You’re considering adding Managed Services to your existing offering, capitalizing on managed recurring revenue in a market that plays well with your existing core competencies. Before you jump into Managed Services, make sure you have these ten elements lined up:
- Your Audience:
Are you planning to offer Managed Services to your existing base or are you going after a brand new market? If you’re going after your current audience, will Managed Services cannibalize or complement your current offering? If you’re going after a brand new market, how will their buying behaviors differ from what you’re used to? Your sales people are likely going to have to make a major shift in process when selling recurring services over projects. Will an additional shift in audience be too much for them to be successful?
- Your Offering:
Speaking of salespeople, it is extremely important that they know exactly what they should be selling and have no room to make things up. We keep our managed service offering very simple, and that’s what we recommend for you, as well. Internally, we call these our platinum and plastic offerings. Platinum incorporates every all-you-can eat service you can think of, including hardware and parts replacements. Plastic includes everything that you can do remotely, with an hourly charge for on-site work. Forget about the Gold, Silver, Bronze, and Lead models. Just stick with Platinum and Plastic, and you’ll thank yourself in terms of ease of sale and service as you grow.
- Your Process:
Like we said, the recurring sale is very different than a project sale. You can’t go in there, ask a couple generic questions, and then send over a quote, focused on line items, equipment costs, and hourly estimates. The Managed Services sales process is much more involved, and if you want to be successful about 80% of the time, you can’t skip any steps.
- Quotas/Commissions: Salespeople sell what they’re most comfortable with, likely because it brings them the most success and boosts their paychecks. If you want your salespeople to begin selling Managed Services, you need to set clear expectations, including realistic quotas and commission structures, specifically for the Managed Services offering (we don’t recommend simple lump numbers). For example, we quota our fulltime salespeople to generate between $2,000 and $4,000 in net new managed recurring revenue each and every month. Determine what makes the most sense based on expectations for your other services, bearing in mind that you need to reward what you want them to do, not expect them to jump onboard the new shiny penny.
- Training Program:
In addition to quotas and commissions, make sure that you’re adequately training your salespeople. I’m not just talking about products and technical training, here, as some of our most successful sales reps have come from industries far outside of IT. Instead, you need to train them on the process, shifting their mindset from the project sale to the recurring revenue sale. As you go through training, watch your salespeople carefully. They may be able to hack it in Managed Services, they may not. It’s easier to recognize this process early, fire them, and bring someone new on, than fight with them for 6-9 months without them making any sales.
- Eat your own Dog Food:
You need to make yourself an example before you start implementing the service for others. That means you need to operate your internal environment as if you were your very first Managed Service client down to how your staff inputs tickets, sticking to strict SLAs, and measuring the profitability of the “agreement”. Treat your own company as a true testament to your Managed Services offering, working out all the kinks before you go live with anyone else.
- Business tools:
There are two tools that are critical to your Managed Services success, an RMM (remote monitoring and management) and a PSA (professional services automation). Your RMM will allow you to implement an efficient, automated service offering from the beginning, while your PSA will keep your organized from a ticketing, project, and sales tracking perspective. If you have to pick between these two tools to save money out of the gate, pick the RMM and add a PSA as quickly as you can thereafter.
- Service Structure:
Are you converting existing team members to run this new division, are you bringing a whole new stack of people onboard, or are you planning to shoulder Managed Services yourself until the offering takes off? Regardless of your plan, make sure you lay out clear job descriptions, career paths, and standard operating procedures. This will create the foundation for service efficiency, accountability, and profitability.
- Getting the Word Out:
Far too many people rely on an, “if you build it, they will come” mentality. In all reality, people are not thinking about you as much as you’re thinking about you. You have to tell them what’s going on in order to get them interested. This means making marketing announcements, going out to visit big clients, asking for referrals, updating the website, working with the media, and hosting events. Also, remember, it’s not good enough to do this once or twice. You need to do a major marketing push to get this new division off the ground. People are familiar with your existing brand, now you need to show them what’s next.
- Go or No-Go Date:
Give Managed Services a fair shake, but don’t just persevere with the offering forever if it’s not making the strides you thought it would. Major caveat to this, though, a fair shot means following each of the above items to a tee, ensuring that you’re setting yourself up for success. If you’ve done that, and the offering hasn’t grown or become profitable within 9-12 months, it’s time to either pull the plug or make a major change! Set your go or no-go date from the beginning, give clear deadlines to accomplish everything talked about above, and ensure that you’re giving yourself the best shot to succeed at Managed Services.
Address these ten items, and you’ll be ready to embrace Managed Services.