By Datto Guest Blog 2

Where do customers come from?

On the surface, this is a simple, even naïve question … but from a market research point of view, it’s sincerely the most common question asked by senior executives at managed service provider companies.

Perhaps you’ll ask it differently, but the point is on target: once you have built a technical services operation capable of delivering proactive, consistent support to customers and improving the performance and value of their IT investments … how do you get customers to start paying you for those capabilities?

Traditionally, the answer has been “word of mouth” via referrals from satisfied customers. And while a referral is admittedly the holy grail of new business development … it simply isn’t a tactic that scales to the requirements of a thriving managed services practice.

(NOTE: Please, please keep pursuing referrals. In fact, build a referral generation program to create opportunities for customers to say good things about you. Often. Just don’t expect to build a better mousetrap and have customers beating a path to your door. For a more in-depth discussion of this topic … see our blog post from last month on The One Metric That Matters Most).

Bottom line: you need new customers … and they don’t show up uninvited. But based on the real numbers in the managed services industry, hiring and managing sales reps is not a core competency. According to our latest research, MSPs indicate their number one challenge is finding and hiring sales reps. Number two: managing sales rep performance and productivity.

So perhaps the question isn’t about the need for having sales reps … but about the mystery of where to find them, how to hire them, and how to get them to work and produce reliably.

Finding and hiring reps is a big topic we’ll discuss in a future blog … and the reason it comes later is a question of motivation. If you aren’t convinced you can get value from a sales rep, surely you won’t want to hire one. So let’s talk first about productivity.

How much value can a sales rep produce? And more to the point, how can you measure the value of a sales rep?

The most common metric is revenue. But relying on revenue to evaluate the success of a sales rep has a fatal flaw: you can’t count the dollars until after the work is done (or not done, as the case may be). And this reliance on measuring the end result is, ironically, the single biggest reason MSPs feel so uncertain about making investments in new reps.

To reduce the risk – and increase the willingness to hire sales reps – MSPs need to track behavior-based activity metrics that lead to the end result of revenue. Which, by definition, means you need to understand how to cause revenue to happen. You need a structural process that can be counted and repeated and improved. And then to actually track and measure the system. (Which should be a core competency for MSPs … by the way.)

Do you have a sales system? Do you know how many potential new customers you need to meet with before winning one new opportunity? Do you know how many times you need to meet with a single customer before they decide to buy your services? Can you predict – before it happens – how much revenue you’ll generate in a given opportunity?

The good news about a managed services model is that recurring revenue is inherently more predictable than transactional revenue. But don’t let that lull you into a false sense of confidence that you don’t need to build a system to create new revenue.

Do you want to learn more about how to measure and manage sales productivity? Join me for the next Datto Partner Development Webinar on April 22 at 2pm ET.

Ryan Morris is Principal Consultant for Morris Management Partners, with more than 20 years experience in marketing, sales, and management in the technology industry—specifically focused on building successful multi-tier channel solutions and profitable go-to-market strategies.