Magazine Article | June 14, 2013

'As A Service' Notes & Best Practices For Retail VARs

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By Mike Monocello, editor-in-chief, Business Solutions magazine
Follow Me On Twitter @monocello

Don’t make the same mistakes others before you have. Leverage every resource possible to shorten your learning cycle and avoid common mistakes.

If you’ve made or are thinking about making the business model transition to a subscription/”as a Service” model, you’re probably going to need help. Some VARs may have the internal resources to train their sales and technical staff on how to sell managed services, but many will need to seek outside help from a vendor/distributor partner or association. Embrace the MSP (managed services provider) communities out there. Just as the RSPA has been educating you on retail trends for years, there are many organizations and vendors that have been doing the same in the managed services space for years. They have tons of great educational content.

Additionally, the MSP community is very open and willing to share tales of their successes and failures to help others learn. Indeed, with all the experience out there gained from MSPs in the general IT space, why not lean on them for support? Following are just a few tips and best practices from some people who’ve been there, seen that.

On Proper Pricing
“Price too high, your clients won’t bite. Too low, you lose out on easy profit. There’s no magic number — it all depends on your costs and the price your clients are willing to pay,” says Julianne Rose, marketing manager, ConnectWise. “The key is not to get it right from day one, but to evaluate your agreement pricing every six months by comparing your price against the cost of maintaining each client. If supporting your client costs more than your original estimates, don’t be afraid to raise their rates when their contract is up. If you have enough data to make the analysis, you have enough evidence to make a case for your price increase without scaring them off.”

On Customer Expectations
“Some clients think that a monthly fee entitles them to unlimited service and on-site presence,” says Randolph D. Carnegie, Ken-Kor Consulting. “One of my first MSP clients thought the monthly fee his firm was paying meant he could call me any time of the day or night he had an issue, and it was included. It was a small firm owned by a man who was an empty nester and had not yet developed any interests outside of work. He would call early or late any weekend day and thought this was part of the service. Most of the calls had to do with how to do things in Microsoft Word or Excel. By increasing the fee and managing expectations, I was able to devote more time to the other aspects of the business.”

On Showing Value
“Technology is a means to an end,” explains Rob Merklinger, VP of sales, Intronis. “The goal is solving a business problem for your customer, making their lives easier, making them more successful, etc. For that reason, you cannot sell services like you did a piece of hardware years ago. To charge a monthly subscription fee for whatever you’re offering, make sure you know the business value that you’re providing, and make sure your customers are aware of what you’re providing.” Plus, sell on technology alone, and you create a line item that can be struck. Sell a total solution that solves a problem, and your customers will happily pay for such a service. Again, they don’t care how it’s done or what’s doing it; they just want their needs addressed.

On Getting Your Team On Board, Up To Speed
Get buy-in from the key people within your organization. “If your technicians, sales reps, and COO are not on the same page, the chances of running a successful managed services practice decrease dramatically,” warns Marco LaVecchia, director of North American sales for N-able. The best way to make this happen is to take a phased approach to educating your workforce. “Help your staff to understand the ‘what, why, and how’ of your managed services plan,” advises Matt Nachtrab, CEO of LabTech. “It’s also important to define each person’s new role and responsibility and be committed to building managed services specialists through ongoing education and training.”

On Sales & Marketing
“New services providers are often founded by technical people, not salespeople,” says James Foxall, president/ CEO, Tigerpaw Software. “New MSPs need to quickly acquire the skills to market their services, as well as how to present their managed services offering and close new business.”

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