How to Kill A Managed Service to Pursue New Revenues
Nobody enjoys death — especially when it involves killing a product or service that you really love. But let’s face it: Sometimes we cling far too long to a “promising” service or solution that makes us “a little money.” Instead, we should be focusing our resources on new services that make us far more money and generate far more customer loyalty. Let me give you an example involving our own company, plus four lessons MSPs can learn from our experience.
Here’s the core problem: When you’re an entrepreneur you believe deeply in your ideas. Everyone keeps telling you to give up on something but you keep plugging away on a wild concept. Sometimes that persistence pays huge dividends. Thomas Edison, for instance, tried 9,990 different experiments before finding the right combination to make a light bulb glow.
But sometimes we waste our time trying to revive, rebrand or rebuild a bad idea. GM,for instance, should have killed Oldsmobile far sooner rather than wasting millions of dollars trying to reinvent the rusting brand.
The real problem: Most of us can’t tell the difference between a brilliant idea that needs more time vs. a resource-intensive idea that needs to die fast.
Here’s an example from our own company: We spent more than two years building and running WorksWithU, a blog and media site that covered the emerging Ubuntu Linux community. By most metrics the blog was wildly successful. It generated:
- More than 150,000 page views per month at its height
- An average 15 reader comments per blog post, an incredibly engaging figure. Some blog entries got 40+ comments each.
- And yes, the site was profitable, generating double-digit revenue growth in 2009 and again in 2010.
But here’s the rub: Our channel sites (MSPmentor, The VAR Guy, MSPtweet and VAR Tweet) emerged as the leading blogs and social media brands in their respective markets. WorksWithU, in stark contrast, was about open source in business.
In short: We had a business scalability problem. Our existing blog and sales staff didn’t really have time to “shift gears” every day from a channel mindset to an open source business mindset. Further complicating matters, we believed in Ubuntu but we didn’t anticipate a bunch of disruptive forces around it… particularly Google Android plus cloud computing.
Time to Kill A Product… And Launch A New One
Around mid-2010,Brett Martin from Exigo Group told me he noticed we didn’t update the WorksWithU site as frequently as MSPmentor and The VAR Guy. Brett is a channel guy who knows a lot about Ubuntu. So I took his constructive criticism to heart and our team realized we had a problem: Although WorksWithU was profitable and growing, we couldn’t cost-justify focusing more editorial resources on the site. The profits weren’t big enough.
By October 2010 we finally made the decision to kill the profitable site. It was a little depressing for me. But it was also liberating. WorksWithU taught us a TON about community. And we’ll apply those lessons to our next Web site, which launches December 7. For those of you who read this far… here’s a link to the new site’s Twitter feed. (Don’t tell anyone else where you found it.)
Four Lessons MSPs Can Learn From Our Experience
Once our latest site goes live on December 7, you’ll see how it’s a natural extension to our existing IT channel brands. It’s also revolutionary in some ways and we’ve been able to staff up our sales and editorial teams to focus on the existing sites and the new site. Everything fits together nicely… akin to Word, Excel and PowerPoint fitting under one Office brand.
For MSPs, the lessons from our experience are clear:
- Don’t Stretch Too Far: If you’re a VAR or MSP that wants to push into a new market be sure to work off a base you already know. For instance, leverage your on-premise Exchange know-how to promote SaaS-based collaboration software and unified communications software.
- Don’t Chase Financial Promises: For instance, why are so many MSPs chasing EMR (electronic medical records) revenue when they know NOTHING about the health care vertical? Most MSPs that lack health care knowledge will fail in that effort, despite the EMR spending boom.
- Kill Marginal Services: Even if a service remains profitable and growing… ask yourself: (A) Is the services revenue growing fast enough? (B) Is the market around the service growing or shrinking? (C) If you killed the marginal service could you focus your resources on an even higher growth market?
- Admit Defeat When Giants Surprise You: When we launched WorksWithU in 2008, Ubuntu was poised to leap from desktop PCs to so-called Mobile Internet Devices (MIDs) and other form factors. We didn’t anticipate Google Android and Apple iPad coming into those markets and redefining the MID market.
Goodbye and Hello
I’ll miss WorksWithU in some ways. Jumping into the open source business debate was nice change of pace for me each day. But ultimately the site didn’t offer us enough financial upside and it didn’t fit neatly into our growing IT channel business.
So WorksWithU died in October 2010… but it freed up more of our team to complete work on our next site launch, debuting December 7.
As 2011 approaches, I wonder how many MSPs are taking inventory of their products and services. It may be time to kill a few of them. Once you pull the trigger you’ll be amazed to see the additional opportunities around you.
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