December 1, 2017
In our last post, we presented five metrics an MSP should focus on to ensure their sales operation supports their business goals. But what sort of numbers can MSPs expect if they’re doing well?Here, we’ll address that question.
Before we do, however, we want to emphasize that, even in sales, more is not always better. You have to find a good balance that works for your company and maintain a sustainable pace. For example, while it may be tempting to try to continue booking more appointments, you might find that your effort is better spent elsewhere. And, on top of that, you don’t want to burn out your sales staff.
With that in mind, let’s talk numbers.
Net New Appointments
The numbers you have to hit here will depend on a variety of factors, including your revenue targets and the size of the clients you typically go after. You’ll need to book far more appointments if you aim for $1,000 contracts than you will if you aim for $10,000 contracts (although, that also assumes your close rates are consistent across deal sizes, which is unlikely).
Let’s assume you’re aiming for contracts between $2,000 and $5,000 per month. In general, we’ve seen the following ballpark numbers. If you can hit the “sweet spot” range, you’ll likely be happy with the results.
Too Low: Fewer than five
Too High: More than 20
Sweet Spot: Between 10 and 14
Obviously, you need to write enough proposals to win new business. This requires that you’re reasonably successful at getting net new appointments (see the previous recommendations). But if you write too many proposals, you could be spreading yourself too thin or may be casting too wide a net in your prospecting. While you can use template proposals (and tweak them as you go), every proposal still takes time to research, write, edit and finalize. So, again, try to hit the sweet spot here.
Too Low: Fewer than four
Too High: More than 15
Sweet Spot: Between six and eight
Win Percentage on Proposals
It may seem like having a high win percentage on proposals is always positive. However, if you win too many proposals, you might be undercharging for your services and should look at raising your rates. Of course, if you’re winning too few, you’re likely overcharging or simply need to improve your proposal writing skills.
Too Low: Less than 20%
Too High: More than 80%
Sweet Spot: Between 30% and 50%
Average Deal Size
This number depends on your preferred customer size. While it may seem like large contracts are best, they could also take up a larger chunk of your time depending on the services they need. They may even be overwhelming for some MSPs: Trust us, you never want to overpromise and find out you’re in over your head with a client. For this example, we’ll stick with the numbers we started with, but you’ll have to find the number that works best for you.
Too Low: Under $1,000 per month
Too High: Over $10,000 per month
Sweet Spot: Between $2,000 and $5,000 per month
Time to Close the Deal
The truth is there really isn’t a “too fast” on this one—the sooner you close the deal, the better. Anything you can do to improve your time-to-close will help your business overall.
Too Fast: Not applicable; the faster the better
Too Slow: More than 60 days
Sweet Spot: Less than 30 days
How Do You Compare?
How does your MSP compare to the numbers above? Have you hit your sweet spot in each, or do you have work to do in one or more areas? Even if you’re off the mark, don’t despair—if you can make improvements in any of these areas, you’ll see a massive difference in your business’s overall health and success.
Eric Anthony is Sales Engineer Manager at SolarWinds MSP. Before joining SolarWinds Eric ran his own managed service provider business for over six years. You can follow Eric on Twitter at @EricAnthonyMSP.
This guest blog is part of a Channel Futures sponsorship.
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