A recent LogicBay study within a managed services channel revealed some startling findings. Basically, there's a critical link between managed services and a manufacturer's hardware sales.
Here are four highlights from the study, along with their implications for managed service providers.
- There is a direct link between managed service deals and manufacturer hardware drag. In fact, many deals have a 60% or greater hardware drag (as a percent of deal size) with managed services revenues.
- A strong tie exists between new account growth and managed service wins. The vast majority of all new account wins (i.e. competitive steals for VAR and manufacturer) were founded on managed services versus traditional transaction solutions.
- There is an alarming turnover/failure rate among channel sales reps focused on traditional transactional sales. Greater than 65% of reps who do not have a significant account base or are not selling managed services are failing. In some cases, the number is well over 80%.
- Reps who follow the best practices for selling managed services are outselling by 1.5 to 3 times those who only marginally follow them (measured as a percent of quota).
- Now is the time for action. Tough economic times are creating a breeding ground for managed service offerings. The adoption rate for managed services from customers is clearly accelerating as pointed out by a recent study in MSPAlliance, where sales cycles have shortened to 2-4 months – down from 6-12 months just two years ago. (Update: Some sales cycles are actually getting a bit longer again, due to the weak economy.)
- “Net new” customers = managed services. If you’re looking for your channel to sell “net new” accounts, then managed services is the best path to ensure success. Do you have a solid approach for enabling those channel partners who are committed to selling managed services? At best, some manufacturers have provided infrastructure or SKU support for helping their partners with managed services. Managed services requires a different sales approach (and quite possibly a different type of rep) than most channel partners are used to. Providing infrastructure is only part of the total strategy for a successful managed service channel strategy.
- New channel partners are needed. Recruiting partners capable of selling managed services is critical for short and long-term manufacturer success. Do you have a defined process to identify, recruit, on-board, and manage partners?
Guest blogger duo Al Rosenbaum is the executive VP of Sales for LogicBay and Mike Stankus is the CEO and professional sales coach with STM360.