Enlist Your Company In MSP Boot Camp
By Jay McCall
This MSP turned to professional coaching to improve its business and realized 30% revenue growth last year as a result.
Most VARs and MSPs know what they have to do to be successful — the real challenge lies in the execution of those tasks. Just like quitting a bad habit or losing that last 10 pounds, change is hard. Valiant Technology is an MSP that understands this concept well. Founded in 2002 by Georg Dauterman, president and CIO; Thomas Clancy Jr., partner and manager of sales and operations; and Gene McMurray, partner and project manager, the company became an MSP in 2007 and experienced moderate growth each year, but not at a pace the owners felt reflected its true potential.
A few months after Dauterman signed up for a core strength and conditioning program called CrossFit, he dragged Clancy along to test his mettle. During the workout routine, a lightbulb went off in Clancy’s mind. He started to see a connection between the accountability and results he was experiencing with his fitness goals and what his company was missing. Over the next few months, they talked McMurray (the last partner) into joining the CrossFit program, and eventually all three were in agreement with Clancy’s idea. The idea became more formalized after the trio read an article in the New Yorker that talked about coaching. “The story highlighted how one of the top surgeons in the country hired his medical school professor to evaluate and critique his surgeries, and in doing so the surgeon reduced the number of complications following surgery from eight per year down to one,” Clancy says. After considering a variety of options, the three founders hired their former sales trainer, Bob Heiss of Sales and Revenue, a local Sandler Sales System franchisee; plus, they enrolled in an industry-focused training and development program — Gary Pica’s TruMethods — and became active in the Autotask user community.
For several months in a row, Heiss met with Valiant’s three owners and two managers weekly for one to two hours, and he evaluated the company’s business processes and goals. Clancy says the trainer uses a simple, four-step process when engaging with the leadership team. “Each session with our coach entails him asking what we want to accomplish, when we want to accomplish it, what additional resources we need to hit our goal, and when he can follow up to check on our process.” Clancy says this simple formula has been instrumental at revealing several areas of improvement the MSP needed to make, including:
1. More frequent rate increases.
One bad habit the MSP had gotten into was only reviewing its customers’ rates quarterly. What inevitably happened is that customers would add new services, but wouldn’t start paying for those services until as much as three months later. Not only was this oversight leading to a significant amount of lost revenue, it actually created unnecessary objections that could have otherwise been avoided. “When customers add multiple new services over several months and then get hit with a big fee increase all at once, it’s much more likely to cause them to balk at the price increase and want to negotiate a lower price,” says Clancy. “It’s much better to apply the frog-andkettle analogy of slowly raising the temperature, which leads to far fewer price objections.”
2. Keep executives out of the trenches.
One of the most difficult lessons small businesses eventually have to face is the balance of working on the business versus in the business. Through the help of its sales coach, Clancy and the other business owners realized that each one of them was spending too much time troubleshooting customer problems. “It’s a common temptation for IT-savvy business owners to ignore their responsibilities as executives by working alongside their technicians and helping out with some of the day-to-day customer service tasks,” says Clancy. “Even though it may look like you’re being humble and a good team player on the surface, it can hinder the company’s growth if left unchecked.”
3. Reduce ticket backlog times.
MSPs do a good job of keeping their customers’ computers and servers running smoothly, but when it comes to managing the important details pertaining to their own businesses, it can be a whole other matter. “It’s easy to fall into the rut of just looking at the day-to-day tasks and failing to look at the bigger picture,” says Clancy. “Through our personal sales coach and other training, we realized that instead of focusing only on our daily tickets, we needed to also be looking at the previous 12 months’ worth of tickets to spot any trends.”
Within a few weeks of looking at the ticket reports, the MSP noticed a disturbing trend: Its service resolution times were getting steadily longer, and the number of backlogged tickets was growing. After interviewing its service technicians and asking for candid feedback, the MSP discovered its engineers had gotten into the habit of hoarding tickets. “This happens when an engineer takes a help desk call and places the ticket in his own personal queue within our Autotask PSA [professional services automation] systems,” says Clancy. “Then, when that same customer calls back — either with another problem or to follow up on the original problem — another engineer may answer the call, but won’t actually resolve the problem because it’s now assigned to someone else. Instead, the second engineer ends up taking notes for the first engineer to follow up, which results in extra steps to resolve tasks and longer resolution times.” By addressing this bad habit with its engineers, Valiant was able to correct the problem and in less than six months reduced its monthly ticket backlog from 250+ to less than 100.
4. Sell backup by focusing on recovery.
One of the lessons Valiant learned from its training with TruMethods was that the best way to sell backup, which is one of the most profitable managed services, is by not focusing so much on the backup technology and process, but instead focusing on the time it takes to recover clients’ data. “Backup is pretty much all the same — it’s just about duplicating data,” says Clancy. “Backup becomes valuable only when a client’s server crashes and they need to restore their data.”
What TruMethods helped Valiant understand is that selling backup is like selling chocolate cake. “You can buy a cake from a bakery, or you can buy each ingredient separately from the grocery store,” says Clancy. “The most successful VARs and MSPs are the ones who figure out how to sell customers the chocolate cake instead of the ingredients. The reseller, like the baker, needs to establish a relationship with the customer and build up trust in its expertise.”
The consultation process is the place where Valiant wins its customers’ trust. For example, whether they use tape or the latest disk-to-disk solution to back up their data, Valiant talks with them about their data recovery times. Before it could have this conversation, the MSP tested various recovery situations in its test lab. “We tested a variety of file-based and image-based backup solutions, including remote-based backups and local backups, and we looked at all the factors that go into restoring them such as bandwidth, conversion time, processor speed, and RAM,” says Clancy.
The backup solution Valiant most often recommends to clients is a Dell AppAssure image-based backup with a virtualized backup copy to Valiant’s data center. “This provides customers with a local recovery time of less than an hour, plus it gives them extra protection in the event of a natural disaster like Hurricane Sandy, which affected many of our customers last year,” he says. All of Valiant’s customers’ data was protected from the destruction caused by the hurricane, although one customer learned the hard way about recovery time. “They had chosen to use a cloud-based file backup solution as their only means of backing up their data,” recalls Clancy. “Restoring each file and building a virtual machine for the customer was a three-day process. The upside was that the client purchased an image-based backup system from us shortly thereafter, and we’ve been able to use that example to convince many other clients to go with our recommended BDR [backup and disaster recovery] solution.” Since Hurricane Sandy, BDR has become one of Valiant Technology’s largest sources of growth.
New Growth Opportunities
In addition to migrating more of its customers onto its BDR platform, the MSP is focused on expanding into new markets. “We are opening our first satellite office in Long Island later this year,” he says. “We plan to learn all the hard lessons of managing a second location — mostly remotely — and learning from our mistakes along the way.” Even though the new location will have a slightly different focus than its Manhattan-based counterpart — serving more traditional professional services markets such as accounting, finance, legal, and healthcare — one thing that will be very similar is its commitment to coaching. “The coaching program was designed from the start to teach us the lessons of accountability, being reliable, and staying focused on our mission,” says Clancy. “When we open our Long Island facility, we will run it with those principles in its DNA, rather than as a reprogramming as it is for us in Manhattan. The Long Island branch will start from scratch with a solid help desk behind it and with a client management method that’s been redefined over a decade servicing New York City’s most demanding community of creative geniuses.”