March 11, 2022
By Jeremy Young
From an outsider’s perspective, the managed service provider community is a gold mine. Selling a product in bulk without talking to hundreds of customers? It seems too good to be true — and that’s because it is. Simply waltzing into the MSP space without any forethought will undoubtedly result in disaster.
There’s a right way and a wrong way to partner with the IT service provider channel. The right way will yield mutually beneficial, long-term partnerships. The wrong way could get you ostracized from the MSP community.
It’s a grave mistake to assume you can apply the same sales tactics to MSPs that you use for other channels, or even direct consumers. If you treat MSPs like direct customers, you’ll come across as a used car salesman: “What can I do to get you in a car today?” MSPs have specific requirements, and it’s disrespectful to not recognize those unique needs.
Ways to Successfully Tap the Channel Market
Let’s discuss ways to successfully tap into the channel market:
Listen to the community. The MSP community is centered around word-of-mouth recommendations. Whether it’s in the r/msp subreddit, MSPGeek Slack, or in-person talks at trade shows, there’s constant chatter about products. Find MSPs where they hang out, and listen. Learn the MSP language. When someone in the MSP community enjoys a product, they’ll happily advocate for it. And if they don’t like your product . . . well, you’ll hear about that, too.
When selling a product to the channel, it’s important to listen to that chatter throughout every step of the process. Vendors aiming to sell to the channel first need to ensure that there’s a product fit. For a product to be viable in the MSP market, it needs to meet some minimum requirements – multitenancy, for example – that enable MSPs to manage the software on behalf of others.
Keep communication open as MSPs continue to use and sell the product to their customers and incorporate commonly requested features into a product road map so that MSPs feel respected and listened to in the long term.
Provide not-for-resale (NFR) licenses. It’s important to think critically about what you’re asking from an MSP: “sell my product for me.” In my opinion, that’s why it’s fundamentally disrespectful to force MSPs to pay to determine if that product is worth selling to their customers. That’s where an NFR – or not-for-resale license – comes in, by offering MSPs the ability to adopt a product for free in their internal environment.
Of course, there are some exceptions to this. If your solution is meant for MSP internal consumption only, such as remote monitoring and management (RMM) or professional services automation (PSA) tools, you have to rely on the revenue from the MSP, so offering an NFR may not be viable.
But generally, it’s a good sign for MSPs when a vendor offers an NFR license. At the very least, it shows that a vendor knows what an MSP is and demonstrates an understanding of the MSP community and its needs.
Equally important is offering a full, no-strings-attached, fully free NFR license. MSPs will be frustrated when dealing with a license that is limited in scope, whether it’s only available for a demo or lab environment or has a time limit. The whole point of an NFR is that MSPs get to live and breathe the product so they’re able to see the value for themselves.
MSPs are in a unique position, both using a product and selling it to their customers. So an MSP is unlikely to recommend a tool to its customers if it hasn’t used it personally — or is, at least, familiar with it. That would just be a bad business practice on their part since they’re going to be the ones managing it.
Incentivize MSP-friendly selling. For as long as the channel has been around, partners have fallen victim to …
… vendors with bad-apple sales reps who end up selling against partners. There are many stories of sales reps internally finding partner deals in their CRM, and then undercutting to win those deals directly.
Understandably, MSPs have some scars from these past traumas. That’s why it’s crucial to have guardrails in place to prevent these behaviors from happening, such as:
Channel-neutral compensation. To prevent sales reps from undercutting partners, ensure that every salesperson in the organization is compensated when a deal goes through the channel.
Qualify prospects to uncover their existing partners. This isn’t always as easy as asking a customer, “Are you working with a partner?” Some customers may use different terminology when referring to an MSP. Others have savvy procurement departments that try to get a direct quote and then loop in their partner to try and get the best deal. To uncover this information, sales reps should be trained to ask customers specific questions throughout the sales process. For example: Where did you get your Microsoft licensing from? Who’s managing your firewalls? Do you have an IT guy? Build in multiple touchpoints to ask well-framed questions that get to the heart of whether a partner is involved.
Offer channel-preferred pricing. Another way to make secret shopping irrelevant is to ensure that you’re providing your best pricing through your channel partners. Putting minimums in place and discount limits for direct business helps encourage business to go through the channel and helps instill trust in your partners that you’re a partner, not a vendor.
Seek win-win-wins. In a partnership, the ultimate goal is for all three parties to win: the vendor, partner and customer. And like in any relationship, good things happen when everyone feels respected. When a partner isn’t treated like an equal, it’s easy for them to get resentful or bitter. Scroll through r/msp on any given day and you’ll see plenty of partners that feel used and mistreated.
Expecting partners to sell on a vendor’s behalf without providing anything in return is selfish. A mutually beneficial relationship will make partners feel respected, and in turn, they’ll be more likely to advocate on your behalf to customers.
Jeremy Young is the director of partner strategy at Blumira. His decade-plus of tech and cybersecurity industry experience includes serving as head of affiliate partnerships at Huntress Labs and working on the Duo MSP team advocating for MFA to be a standard for all MSPs and their customers. You may follow him on LinkedIn or @blumirasec on Twitter.
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