Price of Admission Calculating Customer Acquisition Cost CompTIA

Price of Admission: Calculating Customer Acquisition Cost, CompTIA

The Doyle Report: Revenue Falls at Microsoft and IBM, “Crunchy Bits” from CompTIA’s Recent MSP Study and a ChannelCon Update

In this edition of The Doyle Report: sales at fall at IBM and Microsoft, some fast facts that didn’t make it into the final edition of the 5th Annual Trends In Managed Services, and an update on the upcoming ChannelCon event in Hollywood, Fla., at the end of the month.

Lotta things in motion this week. On tap in this edition of The Doyle Report: sales at fall at IBM and Microsoft, some fast facts that didn’t make it into the final edition of the 5th Annual Trends In Managed Services, and an update on the upcoming ChannelCon event in Hollywood, Fla., at the end of the month.

Let’s start with the big news of the week: IBM and Microsoft aren’t as big as they once were. To wit, both companies reported quarterly earnings this week. Both reported a drop in revenue. For IBM, the results marked the 17th quarter in-a-row in which sales declined. For Microsoft, the results marked the first time since 2009 that annual results dropped year-over-year.

In addition to currency swings, Brexit aftershocks and sluggishness in key markets, both Microsoft and IBM are struggling with legacy sales. But is that really bad? By that I mean should we gauge the relative health of tech giants based on old views of “success”?

Consider what our Nicole Henderson, editor-in-chief of Talkin’ Cloud, witnessed firsthand in Toronto at the Microsoft Worldwide Partner Conference. Her assessment of the gathering in Toronto: “The Microsoft world is rocking.”

But don’t just take her word. Consider this, according to Microsoft: “Revenue in Intelligent Cloud grew 7 percent to $6.7 billion.”

That’s a pretty big number on top of an already very big number. The $6.7 billion in “Intelligent Cloud Revenue,” for example, is as much total revenue that managed in all of fiscal 2016. Similarly, IBM grew where it matters most in the most recent quarter, according to the Financial Times: “Revenue from so-called ‘strategic imperatives’—in analytics, cloud, mobile, security and social—rose by 12 percent from a year before and now account for 38 percent of the overall business...”

So what should we make of the shrinking bellwethers? Wall Street, for one, likes what it sees from them. Shares of both IBM and MSFT jumped after earnings were announced this week, though IBM has since given back some of its gains.

Maybe it’s time to rethink long-held tenets of corporate success and fitness, which have traditionally valued growth ahead of profits and almost everything else. Maybe the cloud demands that we see the world in a new light. Cisco, after all, shrunk in 2014 only to grow in 2015. Maybe IBM and Microsoft are on the right track after all.

Partners I speak with seem to think so. What about you?

“Crunchy Bits” from the 5th Annual Trends In Managed Services

Did you make your way through the entire “5th Annual Trends In Managed Services” published recently by CompTIA—all 29 pages? I did finally this week. It’s chocked full of good stuff—so much that CompTIA had to leave out some interesting fast facts that I like to call “crunchy bits.” These are morsels that don’t define a meal but certainly leave an impression (no pun intended).

Penton Technology Xpert and CompTIA senior director of industry analysis Carolyn April tells MSPmentor that one of the findings left out of the main study centers on Customer Acquisition Costs (CAC). Here’s what her research reveals:

Increasing the volume of net-new business is the No. 1 strategic planning objective for MSPs over the next two years. Sixty-two percent of study respondents deemed this a major priority. Given that, we asked MSPs to gauge the investment they need to make in marketing, sales and staff time to accomplish this goal. Forty-four percent perceive the investment needed for customer acquisition as significant, while another 49 percent consider it a moderate requirement. Their best guess for average CAC across the entire MSP industry? The sweet spot appears to fall between $750 and $2,500 spent per new customer. The most votes – 29 percent of MSPs – went to $1,000 as the average CAC.

One thousand dollars per new customer? Wowsa. For more on the “Six Strategic Initiatives on the Radar of Today’s Managed Services Providers,” click this CompTIA link.

Speaking of CompTIA…

Later this month at ChannelCon in Hollywood, Fla., Penton Technology will host a breakfast for attendees. The event: “Great Eggspectations 2.0.”

Here’s a description:

What do a research visionary, chief technologist, industry gadfly and other tech innovators believe will be the breakout trend for 2017? Have breakfast with Penton Technology and learn firsthand. As we did at ChannelCon last year, Penton, the company behind The VAR Guy, MSPmentor, Talkin’ Cloud and the WHIR, invites you to attend “Great Eggspectations: The Future Revealed.” Will our panel of experts pick augmented reality? Artificial Intelligence? Software-defined networking? Or maybe something more practical such as a waterproof smartphone with an all-day battery or a business trend such as software-as-a-service (SaaS)? Enjoy eggs or whatever your breakfast calls for and delight as our “eggsperts” advocate their ideas and debate the others put forth. We promise nothing less than an appetizing and fulfilling discussion.

Right now, we have the following “Eggsperts” confirmed:

  • Tim Herbert, SVP, Research, CompTIA
  • Ryan Morris, Principal, Morris Management Partners
  • Heather Terenzio, Co-founder, CEO and President, Techtonic Group, LLC

If you’re at ChannelCon, don’t miss this presentation, which precedes the entrepreneur’s keynote on Wednesday by Datto CEO Austin McChord, “Building a B2B (basement to billions) Company.” The Great Eggspectations breakfast starts at 8 a.m. on the 3rd in the Grand Ballroom.

As if you needed another reason to attend, you definitely don’t want to miss Terenzio, in particular. Check out the Techtonic website, for example, where she shares some interesting insights on how her company works to overcome a talent shortage:

Having a hard time finding software developers? We aren’t. We are staffed with talented, engaged and loyal employees who are in the process of becoming masters in .Net, PHP, CSS, Java, HTML, JS, Angular, iOS, Android, Kentico, PhoneGap and EpiServer. Their backgrounds are varied and sometimes unconventional but they are all enthusiastic and skilled and know how to work with clients and with deadlines. We are not a Boot Camp! We are a team of Agile software developers, mentors, teachers and professionals working together to build great software for our clients.

Do you want in on our talent pool of developers with 1-2 years of experience? Hire us to work on your software project. We will have a developer with 20+ years’ experience help our more junior folks get up to speed. Once they are up to speed, they will work on your project as contributing members of your team. After 6 months, you will have the option to convert to full time employees or continue on as contractors.

This is a great opportunity to change the life of a young adult embarking on a career in software development, create a talent pipeline for your company and significantly shorten the time it takes to find, interview, train and create productive members of your team.

Interesting, no? More to come…

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