As a managed services provider (MSP), you understand the benefits of the recurring revenue stream model. It provides predictable income, saves time and money, improves service levels, and boosts profitability, just to name a few benefits. But making the business case to your customers--especially those who’ve historically been on the “break/fix” invoicing model--may take a little more explaining.
Instead of going for the hard sell and walking the customer through the math, step back and see what more you can do on the back end to help your customers better understand your business model and services. Here are a few preliminary steps to consider:
1. Assess your service offerings.
Start by taking a closer look at your business model to ensure that you offer a managed services contract that will meet the needs of your break-fix clients. You should take time to analyze your remaining break-fix accounts and look for commonalities that might be holding them back from making the transition to managed services. Ask yourself: Is there something missing from your current services offering? Once you’ve determined the reason that clients aren’t making the switch to managed services, you can then move forward in creating a specific package that will meet their needs. It might be as simple as creating a basic package that can be used to increase their comfort level with managed services before moving them up to a more robust offering.
2. Educate your client.
Get your brand out there, and demonstrate success through a campaign, an event or social media. Build the business case around some of your most successful clients and share their stories. Leverage industry research and data to demonstrate how managed services are helping organizations of all sizes streamline their IT operations and grow their businesses.
3. Take a closer look together.
During your standing meeting or quarterly business review, show the client where the service is struggling. When you can successfully demonstrate the limitations of the break-fix relationship to your clients, you will close more managed services business. For example, remind clients that when they are in a break-fix relationship, there is no guarantee that their issue will be resolved as quickly as they would like. With a managed services contract, in contrast, the MSP is held accountable to a service-level agreement (SLA) that requires addressing any problems clients are experiencing within a certain agreed-upon period of time. Having this guarantee in writing reassures clients that there will always be someone on your team who is ready and willing to assist them.
These three tactics should pave the way for a healthy discussion on why managed services makes sense, but don’t assume that customers will jump right on board. Be prepared to counter objections. You can help your sales team become more effective in making the case for managed services by creating a cheat sheet that lists common arguments against managed services, along with the corresponding reasons why the client should make the switch.
Another option is to create a list of services, along with the costs of those services over time. Then, when clients bring up the cost, ask them to consider how much they are currently spending on repair or emergency services, including the hourly fee for the technician, the cost of new hardware installed and all other related costs. Chances are good that when clients compare what they are currently spending on break-fix to the cost of your managed services, they will see the value of transitioning to a contract.
Regardless of whether you are just starting to sell managed services or transitioning the last of your break-fix customers, when you engage with your clients using these tactics, you can close more business and increase your recurring revenues. What’s more, the cost savings and higher level of service your clients experience when their IT environments are proactively managed will increase their satisfaction, and you will continue to see value through the increased productivity of your staff. And, last but not least, the recurring revenue streams driven by managed services will help to increase the sustainability of your business.
Rob Merklinger is vice president of sales at Intronis, a Boston-based provider of world-class backup and data protection solutions for the IT channel. He is an experienced software sales leader with a proven track record for driving success and developing sales talent.