Small Businesses And MSPs: My Big Concern
Small US businesses cut 79,000 jobs in November, the sharpest decline in seven years. The information, reported by Inc.com, is critical warning to managed service providers.
You can’t just double-down on your existing customers during a bad economy. You need to find the energy, will and focus to recruit new customers. Here’s why.
As some small businesses shrink, they will negotiate hard to reduce monthly MSP service fees, or even eliminate some seats or users from service level agreements.
MSPs can’t sit still. I know plenty of MSPs that are seeking to offer more and more managed services to their existing customer bases. But even if you hold onto those customers, they may have fewer seats for you to managed/service during the recession.
Don’t be shy. Get out on the road. Make a shortlist of customer prospects that are located within 20 miles of your headquarters — and go visit them.
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Joe,
I couldn’t agree more! You’ve got to be selling like crazy in this environment. We doubled our efforts at Everon in the last year, and plan to double them again in 2009. That requires a big investment, which may seem painful at times, but I firmly believe it has to be done.
Even the best MSPs will see customer churn during this economy. Small businesses are downsizing, cutting back, and selling out in a lot of cases – this volatility means changing vendor relationships in many cases.
That is both a threat and an opportunity!
Mike Cooch
http://www.everonit.com
http://www.smbitpros.com
Mike: your focus explains why everon landed on the Inc 5000 list. Happy holidays.
Hi Joe,
I agree,that this is the time to expand your base and even your services. This year Nemertes has seen an increased interest in managed services from all size organizations. Sixty-three percent of companies we spoke with for our Unified Communications and Collaboration benchmark are using or evaluating some flavor of managed service at one or more of their branch locations. Those who are using third-party services extend them to 89% of their locations. That’s quite an increase from past years (46% in 2007 and just 27% in 2006).
With recent economics however, SMBs are hesitant to spend money on IT capital expenses, especially technology perceived as *nice to have*, not *must have*. They do understand they’ll need to make some investments to stay competitive and have interest in technologies that offer a competitive differentiator. That may mean investing in customized software to better service their customers or collaborative applications such as conferencing tools to connect with partners and suppliers.
There is an opportunity for MSPs to offer SMB customers and prospects hosted solutions (VOIP, conferencing, SaaS). I understand that reselling hosted solutions is not typically as profitable as managed services, but it’s a very good way to get your “foot in the door”. Once you’ve offered a successful solution, those customers are ripe for up sell when the economy does pick up. Just read yesterday that MS and HP are creating a program to help MSPs resell their solutions, so I’m sure this will be something we hear more MSPs considering.
~Katherine
In some ways, it makes the value add easier to show and explain since now the SMBs are looking for ways to save or ways to get the same technology and its maintenance for the same without having to hire extra people to do it.
Some of my best credit clients for leasing (although fewer of them for sure) have come as a result of this environment and showing where we add value, like my HW rotation that usually equates to about 80% of the value of the tech over 3 yrs with rate included and the preferred option of returning it.
Stu
http://www.southernlendingsolutions.com
Stu: Are you doing any Webcasts or podcasts to educate VARs and MSPs about lending and financing strategies? If not, you should. Shoot me an email and let’s talk podcast. I bet our readers would love to hear your voice and would love to get more info/perspective from you.
-jp
Katherine: You’re on the mark. Foot-in-the-door solutions involving hosted VoIP are worth investigation, especially in this economy.