To insulate themselves from the shrinking margins resulting from hardware commoditization, resellers need to get creative. My recommendation: Identify opportunities to bundle new managed and cloud services with your existing infrastructure offerings in a way that makes the whole solution greater than the sum of its parts.
This strategy will lessen your dependence on equipment-based sales. And, bundling services that provide specialized, embedded capabilities beyond traditional IT network offerings, like security or VoIP, can increase your stickiness. Customers like getting a single bill and having "one throat to choke." The addition of per-seat service licenses can as much as double the monthly fee associated with a typical network deployment focusing on desktop services. Bundled, recurring-revenue-based offerings allow partners to enhance their service-level agreements and further vest themselves in their clients’ operations, all while delivering state-of-the-art capabilities that make end users more agile and productive.
Here are some guidelines on how to profit from this approach.
1. Identify What to Add: Services such as RMM, hosted cloud storage, disaster recovery, security assessments and data center are mainstay IT offerings. Yet, as the need for collaboration becomes more pressing in the workplace, even small businesses are integrating back-end infrastructures, such as customer-relationship management and accounting systems, into their overall networks. This allows personnel from different departments to access the same data, as opposed to running a series of disparate software suites that are restricted to use in individual departments. Silos are a persistent problem, with potentially serious implications.
End users typically find it a challenge to deal with multiple providers, however, in an attempt to create these unified, company-wide platforms. This is an opportunity for MSPs to provide not just the equipment and services the end-user needs, but the expertise to integrate and manage these systems. In addition, it’s more palatable for CIOs pays for these enhanced through a monthly fee structure as opposed to a large lump sum. Software subscriptions are a welcome change from rigid and expensive licenses.
2. Increase Pricing Accordingly: The potential for added revenue is considerable since you’re no longer just selling seats, you’re selling seats plus platforms — all while building in value for the customer. For example, a solution provider who typically sells desktop management for $15 monthly per seat can charge the same client up to $100 per seat by bundling services such as IVR, unified communications, professional services automation software packages, or business automation services such as invoicing and sales software.
A VAR’s Guide to MRR: Moving with the Cheese: CompTIA predicts that, for more than half of all IT solution providers, 75 percent of revenue will come from managed services by 2019. In this free report, we speak specifically to partners looking to transition away from a break-fix model and add recurring managed service offerings such as SD-WAN, UCaaS and DRaaS. Download now!
In giving customers the ability to accommodate a multitude of business functions from a single network ecosystem, you position yourself as that valued IT adviser who every solution provider strives to become and migrate away from the increasingly archaic — and less profitable — “break-fix” model.
3. Leverage the Informal Contact Center: In another example, MSPs could offer contact center capabilities in conjunction with traditional data-based networking services. This option is often overlooked by IT providers who don’t specialize in voice, assuming such capabilities are appropriate only for companies that maintain large, formal call centers. However, consider how widely such tools can be applied: Most businesses must deliver an effective customer-engagement experience in order to succeed, and almost every business communicates with a customer base. Consequently, any organization that maintains a sales team, a group of account representatives, field technicians, billing representatives, dispatch teams or customer service agents, in essence, runs a call center. By that measure, what I call "informal contact centers” abound in the marketplace. From HVAC companies to medical facilities to car dealerships, you have many opportunities to add-unified communications services to a network sale. VARs can likely bring these services to much of their existing customer base.
4. Use the Built-in “Stickiness” of Bundles: Another advantage of bundling: Your competitors will have a harder time convincing your clients to change vendors if their communications system is integrated with their billing and CRM records, or if it includes an auto-response system that keeps them engaged with customers. It's just not worth the disruption. However, be aware of rivals competing solely on price.
5. Justify Cost — It’s Your Job to Bring More to The Table: Business users might question the necessity for new capabilities. Don’t be shy about justifying the addition of services, and don't neglect training to make sure employees are making full use of new systems. It’s a crucial part of being a responsible and effective IT adviser. In an industry that’s constantly evolving, any MSP worth its salt should bring new technologies to the table on a regular basis. Explain that you’d be remiss if you didn’t introduce unique and valuable features to help improve the business owner’s processes, making them more competitive.
Of course, don’t try to sell extraneous technology that won’t deliver specific benefits, but don’t be reluctant to command fair compensation for more sophisticated and functional technology. Improving your client’s network is your job.
Once MSPs are willing to extend beyond their core competencies – hopefully with the support of channel-focused vendor partners – you'll no longer be limited to selling commoditized, traditional systems; instead, you'll be selling high-margin capabilities. Best of all, you increase your value proposition, making you more relevant and entrenched in each customer’s business model.
In a marketplace that is quickly becoming commoditized, solution providers are constantly looking for ways to enhance revenue. Bundles are a win-win.
CoreDial's chief revenue officer, Ken Lienemann, is responsible for leading marketing and sales as well as partner on-boarding, training, support, and partner success. With a deep background in marketing, sales and service, Ken brings more than 20 years of experience to the position, having previously worked for telecom and software companies ranging from startups and early stage IPOs to Fortune 500 enterprises. Serving more than 23,000 businesses, and more than 300,000 seats nationwide, CoreDial enables its partners to quickly and cost-effectively provide their end users with high-quality, reliable services including UCaaS, CCaaS, hosted PBX, mobility, SIP trunking, and SD-WAN.