Gary Pica, founder of TruMethods and a well-known managed services veteran, is onstage at the Ingram Micro Seismic Partner Conference in Dallas. Pica is sharing managed services sales tips. Here are some of the highlights, plus a hint about Pica's next potential career move.
First, some background: Pica purchased an IT reseller business in 1996 just outside of Philadelphia. He ultimately transformed the business into an MSP that managed 7,000 endpoints and generated $500,000 in monthly recurring revenue. mindSHIFT, the top-ranked company on the MSPmentor 100 list, acquired Pica's business (Dynamic Digital) in 2005. And by 2009, Pica had moved on to launch TruMethods to help MSPs build their businesses.
During the session, I asked Pica if he would ever get back in the managed services game. Pica said he's still a shareholder in mindSHIFT. And he also hinted that he may consider a career move in the next 18 months or so. In the meantime, he's busy educating MSPs.
The biggest challenge facing VARs and MSPs, Pica said, is an acronym called: A.T.D.I.Y.P.B.A., short for after tax dollars in your personal bank account. "After a few years, the reality of life and business set in and you adjust your expectations downward," said Pica. His goal, naturally, is to help MSPs adjust their financial expectations upward.
When Pica launched his managed services practice, he told a customer it cost $2,000 a month. The customer's reaction: "I spend $18,000 a year with you; why would I spend more?" Pica instantly realized "something had to change" because he had a business model and pricing challenge.
New ApproachTo build a successful MSP practice for customers, Pica zeroed in on these five points:
1. Focus on the end result
2. Limit the choices and options you offer to your customers
3. Zero in on people, process, technology and time
4. Define your edges: You have to have a clear line of distinction between what's included in your service and what isn't. Be able to say what the service is, what it covers, what it doesn't and how much it costs, you're probably on the right track, Pica said. "Don't have fuzzy edges," said Pica. "If you have fuzzy edges you'll sell less and you'll make less."
5. Remove barriers to entry: "There's only one thing that can eliminate risk in your business. Have enough customers at the right price to create scale, and therefore eliminate risk."
Building a Sales EngineGenerally speaking, for a 20-person network Pica says you can charge roughly $2200 to $2600 per month for managed IT services.
But before you get to a price conversation, think about building your sales engine. The idea is to have an "un-sales process." When you get in front of a customer, ask them as much as you can about their business. And find out why they should NOT buy from you, Pica said.
Get the answers, and 20 percent of those customer meetings will turn into long-term managed services contracts, Pica said.
When customer say "they're fine," make sure you're making a list of 5 to 10 things in the customer setting you know you'd do differently. The idea is to "reframe" what "fine" is, Pica added.
Customers who are "fine" typically believe nothing is crashing and their vendors call them back. Also, the customer thinks their IT costs are "the bill from their current IT vendor."
MSPs, in turn, need to expand customers' definition of fine: Predictable performance, functionality, reduced risk, capital costs and productivity. Also, MSPs need to redefine their customers' definition of IT costs to include the impact of IT on their biggest cost: People.
Pica says his approach worked 400 times over his 12-year career, though he concedes roughly 1,500 target customers did not embrace his pitch. His key point: You can't always win.
"Where the rubber hits the road in this business is when you're belly to belly with the customer in a meeting," said Pica.
Four other tips from Pica:
- Find a new hammer: Stop doing the same old same old.
- Create a vision: Instead of being a brick layer waiting for the next pile of bricks, focus on the bigger picture: Your unique ability to build a cathedral in the managed services market.
- Put your goals in writing: If it's not in writing, it's not a goal. "It's amazing what happens when you work with a plan."
- Do something now: Write down your 10-year net worth goal. How many people do you need to get in front of each week to achieve your goals.