that you can collect when giving access to gated resources for example. Don’t overdo it though – you could lose a prospect if you put them through an inquisition just to download a case study!
Is your data collection process GDPR-proof?
Qualification through information collection is extremely useful – but don’t forget the legal implications.
The EU General Data Protection Regulation (GDPR) comes into force in 2018 and will introduce more stringent requirements for digital and email marketing – specifically the way prospect/customer information can be shared across different marketing/sales activities.
Businesses will have to demonstrate that ‘explicit consent’ has been given by individuals for each activity in which they are involved. For example, when someone provides personal details to download a whitepaper, this will no longer be taken as automatic agreement to receiving a follow-up sales call – or to being targeted for other types of marketing activities.
The new law will force organisations to remodel their marketing and sales processes to accommodate these new changes – and to provide transparency so compliance can be demonstrated.
The funds/resources necessary to do this should be built into your marketing budget.
Are you using the full range of marketing techniques to support lead generation?
The internet has opened up a whole new range of possibilities for inbound marketing activities that will bring in leads by drawing possible customers to your company – as opposed to the more traditional outbound marketing methods that rely on pushing information to a marketing list – and hoping that a percentage of recipients will respond.
A combination of inbound and outbound marketing activities is necessary for effective lead generation and conversion.
One of our MSP partners recently signed a contract with a new customer and when he looked at the sales process in detail, he noted there had been some 30 marketing ‘touches’ over the previous nine months. This is the kind of activity needed. Your customer won’t receive a mailing or sales call and decide to sign up on the spot.
An informative, user-friendly web site; the production of thought pieces on customer pain points or industry issues; customer testimonials; an active presence in social media; attendance at industry events; and other networking activities can persuade prospects to jump into your lead generation funnel voluntarily.
And a further benefit is that these activities contribute to a background buzz about your company, helping to build an awareness and name recognition that can make cold-calling/cold-mailing campaigns that much easier.
How many of these activities are currently part of your lead generation process?
MSPs are busy people. Sales and marketing is rarely at the top of the ‘to do’ list. But if you are looking for real business growth, you need to make the time to put some serious lead generation processes in place – if not by staffing up with the appropriate skills, then by outsourcing key activities to a specialist.
If you already know where your sales leads will be coming from this year – fantastic and I wish you every success.
If you are less confident, we may be able to help over the next few weeks with a series of blogs focussing on the sales and marketing essentials required to drive lead generation/conversion activities.
These will include:
- Know your ideal customer profile (market segmentation)
- Content marketing
- Asking for the business (sales conversion)
- Incentivising and compensating your team
- Using social media
- Where tools and third parties can help
If you would like to free up more of your time to focus on business development, let us take on the strain of delivering your Service Desk and NOC Services.
To find out more…….
Click here to read our latest success stories.
Listen to our MSP Trailblazer series of webinars for the inside story on how four key industry MSPs grew their businesses
Episode 1 – Chris Ward (Vermont Systems) – View Webinar
Episode 2 – Eric Rockwell (Centrex IT) – View Webinar
Episode 3 – Darren Strong (Concise Technology) – View Webinar
Episode 4 – Steve Ross (Shackleton) – View Webinar
Contact us to see how we can free up your time for sales….
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 CompTIA: 5th Annual Trends in Managed Services
 CompTIA’s 6th Annual State of the Channel